A new, politically motivated Department of Justice interpretation of the 1961 Wire Act has raised questions about the ongoing, and future, regulated online gaming industry in the U.S. However, the state most ready to legalize and regulate online casino gaming next is planning to carry on with its efforts.
Late last year, the state of Michigan saw rare bipartisan support on legislation to legalize online casino gaming, which would have also paved the way for sports betting in the state. A stunning veto from outgoing Gov. Rick Snyder prevented the Lawful Internet Gaming Act from becoming law.
The bill’s sponsor, Republican State Rep. Brandt Iden, is still planning to push the measure this year, despite the DOJ memo, a spokesperson told MI Bets on Tuesday. The memo doesn’t carry with it the force of law.
“In regards to the new DOJ opinion, I believe the tentative plan is to have our policy and legal team take a look at it, but we will likely still move forward with the re-intro of last term’s gaming legislation,” the spokesperson said. “I do not believe this will delay the process on our end at all, at least not at this stage.”
Opinion could be a nothingburger
The legal opinion from the DOJ’s Office of Legal Counsel has raised more questions than it has provided answers. It was likely written for precisely that purpose. States with legal online casino gaming, as well as states with internet lottery services, will surely challenge the opinion in one way or another, likely through litigation, especially if federal authorities attempt to enforce the anti-states’ rights opinion.
There’s a 90-day window before potential enforcement of the DOJ’s view that virtually all forms of online gambling run afoul of the Wire Act, even if activity is intrastate. Enforcement of the absurd memo might never happen at all.
The opinion could be nothing more than a way to spook some state legislators across the country who are looking into online gaming in the wake of New Jersey’s states’ rights victory with the Supreme Court’s PASPA ruling in May 2018. It could also make banks and payment processors wary of state-sanctioned online betting, even though they shouldn’t be.
One thing the opinion does not do is make online gambling illegal.
“It is worth noting that OLC opinions are not binding precedent and have no immediate or discernible effect upon federal prosecutorial priorities,” gaming attorney Jeff Ifrah wrote in an analysis of the memo.
“This change in position, then, does not mean that U.S. Attorney Offices or Department of Justice Criminal Division sections will suddenly seek out federal prosecutions of online gaming where some aspect of the betting touches jurisdictions where gambling is illegal under state law,” Ifrah continued. “Rather, this Opinion is merely a change in interpretation and it remains to be seen whether this will be a new enforcement policy for the Department of Justice.”
Path forward in Michigan
Iden’s office told MI Bets that the legislation will likely be effectively identical to the version that Snyder vetoed. The legislation could be reintroduced in the House in just a few weeks.
Hopefully this time around the legislation won’t have to wait until the very end of the session before heading to the governor’s desk. The Lawful Internet Gaming Act passed the Michigan Senate late in the evening on the very last day of the session.
The new Wire Act memo could actually provide a catalyst for Michigan policymakers to act quickly.
Democratic Gov. Gretchen Whitmer, who was inaugurated on New Year’s Day, doesn’t have a known position on online casino, but she did signal support for sports betting in Michigan at a primary debate in July. Whitmer, a former member of the legislature, will more than likely not veto online gaming legislation that reaches her desk. She’s not an enigma like Snyder, which more than likely means her former colleagues won’t waste their time delivering a bill to her that she will reject.
All signs point to Michigan moving ahead with intrastate online casino. Whether the final legislation includes a provision to have the state share online poker players with other online gaming states is another question, as the reinterpretation might call into doubt state liquidity sharing more than anything else.