Department of Justice Slows Growth of Online Gambling With Ruling

It would appear the gauntlet has been tossed down between land-based casino operators and online casino interests. 

In 2011, the Department of Justice (DOJ) issued an opinion, confirming its position that the 1961 Wire Act (prohibits online gambling) was only applicable to sports betting. With the recent rise in popularity of online casino gambling among Americans, a consortium backed by billionaire casino executive Sheldon Adelson has been pushing the DOJ to take another look at its original position. It's clear that the land-based casino operators are looking to maintain its hold over the US dollars being wagered across all sources. 

Now comes a report that DOJ, under Rod Rosenstein, has issued a 23-page opinion by the department's Office of Legal Counsel. The report essentially reverse its original opinion and states that the 1961 law in fact applies to all forms of online gambling that might cross state lines. 

This is a devastating blow to the youthful online gambling industry in America. With many states currently processing legislation to approve such activities, everyone is going to be scrambling to reassess how its law are written and are intended to be enforced. This will be a particularly strenuous task for states that currently allow out-of-state residents to bet on horse races and through online casinos and online lottery operations. 

It's a good bet online casino operators and industry participants are sure to take this ruling to court. Too much time and money has been invested to get things operating as smoothly as they are currently operating. For now, the DOJ has given the states 90 days to comply with this new ruling. 

The effect this will have on online gambling enthusiasts is hard to predict. If upheld by the courts, each state would have invest a lot of money and develop tight rules to control the use of its online gambling sites by residents of other states. It's also not clear if the DOJ would go after gamblers or simply fine and/or shut down any online gambling operations that prove incapable of policing its customers. 

Some experts believe this is a ploy to put pressure on state legislatures to allow some level of federal regulation and taxation over the entire online gambling industry. It might not be a coincidence that this ruling was issued on the heels of the Democrats taking control over the House of Representatives. Both sides of the issue will be digging in.