USDOJ Appeals Wire Act Ruling

USDOJ to Appeal Wire Act Ruling: U.S. Online Poker in Doubt

The U.S. Department of Justice has filed its intent to appeal a recent District Court ruling that determined the 1961 Wire Act only applies to cross-state sports betting. The decision could further delay the spread of “shared liquidity” online gambling services in the United States, specifically online poker.

Fans who wish to see online poker spread to more states within America can anticipate further delays.

On Friday, August 16th, the DOJ filed a motion to appeal a June 2019 U.S. District Court ruling that limits the scope of the 1961 Wire Act to interstate sports betting.

SOURCE NEWS: US Online Gambling Still Under Threat (Dustin Gouker – OPR – Aug 16, 2019)

The latest actions by the U.S. federal government could result in more hurdles for implementing licensed interstate online poker games similar to those currently offered through the Multi-State Internet Gaming Agreement (MSIGA) between New Jersey, Nevada, and Delaware.

USDOJ Appeals Wire Act Ruling: Negative for U.S. Online Poker?

Public intelligence from former poker lobbyist Rich Muny informs players that “regulators and banks” will represent Achilles’ Heels to licensed, statewide U.S. online poker pursuits in light of the USDOJ-OLC Wire Act re-interpretation.

At least some of Muny’s fears appear to have already become reality in 2019:

(1) REGULATORS: Pennsylvania could begin offering state-regulated online poker services as soon as this year. However, the Commonwealth has already declared that its interactive gaming rollout is restricted to within that state.

This means online poker players in Pennsylvania will not be allowed to compete in games versus players who are located within NJ/NV/DE — although enjoining the Keystone State to the MSIGA compact remains an eventual goal for many who support the proliferation of regulated online poker in the United States.

(2) BANKS: Recent payment processing issues relayed by multiple players on the NJ/NV/DE “shared liquidity” site WSOP dot-com are reportedly not tied to any Wire Act banking crackdowns, but were rather the result of unrelated operator miscues.

Separately, a June 2019 budget dispute between officials in New Jersey threatened to block Garden State players’ access to funds on licensed online gambling sites. The issue was eventually resolved and likewise was not linked to the USDOJ-OLC’s new Wire Act opinion.

However, a number of major financial institutions have been moving to hinder online gambling transactions since the Unlawful Internet Gambling Enforcement Act was passed in 2006.

The new interpretation — reported to have closely resembled a memo distributed by associates laboring on behalf of Las Vegas Sands Corp. CEO Sheldon Adelson — could, as Muny implies, attract ongoing pushback from those who support the casino mogul’s staunch opposition to online gambling.

Trade Group Wants DOJ to Focus on Offshore, Unregulated Sites

In a statement to OPR’s Dustin Gouker Friday, iDEA Growth member Ifrah Law suggested that the USDOJ should focus its Wire Act enforcement efforts on “unlicensed illegal offshore Internet gambling operators who do not create jobs or tax revenue in the U.S. and do not appropriately protect consumers.”

The trade group — which counts the parent companies of PokerStars, partypoker, and 888 Poker as its members — has consistently pointed to New Jersey as proof that regulated U.S. iGaming provides publicly-verifiable jobs and brings in publicly-verifiable tax revenue for states, while providing a safe internet gambling environment for consumers.

But Ifrah’s hard-line stance pertaining to offshore online gambling services could result in a profound tear within the social fabric of the online poker playing community — a group that traditionally has not discriminated between “regulated vs. unregulated” when extending specific forms of pro-consumer “public interest” or even “commercial” outreach.

In fact, many American online poker players patronize both “licensed” and “unlicensed” sites.

CONSUMER OUTREACH: Internet Poker Feedback & Discussion Forum (TwoPlusTwo)

If legal rhetoric supporting any potential settlement with the United States government bears fruit, online gambling influencers in particular could also face eventual regulatory oversight compliance burdens similar to what licensed “affiliate” models and their sponsoring sites have shouldered for more than a decade. And without some form of settlement or other official clarification of the DOJ’s Wire Act re-interpretation, federal government enforcement actions could negatively affect all U.S. poker players’ ability to compete for real money online as soon as the 2020 calendar year.

SOURCE: Updated Directive Regarding Application of the Wire Act (USDOJ – Jun 12, 2019)

Furthermore, an August 2019 report by WSOP dot-com player John Mehaffey suggests that key operational elements of the brand’s licensed online poker services in Nevada are outsourced to personnel in Antigua.

READ: Time to Amend Nevada Online Poker Regulations (The Nevada Independent – Aug 4, 2019)

Mehaffey’s report suggests that the virtual monopoly enjoyed by the WSOP-NV online poker service has resulted in a product so inferior that state policymakers should reconsider “Bad Actor” policies that have prevented rival site PokerStars from entering the Nevada market up until this point.

[“Nevada needs to follow New Jersey’s lead here and repeal its bad actor clause.” -John Mehaffey]

USDOJ to Appeal Wire Act Ruling (Summary/Analysis)

The U.S. federal government’s push to utilize the 1961 Federal Wire Act to crackdown on all forms of online gambling — without discriminating between (a) services that have and will continue to invest in critical, licensed statewide infrastructure, and (b) offshore operators that service the U.S. market in an unlicensed capacity — presents a number of regulatory and commercial hurdles that will take time to sort out.

Without the ability to share liquidity in a cross-state environment via compacts, there is very little (if any) incentive for prospective online poker operators to subject themselves to the massive costs and unique regulatory guidelines that would be required for licensure in most statewide jurisdictions — many of which are not large enough to support heavily restricted ring-fenced markets.

In the meantime, the U.S. online poker world appears destined to suffer from a lack of certainty and sustainability mixed with an abundance of friction and sensitivity.

Read More Part Time Poker News Coverage

U.S. Online Poker Faces Steep Challenges (Apr 12, 2019)
NAGRA Webinar: DOJ Wire Act Opinion (Timestamps) (Mar 3, 2019)
Michigan Geolocation and Restriction of Virtual Private Networks (Mar 13, 2019)
Analyst Warns VPN Restrictions for Regulated iGaming are “Overreaching” (Mar 15, 2019)
YouTube Temporarily Removes Over 100 Videos Featuring PokerStars (Jun 2, 2019)
Encore Boston Harbor Poker Room Debuts with 88 Tables (Jun 23, 2019)
Alex Scott Interview: Online Poker Bots and The Future (Feb 15, 2019)

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