Online Gambling

Is Jeff Sessions Ready to Ban Internet Gambling by DOJ Fiat?

Prohibitionists want the next attorney general to criminalize online betting by rewriting federal law.



During his confirmation hearing on Tuesday, Jeff Sessions promised that as attorney general he would "revisit" a 2011 Justice Department memo that interpreted the Wire Act of 1961 as applying only to sports betting, which opened the door to state-regulated online gambling. The implication was that Sessions might revert to the department's earlier position on the statute, which implausibly read it as banning all forms of internet-assisted betting, even those permitted by state law.

Although Sessions' comments set off alarm bells among online poker fans and other supporters of legalization, it's not clear how serious he is about reversing the DOJ's position. The Alabama senator said he was "shocked" by the 2011 memo and "criticized it." But it was obvious he had not read it, and there seems to be no public record of his opposition to it.

Sessions was responding to a question from Sen. Lindsey Graham (R-S.C.), sponsor of a bill that would amend the Wire Act to ban all online gambling. The bill, which is backed by Republican mega-donor Sheldon Adelson, who is keen to wipe out online competition with his casinos, is called the Restoration of America's Wire Act. But it does not "restore" anything; it rewrites the 1961 law by excising its reference to sports betting and inserting language about the internet.

To give you an idea of how big a loon Graham is on the subject of online gambling, he tried to justify his bill on national security grounds during the 2015 confirmation hearings for Attorney General Loretta Lynch. "Would you agree with me that one of the best ways for a terrorist organization or criminal enterprise to be able to enrich themselves is to have online gaming?" he asked. Lynch allowed that "those who provide the material support and financing to terrorist organizations…will use any means to finance those organizations." She declined to offer an opinion on the DOJ memo, saying she was familiar with its conclusion but had not read it.

Although Sessions clearly had not read the memo either, he was eager to appease Graham. "I was shocked at the memorandum…that the Department of Justice issued with regard to the Wire Act and criticized it," he said. "Apparently there is some justification or argument that can be made to support the Department of Justice's position, but I did oppose it when it happened." Apparently there is some justification? Wouldn't you want to consider the DOJ's reasoning before criticizing its conclusion? It seems that's not necessary when you're a senator, but Sessions promised to do so after taking charge of the Justice Department. "I would revisit it," he assured Graham, "and I would make a decision about it based on careful study."

If Sessions really does study the issue carefully, he will find that the DOJ's current interpretation of the Wire Act is much more faithful to the text and history of the law than the interpretation the department repudiated. The Wire Act, which was a response to the involvement of organized crime in sports betting, made it a felony to use "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." Prior to 2011, the DOJ implausibly insisted that the phrase "on any sporting event or contest" does not modify "bets or wagers" and therefore does not restrict the law's scope to that kind of gambling. But the 2011 memo, a 13-page document prepared by the DOJ's Office of Legal Counsel (OLC) in response to questions about online sales of state lottery tickets, concluded that "the Wire Act prohibits only the transmission of communications related to bets or wagers on sporting events or contests."

There is nothing at all "shocking" about that position, which was endorsed by the U.S. Court of Appeals for the 5th Circuit in a 2002 ruling that rejected Wire Act charges against the operators of websites offering casino-style games. The 5th Circuit matter-of-factly observed that "the Wire Act does not prohibit non-sports internet gambling." In a letter responding to Sessions' comments, the Competitive Enterprise Institute (CEI) and six other organizations note that "the OLC memo was not a 'reinterpretation' of the Wire Act's intent; it merely restored the law to its original meaning."

It is not clear on what grounds Sessions "criticized" and "oppose[d]" the DOJ memo, or even that he did so. A search of his office's website turns up zero references to the Wire Act, and a Nexis search of news stories and transcripts since December 2011, when the memo was posted, finds no comments about it by Sessions.

Sessions, a social conservative, is no fan of online gambling but has not said much about it since he was elected to the Senate in 1996. "With the exception of his first two years as a United States senator," the Online Poker Report noted in November, "by and large, Sessions has avoided gambling issues." In 1997 Sessions announced that he was cosponsoring the Internet Gambling Prohibition Act, saying, "I am troubled by how easy it is for children to pick up their parents' credit cards and gamble on the Internet." But he never actually got around to cosponsoring the bill that year or in 1999. Nor was he listed as a cosponsor of Graham's bill in 2013-14 or last session.

Notably, Sessions said the 1997 bill would "update the law by extending existing prohibitions against gambling to the Internet," which contradicts Graham's premise that the Wire Act already bans online gambling, so that his bill merely "restores" the law's original meaning. That premise is pretty hard to swallow, since Congress passed the law decades before the internet existed and expressly limited its scope to sports betting.

Sessions may not approve of online gambling, but his job as attorney general will be to enforce the law as written, regardless of his personal policy preferences. "We appreciate nominee Sessions' pledge to give the issue 'careful study,'" says the Poker Players Alliance, "and we also have no doubt that such careful study will reaffirm what OLC, the courts and Congress already agree on: the Wire Act is limited to sports betting and states may regulate other forms of internet gaming."

Supporters of Graham's bill claim it would protect the prerogatives of states that refuse to let their residents play games for money, when in fact it would blatantly violate federalist principles by overriding the decisions of states that choose to legalize internet gambling. CEI warns that reading the Wire Act the way Graham prefers "would severely injure one of our nation's founding principles: the idea that the federal government's power should be limited and states should be free to regulate intrastate commerce as they see fit." It urges Sessions to defend the 10th Amendment by "rejecting cronyist calls from casino interests to create a national gambling ban."