Federal Wire Act of 1961 Explained
The Federal Wire Act, also known as the Interstate Wire Act, was made the law of the land on September 13th, 1961 by President John F. Kennedy. It specifically prohibits betting or gambling businesses from using a wire communication facility to transmit interstate or foreign bets, wagers and related information. Naturally, with the birth of online gambling, this US federal law came into question and has been addressed, discussed, debated and reviewed. This page will explain the official position of the DOJ concerning the law, how it affects US online gambling legality, and why it is considered very controversial according to some parties.
Intent of the Federal Wire Act
At the time this law was passed, the United States was dealing with significant organized crime activity, particularly with illegal bookmaking services that accepted bets through wired communications, also known as the telephone. The law was actually created specifically to address this growing problem with the mafia. It was indeed successful in this intent, and was able to severely damage the mob's illegal bookmaking activities and minimize organized crime's reach in this are of criminal activity.
The Formal Legal Opinion of the Department of Justice Concerning the Federal Wire Act
In September of 2011, the US DOJ issued their formal legal opinion to the public concerning the scope and reach of the law. In essence, they determined that the law only applies to US based sports betting, and that casino gambling and poker gambling activities fall outside of the range of application of the Federal Wire Act. During the same release, the DOJ went on to clarify that each US state has the authority to dictate its own destiny regarding online gambling, with the exception of sports betting, which is prohibited by this law.
How Does the Federal Wire Act Affect US Online Gambling?
First of all, the Federal Wire Act only applies to US based online gambling, and does not apply to any other jurisdictions around the world. It does effectively ban owning or operating any US based online sportsbook gambling business or website. This being the case, US players will have to rely on legally licensed and regulated offshore bookmakers for accessing sports betting entertainment. The Federal Wire Act does not prohibit US players from participating in legally sanctioned online sports betting services that are based outside of the United States.
Controversy Surrounding the Federal Wire Act
Many online sports betting proponents feel that the law is arguable based on the original intent of the law. They argue that the act was never intended to include the Internet because the Internet was not even conceptually viable or even a theory back in 1961, hence it could not have been included in the actual intent of the law itself. They feel that this is a legitimate argument, and that the government has interpreted the law to fit its desires concerning the scope of reach for application of the law. Proponents of how the law is being applied argue that the Internet is just another form of wired communication and that just because the lawmakers didn't foresee the inception of the Internet does not preclude it from being subject to the law itself. Both sides of the argument have valid claims and concerns, but ultimately it is up to the US DOJ to interpret and apply the law as it sees fit. Unfortunately for US sports bettors, it is currently an effective ban for US licensed online bookmaking services. Players who want to stick with US based sports betting destinations will be restricted to land based sportsbooks.
RAWA stands for the Restoration of Americas Wire Act and was introduced by Senator Lindsey Graham of South Carolina, and Utah Representative, Jason Chaffetz. The idea behind the bill would be to have the DOJ ruling from 2011 reversed which effectively left it up to each state as to whether or not they wanted to offer legal internet gambling.
Does the Wire Act Make All Options for US Online Sports Betting Illegal?
No it does not. The law does not prohibit US players from participating in legally licensed online sportsbooks that are located outside of the United States. The law only bans US based online sports betting activities, and does not have the power to reach into other jurisdictions to curtail their services.
Federal Wire Act Sources And Citations