Overview of the Wire Act
In the 1950s sports betting in the United States was largely controlled by the mob. Racketeers were taking advantage of the recently expanded telephone networks to accept bets remotely. The Wire Act of 1961 was the Federal response to this. It was a broad act designed to boost state anti-gambling laws by prohibiting transmission of bets and gambling information between states. This act also included wording covering transmission of bets to foreign countries.
This page gives you an overview of the 1961 Wire Act. First of all below the key passage of the act is reviewed, showing how this affected gambling for many years. Next, you’ll find information on how the Wire Act relates to internet gambling. This act was clarified in 2011, which set the ball rolling for some states to legalize online poker and casino games. This is covered at the end of the article along with a look at current attempts to broaden the scope of this law.
The 1961 Wire Act
Here is an excerpt from the key wording in the act:
“Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest…”
There are several aspects of this law which are noteworthy. First is the focus on those people in the business side of betting. This law was aimed squarely at the organizations taking bets, which were controlled by the mob. Individuals were not targeted by this law.
Another interesting point is that information assisting the placing of bets was also covered. This ensured that knowledge of the results of events (mostly horse races) could not be telephoned in advance.
Third, the wording targets only ‘sporting events or contest’. This leaves open the argument that games of chance, including casino games, are not covered by this act.
The Wire Act and Internet Gambling
This act was created before internet gambling was ever imagined.
The first time the question of whether this act related to online gambling was addressed came in a 2002 clarification statement from the Fifth Circuit judges. They stated that the act did cover sports betting on the internet. They also added that it was unclear whether games of chance (casino games) were covered by the act.
The landscape changed for online gambling in 2006. The UIGEA law, passed as an addition to a sea-port security bill, borrowed a lot of wording from the Wire Act. This made financial transactions between US banks and gambling site operators illegal.
The default view was that a combination of the Wire Act and UIGAEA effectively made internet gambling illegal from that moment on. Publicly listed operators quickly pulled out of the US. Many offshore operations continued to offer their services, based on gambling being legal in their jurisdictions – arguing that free trade agreements allowed them to take US wagers from abroad.
2011 Clarification of the Wire Act
The State of New York requested a further clarification of the Wire Act in 2011. The Department of Justice clarified this act by stating that:
“Interstate transmissions of wire communications that do not relate to a "sporting event or contest" fall outside the reach of the Wire Act.”
This meant that poker and casino games were effectively no longer covered by this act. This set off in-state legislative efforts to regulate and tax online poker and casino games. Delaware, Nevada, and New Jersey already have their own online poker sites. These have started slowly, with smaller than expected revenues – however they are still projecting growth.
Moves to Tighten the Wire Act
A bill was introduced in the Senate in the 2014 legislative session which seeks to amend the original Wire Act. Senators Graham and Chaffetz have proposed the bill to specifically include the internet and broaden the scope of the bill from sport betting only to cover all forms of gambling.
Though this bill has support from some conservative senators and many anti-gambling lobby groups (including those backed by Sheldon Adelson), it is not expected that this bill has enough support to make it through to a vote.
Gambling at Offshore Sites
There are some long running and reputable brands accepting wagers from many states from offshore locations. Depositing at these sites is made possible using international credit card transactions and money transfer services. You’ll find operators in all the major gambling verticals including sports betting, poker, and casino gaming.
Until state gambling becomes established, and networks of states help form the critical mass which will allow online gambling sites to be successful, offshore operators will continue to offer the best solution. Remember that no Federal law prohibits individuals from enjoying online gambling, as both the Wire Act and UIGEA are aimed only at the business and banking side of gambling online.