Académique Documents
Professionnel Documents
Culture Documents
the
DOJ,
Poker
Hysteria,
and
the
Enduring
Importance
of
the
well-placed
Comma
by
Alfred
Denning
03
January
2012
People can foresee the future only when it coincides with their own wishes, and the most grossly obvious facts can be ignored when they are unwelcome. - George Orwell I remember well the sear of the strap across the knuckles of my scarlet hand in the headmasters office - a well-deserved correction, I readily admit, but one that I maintain to this day was administered with unseemly gusto. Some belligerence on my part to my English teacher impelled my long walk to the headmaster, in turn sparked by a disagreement over my copious use of multiple exclamation points in my writing, a practice I insisted was perfectly correct with all of the grace and tact of a cricket bat to the face. And so I take punctuation rather seriously. Over the holidays, the poker advocates, pundits, associations and online gaming lawyers have worked themselves into a froth. The cause? The US Department of Justice released an Opinion (dated September 20, 2011, but which became public in late December) regarding its interpretation of the scope of the Wire Act. Upon its public release, the Opinion was promptly declared by online gaming observers and lawyers a shocker, game-changing, a blockbuster, historic. Stock prices of online gaming companies and suppliers twitched. The Poker Players Alliance ejaculated a press release within minutes. There was much gnashing of teeth and rending of garments. And upon what did this Opinion ultimately turn? A comma. THE OPINION WHAT DOES IT ACTUALLY SAY Let us first understand exactly what happened. It all started so simply. New York and Illinois have developed proposals to use the Internet to allow in-state adults to purchase lottery tickets online. A simple enough idea. However, they were
concerned.
The
actual
Internet
traffic
was
to
route
outside
of
their
State
lines
and
they
also
wanted
to
use
transaction
processors
that
werent
necessarily
in
NY
or
IL.
They
were
fearful
that
this
interstate
element
would
trigger
the
federal
Wire
Act,
a
piece
of
legislation
implemented
in
1961
during
Robert
Kennedys
anti-Mob
crusade.
You
see,
though
the
language
of
the
law
seemed
to
limit
it
on
its
face
to
bets
or
wagers
on
sporting
events
or
contests
the
DOJ
had
consistently
taken
the
stance
that
the
Wire
Act
applies
to
any
inter-state
transmission
of
bets
or
wagering
(or
information
relating
to
bets
or
wagering).
So,
NY
and
IL
were
concerned
that
the
out
of
state
transmission
of
this
information
to
the
processors
would
run
afoul
of
this
federal
law
and
they
asked
the
DOJ
to
provide
an
Opinion
before
they
would
proceed.
The
entire
matter
turns
on
a
single
section,
which,
for
the
sake
of
clarity,
Ill
reproduce
here:
Whoever
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
placing
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
placing
of
bets
or
wagers,
shall
be
fined
under
this
title
or
imprisoned
not
more
than
two
years,
or
both.
Clearly,
the
drafter
of
this
clause
didnt
attend
my
English
class,
or,
if
he
did,
he
must
type
with
one
hand
today.
There
are
two
principal
sections
here.
Ive
inserted
numbers
and
bolded
text
for
clarity,
but
the
clause
breaks
down
thusly:
Whoever
being
engaged
in
the
business
of
betting
or
wagering
knowingly
uses
a
wire
communication
facility
for:
(1) 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,
or
(2) 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
placing
of
bets
or
wagers,
shall
be
fined
under
this
title
or
imprisoned
not
more
than
two
years,
or
both.
So,
the
Opinion
the
DOJ
issued
specifically
addressed
the
following
question:
Does
the
phrase
on
any
sporting
event
or
contest
modify
the
first
half
of
part
(1)
and/or
part
(2)?
Put
another
way,
are
all
the
references
to
bets
or
wagers
in
this
entire
section
intended
to
mean
bets
or
wagers
on
any
sporting
event
or
contest
or
are
there
two
classes
of
bets
and
wagers
one
class
limited
to
bets
or
wagers
on
sporting
events
or
contests
and
one
more
general
class
that
applies
to
all
bets
or
wagers?
MY
KINGDOM
FOR
A
COMMA
The
actual
case
law
on
this
question
was
always
limited,
but
it
was
split.
In
Re
Mastercard
in
2002
(an
internet
casino-only
case
i.e.
no
sportsbetting)
the
court
(upheld
on
appeal)
concluded
that
the
Wire
Act
applied
only
to
sports
betting
and
contests.
But,
the
district
court
in
Lombardo
(the
BetUS
case
obviously
implicating
sportsbetting)
in
Utah
in
2007
reached
the
opposite
conclusion;
an
instance
of
hard
cases
make
bad
law
if
ever
there
was
one.
Even
the
Congressional
Research
Service
(the
body
responsible
for
putting
together
legal
analyses
and
summaries
for
Congress)
acknowledged
that
the
language
permitted
either
interpretation
in
2006.
Ill
cut
to
the
proverbial
chase,
shall
I?
The
DOJ
Opinion
concluded
that
both
provisions
are
limited
to
bets
or
wagers
on
or
wagering
communications
related
to
sporting
events
or
contests.
Referring
to
legal
principles
of
construction
used
to
interpret
statutes,
the
context
and
history
of
the
passage
of
the
law,
and
the
fact
that
other
laws
were
being
passed
contemporaneously
that
dealt
explicitly
with
other
forms
of
gambling,
the
DOJ
publicly
changed
its
stance
on
the
breadth
of
the
Act.
It
should
be
noted
that
even
the
DOJ
pined
for
punctuation:
The
text
itself
can
be
read
either
wayit
does
not,
for
example,
contain
a
comma
after
the
first
reference
to
bets
or
wagers,
which
would
have
rendered
our
proposed
reading
significantly
less
plausible.
