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 area of criminal activity.
The 2011 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 interstate sports betting, which is prohibited by this law.
2019 DOJ Legal Opinion RE: Federal Wire Act - Reverses 2011 Legal Memorandum
In early 2019, the DOJ released their 2019 formal interpretation of the Federal Wire Act. This interpretation dictates that all state-licensed online gambling is to be regulated through the Federal Wire Act. This includes casino gambling, sports, poker, lotto, and horse racing. Under the new interpretation, no interstate online betting is permitted. Each state had 90 days to comply, but this opinion is sure to be settled in a court of law soon.
This change, if enacted, will affect the states that have active interstate compacts that share player pools. We are expecting the issue to be addressed by multiple parties through lawsuits and court action. We will update this page as progress is made.
How Does the Federal Wire Act Affect US Online Gambling?
Today the federal wire act prevents US-based online sportsbook operators from accepting bets across state lines, from foreign citizens, or from foreign enterprises. Multiple individual states have already legalized domestic sports betting operations since PASPA’s repeal, and most of these regions have already launched or announced plans for online sports betting.
The Federal Wire Act in its present form will prevent these state-run operators from offering their online betting services to anyone located outside of the state lines. For states that don’t yet allow legal sports betting, residents are free to use legally sanctioned offshore sports betting services, which are not bound by the Wire Act.
Controversy Surrounding the Federal Wire Act
Many online sports bettors and industry insiders feel that the Wire Act is arguably based on the original intent of the law. Opponents of the law 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.
Proponents of the law 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 the US DOJ interpreted the Federal Wire Act as relevant to online sports betting and not other forms of online gambling.
Based on the current application, the law prevents US-based online sports betting services from accepting bets from across state lines or from foreign countries. Therefore bettors who live in a state without any type of state-regulated sportsbook gambling options will not have any domestic opportunities, but can alternatively place bets at reputable offshore sportsbooks without violating any laws.
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. As of 2021, the RAWA has not been further acted upon in Congress, though it could be revisited at any time.
Does the Wire Act Make All Options for US Online Sports Betting Illegal?
No, it only prohibits US-based online bookmakers from accepting bets across state lines or from foreign countries. The law does not prohibit US players from participating in domestic online betting that operates within the state in which they reside or from legally operating online sportsbooks that are located outside of the United States. The law only affects US-based online sports betting activities and does not have the power to reach into other jurisdictions to curtail their services.