Dispatches from the Culture Wars

The part about the delay in the rules is correct; the notion that the bill was designed to ban internet gambling is absolutely false. As I explained shortly after the UIGEA was passed in 2006, when it was slipped by then-Senate Majority Leader Bill Frist into a port security bill in the dead of night just hours before Congress adjourned for its regular election break, that bill does not outlaw internet gambling, nor does it even attempt to define what kinds of gambling might already be illegal on the internet.

More importantly, the law also specifically states that it is not expanding the definition of unlawful internet gambling, only requiring a specific form of enforcement of existing laws. It specifically states that the law is not to be read as "altering, limiting, or expanding any Federal or State law...prohibiting, permitting or regulating gambling within the US." Thus, what is to be enforced is only what was already illegal before the act took place.

So what kinds of online gambling actually are illegal? That will vary state to state, of course. In Washington, all forms of online gambling are illegal. But most states do not have laws on this at all, so it's controlled at the federal level. The Bush DOJ maintained all along that the Wire Act prohibited all forms of online gambling, but the federal courts have ruled to the contrary.

In 2003, the 5th Circuit Court of Appeals ruled in a case that consolidated cases from every other judicial district (which means it is binding precedent in all judicial districts, much like a Supreme Court ruling would be) that the Wire Act only prohibits online betting on sports contests, not poker or any other form of gaming:

As the plain language of the statute and case law interpreting the statute are clear, there is no need to look to the legislative history of the Act as argued by plaintiffs. See In re Abbott Laboratories, 51 F.3d 524, 528 (5th Cir. 1995). However, even a summary glance at the recent legislative history of internet gambling legislation reinforces the Court's determination that internet gambling on a game of chance is not prohibited conduct under 18 U.S.C. §1084. Recent legislative attempts have sought to amend the Wire Act to encompass "contest[s] of chance or a future contingent event not under the control or influence of [the bettor]" while exempting from the reach of the statute data transmitted "for use in the new reporting of any activity, event or contest upon which bets or wagers are based.'" See S.474, 105th Congress (1997). Similar legislation was introduced the 106th Congress in the form of the "Internet Gambling Prohibition Act of 1999." See, S. 692, 106th Congress (1999). That act sought to amend Title 18 to prohibit the use of the internet to place a bet or wager upon "a contest of others, a sporting event, or a game of chance..."Id. ."Id. As to the legislative intent at the time the Wire Act was enacted, the House Judiciary Committed Chairman explained that "'this particular bill involves the transmission of wagers or bets and layoffs on horse racing and other sporting events." See 107 Cong. Rec. 16533 (Aug. 21, 1961). Comparing the face of the Wire Act and the history surrounding its enactment with the recently proposed legislation, it becomes more certain that the Wire Act's prohibition of gambling activities is restricted to the types of events enumerated in the statute, sporting events or contests. Plaintiffs' argument flies in the face of the clear wording of the Wire Act and is more appropriately directed to the legislative branch than this Court.

It's not known what position the Obama DOJ takes on the Wire Act and online gambling. But it's looking more and more like Congress may step in to repeal the UIGEA and replace it with a regime to legalize, regulate and tax online gambling:

However, in a joint notice Friday, Treasury and the Fed said that several members of Congress had sought a delay, arguing that there was considerable support for new legislation to clarify the current laws.

The two agencies said groups seeking a delay had provided sufficient reasons to justify a limited six-month delay. Financial organizations including the American Bankers Association had sent the agencies letters supporting a petition filed by gambling industry associations seeking a delay.

This is very good news.