Department of Justice Adjusts Stance on Internet Poker
New Position Comes a Day After Nevada Adopts Web Poker Regualtions
On Friday, the Department of Justice publicly released a legal opinion that offered clarification on the Interstate Wire Act of 1961 — a federal law that has complicated efforts to legalize Internet poker.
The 13-page document dated Sept. 20, 2011, says the correct interpretation is that the law only prohibits sports betting.
The Wire Act was once interpreted as outlawing all forms of gambling across state lines, and was used by the DOJ in its prosecution of the operators of online poker sites.
One of the causalities of the Wire Act was Anurag Dikshit, co-founder of then PartyGaming, who reached a $300 settlement with the DOJ in 2008 for violating its provisions. The Internet gaming company subsequently left the U.S. market, but is now eying a return via a partnership with Las Vegas-based MGM Resorts.
Despite Nevada making substantial progress toward intrastate online poker, the memo was in response to New York and Illinois seeking to use the Internet for lottery sales. In fact, there is no mention of poker in the opinion from Assistant Attorney General Virginia Seitz.
Nonetheless, Anthony Cabot, attorney for Fertitta Interactive, said that the “significant decision” gives states the right to legalize a wide range of games for the Internet, without violating the Wire Act.
“It clears a legal point that has been out there for a long time, as to whether or not states can go forward and legalize games of chance or poker, within their own borders,” he said.
According to Cabot, since web poker is legal in Nevada and will occur intrastate, it’s completely legal under the Unlawful Internet Gaming Enforcement Act — a 2006 federal law banning financial transactions for gaming activities that are deemed illegal.
If poker on the web is legal in a given state, the UIGEA, which was a tool in charging the offshore operators in poker’s Black Friday, would not be implicated.
When asked if this all gives Nevada brick-and-mortar casinos the ability to eventually operate interstate, Cabot cautiously said it does.
“It is now conceivable that states can get together and try a compact, which is an agreement between the states to offer wagering,” Cabot said. “That has happened in the past, with regards to non-Internet based wagers, for example the state lotteries. Now, this will obviously require some negotiations between the states as to how you handle tax matters and those things.”
Ellen Whittemore, attorney for Nevada web poker applicant International Game Technology, said that the legal opinion “cracks open the door” for the interstate offering of poker.
Gaming consultant and professor I. Nelson Rose told Card Player that the DOJ’s new position could conceivably lead to U.S.-based online poker operators having their rooms open to an international player pool.
The American Gaming Association, which has been behind federal web poker legislation and not a state-by-state patchwork, responded to the announcement from the DOJ, saying it “validates the urgent need” for Congress to act.
The AGA declined to comment at this time on whether interstate online poker could now happen without a federal measure.
Cabot sees the opinion on the Wire Act increasing the pressure to get a federal bill done.
“I think it makes it more likely. Now the federal government will have to act relatively quickly if they want a federal regime to regulate online poker,” he said.
Cabot said that there could be a push on both sides of the political aisle for Internet poker. He said that Senator John Kyl (R-Ariz.), a historically staunch opponent to gaming in cyberspace, could now get behind poker in order to curtail the Internet having games of chance.
As for a jurisdiction with Internet gaming on the horizon, both Cabot and Whittemore don’t see Nevada speeding up the implementation of online poker as a result of the DOJ’s new position. “Nevada is going as fast as it possible can already,” Cabot said.
Whittemore said that Nevada already has “an aggressive position” on Internet gaming, and that regulators already knew what the DOJ stance was going to be.
Card Player reached out to Mark Lipparelli, chairman of the Nevada Gaming Control Board, but he declined to comment at this time.
Follow Brian Pempus on Twitter — @brianpempus
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