Is that really the title I’m going with? Yes, I think it is.
Today’s post is a work in progress. I spotted something that interested me, but I am not an expert on gaming law, so my position on this is likely to evolve. Basically, there’s an interpretive mess concerning the regulation of online gambling that is not sports-related. In 2011, a memorandum opinion by Assistant Attorney General Virginia Seitz reinterpreted the Wire Act to not apply to in-state lotteries where some of the transmissions occur across borders. Because lotteries were not “sporting events or contests,” the reasoning went, it did not violate the Wire Act to transmit information using facilities operating in interstate commerce. This interpretation was overturned in 2018 by the Department of Justice.
The Wire Act is a federal law codified at 18 USC 1084. It reads in part:
(a) 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.
For some reason, I enjoy statutory interpretation, so let’s play with this one a bit. I don’t have formal training in diagramming sentences, but that one is a doozy, innit?
WHOEVER – The subject of our sentence is Ms. Whoever, who is in “the business of betting or wagering.” Against legal advice, Ms. Whoever uses an interstate-operating “wire communication facility” to transmit bets and wagers “on any sporting event or contest.” Ms. Whoever also transmits information to help people place bets on “any sporting event or contest.” Ms. Whoever further uses these interstate transmission methods for notifying recipients about their winnings. Ms. Whoever also uses interstate transmission methods to transmit “information assisting in the placing of bets or wagers.”
Following yet? No? Okay, maybe a picture would help. The following is a dramatization of a hypothetical email exchange. The facility through which the email is sent is not in the same state as Ms. Whoever. It’s the Internet, where the borders are made up and the points don’t matter.
Seitz’s 2011 memorandum said that lotteries are not “sporting events or contests” and therefore the Wire Act is not implicated by state lotteries that use out of state facilities to process in-state transmissions related to the lottery.
So just as a quick rewind, there’s a law about transmitting information about gambling, and for a few years, it was interpreted as only referring to sports gambling, supposedly facilitating the growth of the online gambling industry in all other areas. This interpretation was opposed quite adamantly by those already established in the casino industry. The interpretation was reconsidered and overturned in 2018.
One of the key parts of the disputed interpretation is the third clause, which refers to information on placing bets and wagers. A couple of commas above that, there was another prohibition about transmitting information on placing bets and wagers, but that clause specifically refers to sporting events and contests.
Even if it had been limited to sporting events or contests, why wouldn’t it have applied to online poker? ESPN covers poker tournaments! And (un)surprisingly, “sporting events or contests” is not defined in the statute. Why, then, did the Seitz memo and subsequent interpretations seem to assume that “sporting” modifies both “events” and “contests”? Referring to something as an “event” presumes a focus on the spectator, while referring to something as a “contest” presumes a focus on the participant. A contest, however, is not inherently about sports. There are beauty contests, and some games of chance are called contests.
For now, the Department of Justice is back to interpreting the Wire Act to apply to gambling-related transmissions on the Internet for non-sports betting as well. The fuzzy line between sporting events and contests, though, may appear in future discussions of statutory construction.