U.S. and Sports Betting: Now DOJ Asked to Get Involved

A congressman who supports federal regulation of sports betting wants the Justice Department to weigh in on the question.

Republican James Sensenbrenner of Wisconsin, outgoing chairman of the House Judiciary Committee’s Subcommittee on Crime, Terrorism and Homeland Security, has written Deputy Attorney General Rod Rosenstein requesting an interpretation of the laws that pertain to online gambling𑁋the oft-cited federal Wire Act, specifically𑁋and what guidance Washington should be offering states that choose to regulate sports betting.

Pointedly, he asked whether the department foresees problems if Congress does not respond in a definitive manner to the U.S. Supreme Court ruling in May that nullified a longstanding federal ban on sports betting, declaring it unconstitutional.

There is history here and not all of it clear-cut.

What the Supreme Court did in May was to define, more or less, a sovereign right on the part of the states to determine for themselves the legality of gambling within their borders, specifically, in this case, gambling on sports.

There are other rulings, however, that appear to be up for grabs, such as a 2011 opinion from the Justice Department’s Office of Legal Counsel that extended that same right to internet gambling. That opinion was rendered in response to requests from state lotteries in New York and Illinois for clarification under the Wire Act regarding online ticket sales. Since the act forbids the transmission of betting information across state lines the OLC concluded that intrastate internet betting would appear to be perfectly legal. Importantly, the OLC was careful to exclude sports betting, which was illegal nationwide at the time under the 1992 Professional and Amateur Sports Protection Act, the law the Supreme Court nixed in May. As for interstate internet gambling, that had been effectively outlawed by Congress with the 2006 Unlawful Internet Gambling Enforcement Act.

Nonetheless, the OLC’s opinion has been firing up opponents of online gambling ever since, notably casino tycoon Sheldon Adelson, who has poured millions into an unsuccessful campaign to persuade Congress to pass a law called the “Restoration of America’s Wire Act” which would ban even intrastate gambling on the internet.

Now, with the Supreme Court’s PASPA ruling, there is belief in several quarters that Congress has a whole new can of worms to try to contain.

In September, Sensenbrenner’s subcommittee took testimony from representatives of the American Gaming Association and the Nevada Gaming Control Board, both of which oppose federal regulation in the wake of PASPA, and advocates of such regulation, including representatives from the National Football League and Adelson’s Coalition to Stop Internet Gambling.

The consensus of the subcommittee, though, was clearly pro-intervention. As Sensenbrenner put it, “We’re going to be in for huge amounts of trouble in the future.”

He echoed that sentiment in his letter to Rosenstein:

“We heard testimony that a significant portion of sports betting is projected to occur over the internet on mobile devices. Such wagering𑁋combined with the issuance of an opinion by the previous administration’s Office of Legal Counsel reinterpreting the Wire Act—will allow for exploitation of internet gambling by criminal and terrorist organizations to obtain funds, launder money, and engage in identity theft and other cybercrimes.

“It is clear,” he added, “that Congress has work to do to ensure the public is protected, and any potential for exploitation by criminals is minimized in this post-PASPA era.”

Of course, come January, with the Democrats regaining control of the House of Representatives, Sensenbrenner’s days as a subcommittee chairman are numbered, as are Judiciary Committee Chairman Robert Goodlatte’s, who has made no secret either of his anti-gambling sentiments.

Which is not to say there aren’t Democrats who also see a key role for the federal government in regulating sports betting. In July 2017, Senator Mark Warner of Virginia wrote to then-Attorney General Jeff Sessions expressing his support for a federal online gambling ban. Four months later, Senator Dianne Feinstein of California joined with Republican Lindsay Graham of South Carolina on a similar letter to the DOJ.

And, earlier this year, Charles Schumer of New York, who heads the Democratic minority in the Senate, proposed a set of guidelines for a federal regulatory bill that hasn’t appeared yet but could well be introduced when the new Congress convenes in 2019.

Of course, the federal courts will continue to play a key role as well, as a U.S. District judge proved earlier this month in shooting down a bid by the New Jersey Thoroughbred Horsemen’s Association and the state’s Monmouth Park racetrack to recover monetary damages from the major pro sports leagues and the NCAA for the legal battle they waged successfully over many years to preserve PASPA.