The 1961 Federal Interstate Wire Act does not Prohibit Online Poker

After researching the 1961 Federal Interstate Wire Act, I conclude that online poker playing is EXCLUDED from its reach for the following reasons:

1) The WORDS of the statute specifically prohibit SPORTS BETTING and nothing more.

2) The LEGISLATIVE HISTORY indicates the statute was aimed at organized crime, specifically in the area of sports betting.

3) CASE LAW construes the statute as applying to sports betting.

4) The only CASE ON POINT to address the issue specifically found that the Wire Act does not apply to online gambling; and

5) Recent PROPOSED AMENDMENTS to the Wire Act demonstrate that legislators do not believe that the statute prohibits online gambling. I will explain my conclusion below.

The world's first virtual online casino, Internet Casinos, Inc. (ICI) opened its doors on August 18, 1995 . Whereas it might cost $300 million to build a new resort casino that employs thousands, ICI's virtual casino was developed for only $1.5 million, which made it a financial dream to run an online site as opposed to the expense of running a casino.

Since that time, it is now estimated that 1,800 gambling web sites have opened. Teams of attorneys specializing in gaming have been working overtime analyzing whether online gambling is legal, whether gamblers and advertisers can be held liable therefore, and whether the Wire Act prohibits playing poker online. There are no conclusive answers because the United States Supreme Court has not spoken on the issue. There is, however, sound legal reasoning based on the time-honored concept of stare decisis . The concept of stare decisis (literally "to stand on the decisions") means that where there are long standing rules of law, they should not be overturned lightly. In the case of the Federal Interstate Wire Act, the long-standing rules of statutory construction militate against a conclusion that the Wire Act regulates online poker playing.

Some people have cited the 1961 Interstate Wireline Act (18 U.S.C. section 1084) claiming that it prohibits online poker playing. My best prediction is that the Wire Act does not speak to online poker playing at all and I will explain why with legal citations for those so inclined.

Title 18 USCS section 1084 speaks to the transmission of wagering information. Congress enacted this section as part of a series of legislation supporting a federal policy against organized racketeering.

Subsection (a) of section 1084 states in relevant part:

"(w) hoever 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 pacing 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 pacing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both."

Even forgetting that the statute requires a WIRE TRANSMISSION and the Internet is now capable of being accessed in a wireLESS fashion, the operative words of the statute are "SPORTING EVENT OR CONTEST". There are systematic and mandatory rules of statutory construction. This means that the United States Supreme Court has specifically told us HOW we must construe and interpret a statute.

The first rule is that we are required to look at the plain meaning of the words of a statute. "When interpreting a statute, a court looks first to the language of the statute" (Richardson v. United States (1999) 526 U.S. 813, 818). "Courts in applying criminal laws generally must follow the plain and unambiguous meaning of the statutory language" ( Salinas v. United States (1997) 522 U.S. 52, 57). "Only the most extraordinary showing of contrary intentions in the legislative history will justify a departure from that language" ( Id . ).

When we consider what activity the statute prohibits by its clear language, the plain words state that it prohibits certain activities relating to a SPORTING EVENT OR CONTEST. Even the exception to the rule reiterates that what is at issue is a SPORTING EVENT OR CONTEST.

Section (b) of the statute carves out an exception to the rule, instructing that the Wire Act shall not "be construed to prevent the transmission in interstate or foreign commerce of information for use in news reporting of SPORTING EVENTS OR CONTESTS" from a state or country where betting on the sporting event or contest is legal to another state or country where such betting is legal." 18 U.S.C. section 1084(b).

It is noteworthy that the rule and the exception reiterate that it is a SPORTING EVENT OR CONTEST that is at issue. Next, even if there were some ambiguity in the words of the statute, there is also a rule of statutory construction which states that if there is an ambiguity, the defendant and NOT the state is entitled to the benefit of that ambiguity. See In re Jeanice D. (1980) 28 Cal.3d 210, 217, where the court held that "When language which is reasonably susceptible of two constructions is used in a penal law, that construction which is more favorable to the offender will be adopted."

As we analyze the statute, the first important point is that the WORDS clearly state that SPORTS BETTING is at issue. If that were not enough, courts have already construed the statute as requiring a sports event. See United States v. Kaczowski , 114 F. Supp. 2d 143, 153 (W.D. N.Y. 2000) (Wire Act "prohibits use of 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"); United States v. Sellers , 483 F.2d 37, 45 (5th Cir. 1973)(overruled on other grounds in United States v. McKeever , 905 F.2d 829 (5th Cir. 1990))("the statute deals with bookmakers"); U.S. v. Marder , 474 F.2d 1192, 1194 (5th Cir. 1973) (first element of statute satisfied when government proves wagering information "relative to sporting events").

