DOJ Memo on Online Gambling – Government’s Ace in the Hole?
by Rebecca E. Neely
01/06/12
The DOJ memo is generally being seen as a complete 180 in regards to its prior stance against many types of online gambling. Issued in September, but only released in recent days, the opinion paves the way for states that have been clamoring for lottery revenue as a means of offsetting their budget deficits.
The memo followed the states of Illinois and New York's requests to determine if the Wire Act of 1961 – which forbids betting via telecommunications systems crossing state or national borders – would prohibit those states from utilizing the Internet to sell lottery tickets to adults within their own borders.
Indeed, with the issuance of this latest legal opinion, the battle about the means for making online gambling legal has been resurrected: should one federal law govern states, or should each state be permitted to govern its own system?
Following the issuance of the memo, the DOJ said in a separate reply that although its new policy “differs from the department's previous interpretation of the Wire Act, it reflects the department's position in Congressional testimony at the time the Wire Act was passed in 1961.”
According to the December 24th nytimes.com article, “Ruling by Justice Dept. Opens a Door on Online Gambling”, gambling law experts felt the new policy implies that states could join together to permit gambling across state borders. However, online sports betting is specifically forbidden per federal law and would be the exception.
New laws, old laws, and interpretations aside, it's interesting to consider the timing of what many consider a bold move by the DOJ. Undoubtedly, the move is politically motivated, and could potentially swing a large number of votes Obama's way.
From a practical standpoint, legalizing online gambling seems to be long overdue, as the entire matter seems to make as much sense as prohibition. As well, as many point out, the revenue generated by online gambling would help not only to offset budgets in the red, but bankroll them.
Per the nytimes.com article, there's not a clear estimate of the size of the online gambling industry; it ranges from $6 billion to $100 billion. The point is, people like to gamble, and they're going to do it, regardless of location. It seems high time for the United States to get a cut of the pie – and even a $6 billion dollar pie tastes pretty good.
The other side of the coin is this – no pun intended: could the proliferation of online gambling contribute to the moral decay of society? Are we becoming hedonistic? And, are we in fact shooting ourselves in the foot to make a quick buck? Are we in fact enabling addictive behavior, and grooming a new generation of people banking on getting rich quick? Are we, contributing to the weakening of our work ethic, as well our morality? Are we overlooking the real problem, which is why budgets are in the red in the first place? Are we denying the existence of some very real problems with government and governance, and choosing instead to throw money at them, in the hopes they'll just go away?
The seedy underbelly of online gambling came to the public forefront earlier this year – though it's been the focus of the DOJ for many years – when the operators of popular online gambling sites Full Tilt Poker, PokerStars and Absolute Poker, based in Antigua and the Isle of Man where online gambling is legal, were charged with fraud and money laundering.
The operations had millions of US based customers, which made it hard for US authorities to come down on the operation. The DOJ said the companies had used United States banks to process their transactions, violating the 2006 law that governed payment processing. However, these types of payment restrictions are not applicable to transactions occurring in a single state. This clears the way for online poker and other types of games in state.
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The DOJ memo is generally being seen as a complete 180 in regards to its prior stance against many types of online gambling. Issued in September, but only released in recent days, the opinion paves the way for states that have been clamoring for lottery revenue as a means of offsetting their budget deficits.
