Mailbag Mythbusting: The Wire Act and Sports Betting, Explained (Part II)
By John T. Holden | Published: May 31, 2018 at 3:45 pm
May 31, 2018
This is the second in a six-pack of stories for Sports Handle discussing various federal statutes that in one way or another remain relevant to the expansion of legalized sports betting after the fall of the Professional and Amateur Sports Protection Act (PASPA). Check out Part I here. This information is provided for information and entertainment purposes only. Nothing contained in this series constitutes legal advice.
Alfred from California, Ed from Missouri, Mitt from Utah, Conor from New Hampshire, Mongo from Florida, Jackie from Indiana, Roy from North Carolina, Bill from Kentucky, and Cody from Arizona, write:
The Wire Act was intended to apply to all gambling that takes place over wired communications including poker and DFS. It wasn’t until an inaccurate memo leaked from the Justice Department that it was determined the Wire Act to only apply to sports gambling.
Thanks for the comment. This is not really a question, but nonetheless you are all wrong. The Wire Act has only ever been targeted at a narrow segment of the broader gambling industry. Sports gambling. This was clearly articulated by the Justice Department in 1961 during a Senate Hearing exchange between Senator Estes Kefauver (D-TN) and Assistant Attorney General Herbert Miller:
Senator Kefauver: I can see that telephones would be used in sporting contests, and it is used quite substantially in the numbers games, too. How about laying off bets by the use of telephones and laying off bets in big-time gambling? Does that not happen sometimes?
Mr. Miller: We can see that this statute will cover it. Oh, you mean gambling on other than a sporting event or contest?
Senator Kefauver: Yes.
Mr. Miller: This bill, of course, would not cover that because it is limited to sporting events or contests.
Senator Kefauver: Do you consider a boxing match a contest?
Mr. Miller: That is a sporting event or contest, yes, sir, normally.
Senator Kefauver: How about a wrestling match?
Mr. Miller: Yes, sir.
Senator Kefauver: I would think that would be more of a performance than a contest.
Mr. Miller: I do not watch them on television, but I understand that is a fact, more acting than wrestling.
The “memo” cited by the group was written by an assistant attorney general from the Office of Legal Counsel, Virginia A. Seitz, one of the most accomplished lawyers in Washington. The memo reflects accurately the legislative history of the statute’s authors who only ever intended the statute to apply to sporting events or contests. Additionally, the Seitz memo followed a finding from the Fifth Circuit Court of Appeals nearly a decade earlier, that the Wire Act applies strictly to sports gambling.
Though various efforts have been made in recent years to replace the Wire Act with a bill called Restoration of America’s Wire Act (RAWA), make no mistake, nothing is being restored. Neither a textual reading of the statute nor a review of the legislative history find any support for the conclusion that the Wire Act was supposed to prohibit anything beyond enumerated transmissions associated with sports betting.
[Also See: ‘Roxy’ Roxborough’s Keys to Successful Nationwide Sports Betting]
Cass from Oklahoma City, Oklahoma asks:
I saw a summary of the Murphy v. NCAA case on Twitter followed by #statesrights #tenthamendment can you explain to me how the federal government can take away my right to gamble when the Supreme Court just legalized sports gambling nationwide?
Wow. That is quite the question. First, please refer to this excellent summary of the Murphy case and its implications. Second, the concept that there is a right to gamble is likely spurious. Finally, to your question about the 10th Amendment. The 10th Amendment to the U.S. Constitution and the final amendment in the Bill of Rights states:
“The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.”
You are correct that the Murphy decision found that PASPA violated the 10th Amendment, but the Supreme Court’s ruling did not invalidate all federal statutes affecting sports gambling.
Normally, states can control activities that happen solely within their borders, provided that the Constitution does not give exclusive authority to the federal government (think issues like immigration or printing money). But the Feds have a powerful tool called the Commerce Clause, which allows them to regulate activities that affect interstate commerce.
The Wire Act’s reference to transmissions in interstate or foreign commerce in its second paragraph is a direct hint that the federal government is using its commerce power to regulate. The federal government is capable of restricting sports gambling through the Wire Act or a federal statute that does not rely on states to enforce the statute. Justice Alito made this abundantly clear.
With that said, Justice Clarence Thomas did not foreclose on the idea that a sports gambling scheme could exist that does not trigger the Commerce Clause, stating: “I do ‘doubt’ that Congress can prohibit sports gambling that does not cross state lines.” This echoed an opinion I earlier articulated in an amicus brief filed with the Supreme Court.
The 10th Amendment is likely not a compelling argument against an application of the Wire Act involving transmission across state lines; however, intra-state transmissions are almost certainly beyond the scope of the Wire Act, and Justice Thomas’ dissent in Murphy articulates support for the idea that if states are able to isolate gambling activities to their borders, they might be able to exclude the Feds.
Cass from Oklahoma City, Oklahoma asks (again):
What you are saying is that if a state can confine gambling to their borders, the Wire Act does not apply?
First, a reminder that I am a lawyer, but NOT your lawyer and nothing written here is legal advice. Secondly, even if the federal Wire Act can be taken out of play through geofencing technology or some other means of controlled access, some states have what are effectively intra-state Wire Acts. For example, Oklahoma prohibits the Dissemination of Gambling Information defined as:
Dissemination of gambling information is the transmitting or receiving, by means of any communications facilities, information to be used in making or settling bets. Provided that nothing herein shall prohibit a licensed radio or television station or newspaper of general circulation from broadcasting or disseminating to the public reports of odds or results of legally staged sporting events.
Roseanne from Lanford, Illinois, asks:
This is all just so fascinating to learn about this statute for the first time. I really learned a lot, but tell me, kind sir, where can I get some additional information?
Thanks, Roseanne. There are a few great resources that will help provide you with even more information about the Wire Act. Obviously, Sports Handle here and here are great resources. The most authoritative source on the rise of the Wire Act is Dr. David G. Schwartz from UNLV. He wrote an excellent book on the subject called Cutting the Wire. Additionally, Ben Hayes and Matthew Conigliaro wrote an academic article titled: The Business of Betting or Wagering: A Unifying View of Federal Gaming Law, which is quite informative.
Come back soon for Part III of “Mailbag Mythbusting” on sports betting and federal law, with a discussion of UIGEA.
John T. Holden J.D. / Ph.D. is an Academic. His research focuses on policy issues surrounding sports corruption. John is on twitter @johnsportslaw.
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