THE FEDERAL WIRE ACT AND THE FUTURE OF US ONLINE BETTING
Although completely changing the landscape of the US gambling industry, the much-spoken U.S. Supreme Court’s May decision striking down the 1992 Professional and Amateur Sports Protection Act (PASPA) however did not automatically legalize sports wagering throughout the States. Although each of them may now freely choose whether to legalize/regulate sports betting, the 1961 US Federal Wire Act remains in force as the most important federal law affecting the future of the market.
The main question posing from this topic is what happens with the legal status of online sports betting, with particular emphasis to that across the USA states border lines?
A quick guide to the 1961 Federal Wire Act
Adopted all the way back in 1961 to curb out organized crime, the Federal Wire Act criminalizes a) interstate transmission of bets and wagers as well as b) interstate transmission of information relating to placing or assisting in placing of bets and wagers c) through wire communication facilities (that is, telephone and nowadays internet).
These provisions, applying exclusively to sports betting, mean that any wire communication (including the Internet) which goes outside the borders of a US state to another state or abroad, for the purposes of sending/receiving sports bets or information relating to those bets, is prohibited (as per the section 1804a).
A slower-than-expected expansion of US state regulation of sports betting?
As many experts in the filed had timely anticipated, backed by the 2011 US Department of Justice’s interpretation of the Wire Act, the US online sports betting’s legal status is as follows: regardless of the Supreme Court’s turning down of PASPA, the Wire Act is to remain massive legal obstacle for a US-wide circulation of sports bets.
This is because the Wire Act continues to criminalize the interstate transmission of all bets on sporting events, regardless of their legal status in a particular state. One of the main reasons for a relatively slow state-by-state sports betting legislative roll-out so far can be found precisely in this 1961 piece of legislation.
In spite of post-PASPA US market, the Wire Act is alive and well
Even in those situations where both the state where the bet is to be placed and the state where that bet is received, recorded and processed, had legalized sports betting, online betting between them is still prohibited.
First of all, it needs to be highlighted once again that current Federal Wire Act not only prohibits inter-state sports bet within the USA but also all bets originating from foreign countries, regardless of whether these jurisdictions are regulated, offshore or prohibited in terms of sports betting. This view has also been re-confirmed by Industry’s leading legal experts after the removal of PASPA ban.
Time for a federal amendment? Yes, but not to be expected soon
There are several reasonable arguments in favour of amending the Wire Act. All of them are clearly visible whenever we recall on a huge number of US customers currently registered at foreign offshore sites. Without any doubt, this fact points out to the need of creating a competitive alternative to the black market – sports betting online (and mobile) offer.
However, this could be done only through the federal legislature, which is not at sight at the moment. That’s why the future of online sports betting in the USA remains vague, uncertain and, for the time being, to be regulated differently from state to state.