On Wednesday online poker players in the United States — and especially in Pennsylvania — received some good news on the legislative front.
The First Circuit Court of Appeals has ruled in favor of the New Hampshire Lottery Commission (NHLC) in its case against the US Department of Justice concerning the DOJ’s revised opinion of the Wire Act of 1961.
The ruling confirms a lower court’s decision that the DOJ’s new opinion was invalid. That revised opinion had attempted to interpret the earlier law prohibiting sports betting across state lines as also applicable to all forms of interstate online gambling.
In summary, the ruling means the DOJ’s 2018 opinion of the Wire Act no longer holds. Having jettisoned the new opinion, the DOJ’s interpretation of the law reverts back to a 2011 opinion stating the Wire Act only applies to gambling on sports.
In other words, states with legal online gambling can once again pursue multi-state agreements with less concern about such compacts violating federal law. That includes online poker, where the ability for states to share player pools will be a key factor affecting online poker’s growth in the US going forward.
Ruling could impact multi-state online poker agreements
The 2011 DOJ opinion came about nine months after “Black Friday.” That was the day the landscape for online poker in the United States irrevocably changed.
On April 15, 2011, the DOJ unsealed an indictment against top executives associated with the world’s largest online poker sites. The DOJ also leveled a civil complaint targeting the sites — PokerStars, Full Tilt Poker, and Absolute Poker/UltimateBet.
The charges included bank fraud, money laundering, and illegal gambling. The indicted were also charged with violating the Unlawful Internet Gambling Enforcement Act (UIGEA). Among the many consequences was for the sites to stop serving US customers altogether. For the period that followed, legal online poker went dark for Americans.
Later that year, the DOJ responded to a question about online sales of lottery tickets. The question concerned whether or not residents not physically located within the state could still purchase tickets. In December 2011, the DOJ responded with a memo declaring such transactions were not covered by the 1961 Wire Act prohibiting sports wagers being accepted over state lines via telephone.
That represented a change in perspective from what had come before, including when the UIGEA had been passed and finalized.
One consequence was for states like Delaware, New Jersey, and Nevada to begin legalizing online gambling shortly thereafter. Later Pennsylvania, West Virginia, and Michigan would pass laws legalizing online gambling as well.
After launching online poker rooms, Delaware and Nevada signed a multi-state agreement to share player pools in 2015. Later in 2017, New Jersey joined the compact as well. As a result, players on WSOP.com sites in those three states are currently able to play against one another.
Appellate court calls DOJ’s Wire Act interpretation ‘erroneous’
Pennsylvania legalized online gambling in 2017. At the time it appeared as though PA would likely join the multi-state agreement as well. However in late 2018 the DOJ’s Office of Legal Counsel issued its revised Wire Act opinion. The reinterpretation suggested such agreements ran afoul of federal law.
The New Hampshire Lottery Commission quickly filed suit against the DOJ. The NHLC based its case in part on the fact that the opinion would make multi-state lotteries illegal. That would include popular lotteries like the PowerBall and Mega Millions.
In June 2019, the NHLC won a favorable ruling in U.S. District Court and the new 2018 opinion was vacated. However the DOJ swiftly appealed. Now, a year-and-a-half later, the higher court has ruled against that appeal.
Much as the lower court had done, the appellate court ruled the DOJ’s attempt to reinterpret the Wire Act as applying to other types of gambling besides sports betting was “erroneous.”
One item highlighted in the ruling concerned the DOJ’s attempt to suggest a second reference in the Wire Act to “bets or wagers” that does not mention sporting events implied the law applied to other types of gambling.
But the appellate court sided with both the lower court and the NHLC. According to the ruling, an initial reference to “bets or wagers on any sporting event or contest” was also the intended meaning in the second reference.
In fact, the court ruled the DOJ’s interpretation introduced “unharmonious oddities” and demonstrated a “lack of coherence.”
Pennsylvania players hope for new sites, shared player pools
The DOJ’s action in 2018 understandably slowed momentum for states to pursue new multi-state agreements and try to share online poker player liquidity with other states. The appellate court’s ruling removes that obstacle.
The fact that the ruling coincides with the inauguration of Joe Biden as president might provoke optimism for some. After all, the DOJ opinion it vacates was a product of the outgoing administration.
It is likely premature to assume a Biden administration will be especially favorable to online poker in the U.S. That said, the ruling does confirm an opinion that emanated from the Barack Obama administration’s DOJ. Biden, of course, served as Vice President under Obama.
In any case, with PokerStars PA still the only online poker site up and running in the Keystone State, the question of whether or not Pennsylvania poker players will be able to play online against players from other states remains somewhat theoretical. PokerStars has yet to enter any multi-state agreements involving its only two US sites in New Jersey and Pennsylvania.
Meanwhile the WSOP has hinted it will launch in PA in 2020 (and perhaps soon), but has not yet confirmed when.
