Restoration Of Americas Wire Act Explained (RAWA)

The goal of RAWA is to reverse the DOJ ruling in 2011 which determined that the Federal Wire Act only applied to sports betting.

LawbookAs is often the case with issues facing government and our nation, the Restoration of America's Wire Act involves many peripheral issues and places a lot more at stake than what meets the eye. What was originally intended to be used to fight organized crime has now been used to try to stop internet-based gambling completely.

However, it also involves issues of state versus federal rights, the rights of different government entities, such as the Department of Justice, and even the reoccurring issue of our Senators and Congressmen being bought out. We will delve into the intricacies of RAWA, it's hurdles, and potential local economic impact if passed.

An Introduction To RAWA

In the spring of 2014, Senator Lindsey Graham of South Carolina, and Utah Representative, Jason Chaffetz, officially reintroduced legislation into Congress with the goal of restoring the federal Wire Act. The bill is known as the Restoration of America's Wire Act, or RAWA for short. The goal of this bill is to reverse the Department of Justice's ruling from December 2011 that stated the Wire Act only applied to sports betting. Since then, Senator Marco Rubio of Florida has also sponsored this bill in the Senate.

What Is The Federal Wire Act?

In 1961, the Federal Wire Act was passed with the help of then U.S. Attorney General Robert F. Kennedy. This act sought to decrease organized crime and the threat of organized crime in America, by hitting the mob's most profitable enterprise; the accounting records on sports gambling and horse racing. It prohibited gambling with the use of the communication systems of telephone and telegraph, our nation's only systems of that type at that time.

Many in Congress have tried to use the Wire Act to make online gambling illegal. After being dormant for a while, the late 1990s saw a resurrection, so to speak, of the Wire Act as it was used to try to prosecute offenses of online gambling. However, in 2011, the Department of Justice announced that the Act would only apply to sports gambling. This cleared up any remaining ambiguity and allowed individual states to make their own rules and regulations about online gambling.

RAWA & The Trump Administration

Supporters of the Restoration of America’s Wire Act hoped 2017 would be a year of resurgence for the ambitious legislation. President Donald Trump’s appointment of Jeff Sessions as Attorney General sparked conversations that RAWA had a chance.

The Attorney General spoke of his disagreement with the US Department of Justice and their interpretation of the Federal Wire Act. He went so far as to say that he would “revisit their position” regarding the matter.

As far as actual Congressional efforts, nothing significant has occurred yet. One particular note of importance is that Sheldon Adelson, a brick-and-mortar casino mogul and known opponent of legal online gambling, has been making donations to the Trump administration.

Some analysts believe that his donations are a form of lobbying for Trump to crack down on iGaming restrictions. While Trump has many donators supporting his tenure, he has singled out Adelson as a valued supporter. Adelson and his wife even sat a few rows behind Trump as he was being inaugurated.

How The Restoration Of America's Wire Act Could Potentially Change The Online Betting Industry

The Restoration of America's Wire Act would essentially rewrite the Federal Wire Act of 1961. It would extend the Wire Act and make illegal most types of gambling online, even if it was legal at a state level. This bill would restore the original interpretation of this act and has the dangerous potential to affect all types of betting or wagering online, not just sports betting.

There are several exceptions made within the bill, however, there are no exceptions for online poker or several other types of online gambling and betting. State lotteries, fantasy sports, and horse racing would also be exempt if RAWA were to pass.

The Power Of The Department Of Justice

Some proponents of RAWA argue that they only want to stop the Department of Justice from being able to reinterpret laws. Additionally, they say they only want the Wire Act restored to its original language and power before it was redefined by the Department of Justice. Supporters of RAWA claim they just want the Act interpreted as it was originally intended, which makes online gambling illegal on a federal level.

2019 DOJ Opinion

The Department of Justice revisited their 2011 Memorandum on the Wire Act in early 2019 and reinterpreted which forms of gambling would be included under the prohibition of interstate wagering. Due to their reinterpretation casinos, poker sites, iGaming, iLottery, sportsbooks, brick and mortar lotteries, and race tracks now must comply with intrastate standards and localize their servers, data, and information.

