The U.S. Department Of Justice Restores America's Wire Act By Opinion

On January 14, 2019, the U.S. Department of Justice (“DOJ”) issued a new opinion memorandum from “the Office of Legal Counsel (“OLC”) regarding its interpretation of the Federal Wire Act. The Federal Wire Act is a federal criminal gambling statute enacted in 1961 as part of a package of laws to deprive organized crime of its funds from illicit gambling activities. The prohibition language of the statute is as follows:

(a) 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, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.

From 1961 until 2011, the DOJ held the position that the Federal Wire Act's prohibition of the transmission of wagers and wagering information applied to all forms of wagering. In part, the DOJ argued that the phrase “sporting event or contest” in the first clause of the prohibition applied to “sporting events” as separate from “contests. Namely, “sporting events” were athletic events and racing events, while “contests” encompassed all other forms of wagering.

In 2001, a federal court in Louisiana was faced with interpreting this language in a civil RICO action filed against credit card companies. The plaintiffs in the suit argued that the largest credit card companies in the country were part of a criminal gambling enterprise that violated the Federal Wire Act, and that they profited from this activity through credit card fees. The credit card companies resisted being held liable for the actions of merchants and argued that because the plaintiffs failed to allege any sports wagering, there could be no predicate Federal Wire Act offense on which to base the civil racketeering action. The federal court in Louisiana agreed with the credit card companies and the Fifth Circuit Court of Appeals affirmed the opinion. Despite this opinion that the prohibition on transmitting wagers applied only to sports wagers, the DOJ continued to assert that the Federal Wire Act applied to all forms of wagering. In a letter to Nevada gaming regulators in 2002, the DOJ affirmed that the Federal Wire Act...