When the plain language of the statute and case law interpreting the statute are clear, there is no need to go to the second step, which is to look to the legislative history of the Act. ( In re Abbott Laboratories , 51 F.3d 524, 528 (5th Cir. 1995). Remember the legislative branch MAKES the laws and the judiciary INTERPRETS the laws. When the law is clearly stated, no interpretation is required.

However, in the case of the Wire Act, there is conclusive evidence that the legislators' INTENT and UNDERSTANDING is that the statute applies to sporting events only. As to the legislative intent at the time the Wire Act was enacted, the House Judiciary Committed Chairman explained "This particular bill involves the transmission of wagers or bets and layoffs on horse racing and other sporting events." See 107 Cong. Rec. 16533 ( Aug. 21, 1961 ).

As to the legislators UNDERSTANDING, one need only review recent legislative proposed amendments to the Wire Act. Recent legislative attempts have sought to amend the Wire Act to encompass "contest[s] of chance or a future contingent event not under the control or influence of [the bettor]" while exempting from the reach of the statute data transmitted "for use in the new reporting of any activity, event or contest upon which bets or wagers are based." See S.474, 105th Congress (1997). Similar legislation was introduced the 106th Congress in the form of the "Internet Gambling Prohibition Act of 1999." See, S. 692, 106th Congress (1999). That act sought to amend Title 18 to prohibit the use of the internet to place a bet or wager upon "a contest of others, a sporting event, or a game of chance. . ." Id .

Further, some have postulated that when the U.S. Attorney for the Southern District of New York Mary Jo White indicted 21 online gambling operators under the Wire Act, she acknowledged the limitation of the Wire Act in a public statement where she stated: "[W]e will vigorously prosecute any use of the Internet to conduct criminal activity. Federal law clearly prohibits anyone engaged in the business of betting or wagering from using interstate and international wire communications, including the Internet and telephones, in connection with betting on SPORTS events."

Finally, there is at least one judge who was already faced with the precise question addressed herein. In the case of In Re Mastercard International , decided on February 23, 2001 , the Honorable Judge Stanwood R. Duval, Jr. was faced with whether the Wire Act applied to online gambling. The suit was brought by deadbeats who didn't want to pay their gambling debts so they brought suit against credit card companies alleging the credit card companies violated the 1961 Wire Act by allowing them to use the credit card to put money online at a poker site.

The judge analyzed the statute precisely as I have here and he concluded that the Wire Act only prohibited wagering on SPORTS EVENTS. "Comparing the face of the Wire Act and the history surrounding its enactment with the recently proposed legislation, it becomes more certain that the Wire Act's prohibition of gambling activities is restricted to the types of events enumerated in the statute, sporting events or contests." ( Id. 132 F. Supp.2d 468, 482.)

In any event, by its language, the Wire Act applies to persons "in the business of betting" and therefore does not apply to the individual bettor. The courts have agreed with this interpretation, finding that the Wire Act does not apply to mere players, no matt er how substantial or how frequent their bets. See United States v. Baborian , 528 F. Supp. 324, 328 (D.R.I. 1981).

In sum, The Wire Act does not regulate on line poker playing because the WORDS of the statute specifically prohibit only sports betting, the LEGISLATIVE HISTORY indicates the statute was aimed at organized crime (specifically in the area of sports betting), CASE LAW construes the statute as applying to sports betting, the only CASE ON POINT to address the issue specifically found that the Wire Act does not apply to online gambling, and recent PROPOSED AMENDMENTS to the Wire Act demonstrate that legislators do not believe that the statute prohibits online gambling.

Allyn Jaffrey received her Bachelor of Arts from the University of California at Irvine in 1977, where she graduated cum laude and became a member of Phi Beta Kappa . She is a practicing criminal defense attorney, having received a Juris Doctorate with scholastic merit from Western State University , where she served as Research Editor and Executive Editor of Law Review in 1982-1983. She has lectured all over California , teaching other attorneys the fine points of criminal defense. She specializes in legal research and her areas of expertise include the filing of extraordinary Writs, Appeals and motions where a lower court judge commits legal error or where the police or prosecutors engage in misconduct. Ms. Jaffrey has been closely following the development of gaming law and the Internet ever since Jay Cohen was convicted in New York of operating a sports betting business from Antigua in violation of the Wire Act.

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