By
the
same
token,
the
text
does
not
contain
commas
after
each
reference
to
bets
or
wagers,
which
would
have
rendered
our
proposed
reading
that
much
more
certain.
As a result, the DOJ concluded that, since the lottery information passing beyond state borders was not in reference to bets or wagers relating to sporting events or contests, the Wire Act did not apply.
Cue the hysteria. SO WHAT DOES IT MEAN? It must first be said that this is an opinion of the DOJ, not a ruling or decree that is binding on a court. It lays out the DOJs policy stance and one could feel reasonably confident that it will reflect their decisions as to whether and when to bring charges under the Act going forward. Thats not to say charges would not necessarily be used as a lever in broader prosecutions, however. The Wire Act has been routinely cited historically in a grocery-list of allegedly implicated statutes whenever the prosecutors could shoehorn it into the indictment see World Sports Exchange / Cohen (1998 NY); Paradise Casino (2000 Missouri); Worldwide Telesports (2005 Washington, DC); BetOnSports (2006 Missouri); Neteller (2007 New York); ESI / Citadel (2007 New York). This is simply kitchen-sink indictment drafting, and hardly surprising it makes potential repercussions sound far scarier and (as it proven by history) substantially increases the likelihood of a settlement in advance of trial. It is also noteworthy that such opinions can be revoked or changed by this or subsequent administrations, though that is admittedly quite unusual. Furthermore, it does not affect the ability of Congress to pass any law changing the landscape entirely, or indeed to amend the Wire Act itself. The Poker Players Alliance promptly issued a press release entitled PPA Applauds DoJ Ruling: Online Poker Does Not Violate the Wire Act, which undoubtedly prompted the DoJ to scratch its collective head. Further complicating public perception, poker advocates have muddied the waters (one hopes inadvertently). For example, the executive director of the Poker Players Alliance John Pappas stated that the Opinion gives states the confidence to move forward with intrastate Internet poker. Why is this statement complicating? Because the Wire Act never applied to intra-state anything. Indeed, the only reasons NY and IL required the opinion at all was because they wanted to be sure that the transmissions out of state would not run afoul of the Act. I have been asked repeatedly these last weeks what, in my view, this all means. For those who are interested, these are my thoughts regarding the most common questions: Does this mean that the Wire Act doesnt apply to Online Poker? What the opinion affirms is that the DOJ considers the Wire Act to apply to bets or wagers relating to sporting events or contests and that in-state lotteries do not qualify as either. Period. It does not opine as to online poker specifically and in my view it would be a profound error to over-read the consequences of the Opinion, as there remains the very germane question of
whether poker would constitute a contest (or, indeed, even a sport, as some poker advocates have historically asserted). The question of betting on versus participating in a contest is not addressed by the opinion, so prudence dictates caution here. What about inter-state poker? If an Opinion could be secured that online poker was not a contest and that online poker rooms did not constitute transmission of bets or wagers on a contest, then its starting to get interesting. There would be no obvious federal barrier to states adopting a model similar to that developing in Canada states (like the Canadian Provinces) could choose to create regulatory regimes individually and then connect to other similarly-regulated States. Larger states with more significant internal liquidity may be less inclined to participate in a multi-state network, but market forces would quickly sort out the participants. It is certainly not without its complications, but I can see a path forward. What does this do to the likelihood of a Federal solution? What about the Barton proposal? Im going to commit the most egregious sin of an industry pundit Ill give a straight and unequivocal answer in writing. The Barton bill is DOA, an irrelevancy, a distraction. Its going nowhere other than a slow death in committee. In a Congress so fractured and paralyzed by ideological hardliners, and at this point in a Presidential election cycle and with both Houses of Congress up for grabs by either party, theres no sane politician inside the Beltway thats going to want to take on a potentially incendiary issue such as this in 2012, notwithstanding bipartisan support. The well-proven and well-worn federal political solution to such trigger issues is to simply punt to the states and wash ones hands of the matter. If online gambling liberalization happens in the United States, its going to happen on a state-by-state basis.
What effect will this have for international operators of online casinos or poker rooms? The effect is negligible. Of course, nothing has changed for foreign sportsbook operators. Sportsbooks or operators that also operate a sportsbook as a channel should be as mindful of the Wire Act as ever, as it squarely applies. Pure online casinos may have an argument now that the Wire Act does not apply to their operators, but there are plenty of other arrows (federal and state) in the prosecutors quivers. It is not true that there is now no federal law available. I frankly cannot trace how this meme started, but its categorically false. The Illegal Gambling Business Act makes it a federal crime to conduct, finance, manage, etc. any gambling business that is in violation of State law. And, of course, the UIGEA is similarly triggered for relevant activities. Since virtually every State either criminalizes unlicensed gambling operators, or prohibits non-governmental operators outright, there are ample options available to prosecutors (see Black Friday, where they used the underlying NY statute not a predominantly chance threshold, by the way to underpin/trigger the UIGEA charge). Even for poker or casino operators, prosecutors simply need to choose a state of prosecution, gather evidence to trigger the local state provision, which then triggers both the UIGEA and the Illegal Gambling Business Act at the federal levels, and potentially ancillary RICO or conspiracy charges. And then you always have the tax and RICO charges that are routinely included, and which also enable more viable extradition proceedings because they typically satisfy the dual criminality threshold for extradition, even from jurisdictions that have a regulated gaming framework. Allow me to conclude simply with a quote from Lynne Truss brilliant punctuation manifesto Eats, Shoots & Leaves: The rule is: dont use commas like a stupid person. I mean it. Its good advice.