Private Interests

Interestingly, Sheldon Adelson has financially contributed to, fund raised for, and supported Both Republican Sens. Graham and Rubio in their past campaigns. Adelson says he is in strong support of the bill and believes society needs to be protected against the dangers of online gambling.

Julie Borowski of FreedomWorks believes that Adelson, the chairman and CEO of the Sands Casino doesn't want any competition for his casino and he has no problem running to his friends in the government for help and paying them off for it later.

2 Senators Try And Revive RAWA

The latest attempt at bringing RAWA back to life came through a letter penned by Senators Lindsey Graham and Dianne Feinstein to President Donald Trump. The letter followed Pennsylvania’s recent decision to legalize online poker and casinos—the fourth state to do so after the DOJ overturned the Federal Wire Act’s ban.

Graham and Feinstein argue that expanding the gambling industry will lead to negative societal impacts, but the truth is that consumer provisions implement gambling addiction assistance and protections for ensuring minors cannot access state-regulated sites. Interestingly enough, both Graham and Feinstein have received support from Adelson in the past.

They also argue that the Federal Wire Act has prohibited online gambling for 50 years. However, online gambling didn’t exist when the Federal Wire Act was passed in 1961. The wording of the law has been loosely applied to online gambling with no true validity. The letter attempts to cite the FBI’s investigation into online casinos by saying they found online casinos to be vulnerable to illegal activities by criminal groups.

Truth is, the investigation found that any competent online casino venture would be able to detect and proactively any block any sort of fraudulent activity. It is unlikely that this letter will be anything more than a correspondence fallen on deaf ears, especially with the weak arguments made, but it shows that RAWA supports are not ready to give up the fight.

Interpreting The Original Wire Act

To analyze the text of the original act and discussions between Robert F. Kennedy, his assistants, and those held by Congress in Committee meetings is to understand that it only applied to the prohibition of sports gambling transmissions. In his testimony to Congress on May 17, 1961, RFK said that the purpose of the Wire Act was to help the states enforce their laws that pertained to gambling and bookmaking. Studying his testimony reveals that RFK's goal with the Wire Act was to make illegal some forms of gambling, but not all of them.

RAWA's Hurdles

RAWA has many hurdles to clear before it has any chance of being signed by President Obama. These include:

  • Coming to the floor of Congress during an election year
  • The complications involving Sheldon Adelson's support
  • Conservative groups against RAWA due to its affront to the rights of each individual state
  • State lottery directors who oppose RAWA, as well as most commercial casinos
  • Opposition in the House and the Senate

Currently, RAWA remains in committees in the House and the Senate. It is important for people to understand that if RAWA were to pass, all internet-based gambling would be illegal, and, therefore, punishable by fines and imprisonment. In addition, it would be a slap in the face to state's rights and the Department of Justice while simultaneously patting those like Sheldon Adelson, who buy the votes of elected officials, on the back.

Economic Impacts

If RAWA were to pass, states that currently offer legal online gambling would be immediately rendered illegal. This would have a deep impact on local economies. Currently, online gambling is legal in Delaware, Nevada, and New Jersey. Stringent legal requirements bring many jobs to these states, such as customer support, fraud prevention, marketing, compliance, and accounting. In addition, in these states the gaming servers are required to be located within the state, bringing more jobs and economic gains.

Online gambling brings in millions to these states in tax revenues. If RAWA were to pass, that would also halt immediately. In 2014, it is estimated that online gambling brought in $20 million in direct tax revenue. Indirect revenues also add up to tens of millions more in revenue for the states.

Many across party lines oppose the passing of RAWA. With state's rights being violated, the Tenth Amendment being ignored, individual privacy and rights being trampled upon, and millions upon millions in lost revenues for states who already allow online gambling, it seems like no one will win, except for Sheldon Adelson, if RAWA passes. However, with so many challenges to RAWA, it seems unlikely that Congress will be debating it in the near future. The future of legally regulated online gambling remains hanging in the limbo until then.

Sources And Citations Related To RAWA