From the NY Times:
The Justice Department has reversed its long-held opposition to many forms of Internet gambling, removing a big legal obstacle for states that want to sanction online gambling to help fix their budget deficits.
The legal opinion, issued by the department’s office of legal counsel in September but made public on Friday, came in response to requests by New York and Illinois to clarify whether the Wire Act of 1961, which prohibits wagering over telecommunications systems that cross state or national borders, prevented those states from using the Internet to sell lottery tickets to adults within their own borders.Although the opinion dealt specifically with lottery tickets, it opened the door for states to allow Internet poker and other forms of online betting that do not involve sports. Many states are interested in online gambling as a way to raise tax revenue.
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In a reply letter that was also issued Friday, the Justice Department said that while the 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.”
The new policy merely reverses the Justice Department’s longstanding position that all forms of online gambling are illegal in the United States. It does not necessarily pave the way for national rules governing online gambling.
But experts in gambling law said Saturday that the new policy does imply that states can band together to allow gambling across state borders. The exception would be online sports betting, which is explicitly prohibited under federal law.
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Online gambling has been a focus in the Justice Department for years, but it burst into public view in April, when federal prosecutors charged the operators of three of the most popular online poker sites with fraud and money laundering.
The three sites, Full Tilt Poker, PokerStars and Absolute Poker, are based in Antigua and the Isle of Man, where online gambling is legal. That had made it difficult for American authorities to crack down on the operations, which had millions of United States customers.
But the Justice Department charged that the companies had used United States banks to process their transactions, violating the 2006 law that governed payment processing.
Those payment restrictions do not apply to transactions within a single state, however. With the ruling that the Wire Act applies only to sports betting, the way is clear for in-state online poker and other games.
So how will this affect the U.S. - Antigua Gambling dispute? Will this increase the harm currently being suffered by Antiguan internet gambling operators, who will now be excluded from a bigger market?
