What the DOJ Opinion Means for Online Poker in NJ and PA

Poker players across the country, including in New Jersey and Pennsylvania, are wondering what this week’s Department of Justice opinion on the Wire Act means for online poker. The new opinion reversed a previous department opinion of the act, which stated that the Wire Act affected sports betting only.

The new opinion stands in stark contrast to the previous one. As Online Poker Report noted:

“The new opinion now makes the Wire Act applicable to any form of gambling that crosses state lines, including online gambling and online lottery. Several states have legalized online gambling in the wake of the 2011 opinion, including New Jersey, Nevada, Delaware and Pennsylvania.”

The DOJ finalized the opinion in November 2018, but it wasn’t released until Jan. 14. The department has delayed implementation of the new opinion of the act for 90 days to give operators time to comply. A department official told Reuters:

“DOJ will continue to prioritize the most egregious conduct, including gambling activity that is part of a larger criminal scheme.” 

The Impact in NJ and PA

New Jersey

Legal experts believe the opinion will be challenged in court soon. New Jersey officials have shown particular stubborness in challenging gaming laws in court as of late.

In fact, New Jersey led the fight for state-by-state sports betting to the US Supreme Court. Now, less than a year after the state’s triumphant Supreme Court victory, there may be another major legal case about gambling taking shape.

“The opinion acknowledges that the decision will likely be tested judicially,” tweeted gaming attorney Daniel L. Wallach. “I think we could be headed toward the next big gambling case that reaches the Supreme Court, or at the very least, the U.S. Court of Appeals.”

Wallach, a Florida-based attorney and a founding director of the sports wagering program at the University of New Hampshire School of Law, believes several entities will look to challenge the DOJ. Potential challenges possibly range from online poker operators and their land-based casino partners, as in New Jersey, to vendors and suppliers.

Pennsylvania

In Pennsylvania, the online poker industry appeared to be gaining a bit of traction after the state passed legislation last year. Online gaming, including poker, expected to come online in the early part of this year.

Observers also expect that Pennsylvania will want to share liquidity with New Jersey, Nevada, and Delaware. However, Monday’s opinion casts considerable doubt on the viability of the Keystone State’s plan. For that matter, it casts doubt on the existing compact itself.

There are many possible scenarios for the outcome of this opinion

It may become hard to play and hard to pay

The DOJ’s move could be quite a setback for the industry. The opinion casts uncertainty on the future of online poker operators and support companies.

One possible scenario is that operators may revert solely to intrastate poker offerings until the legal situation can be clarified. Obviously, that would be a setback for what had been a slowly burgeoning industry. The effects would manifest in the form of lower player pools and smaller prizes.

Unfortunately, it is even possible that the opinion would affect intrastate online poker and gaming.  Even though the start and end point of a signal could be in the same state, it is possible that it could go out of state during its travel. Hence, a court could conceivably classify the transmission as an interstate transaction, and subject to the Wire Act.

Payment processing might also suffer due to this opinion. Some banking institutions may fear DOJ action for taking payments that might cross state lines. In states like New Jersey and Delaware, payment processing has already been problematic from time to time.

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The silver lining to a rather dark cloud

However, online poker players don’t need to start closing their accounts just yet. In past rulings, the 1st and 5th Circuit Courts of Appeal have defined the scope of the Wire Act to sports betting only – in direct opposition to the DOJ opinion.

The DOJ may also choose not to enforce its own opinion. Several states have passed recreational marijuana usage laws in recent years, but the practice remains technically against federal law. On the other hand, a federal solution via Congress seems highly unlikely.

Investors Business Daily notes that the DOJ may have difficulty justifying its opinion, too. There is considerable legal opposition, which includes previous court opinions, regarding the Wire Act.

That could offer some hope for online poker. As Deutsche Bank managing director Carlo Santarelli said,

“Given the genie has left the bottle, we think the DOJ will have a somewhat uphill battle to successfully defend its new position. We think it will require considerable leg work to undo what’s been done, and we think the process will take an extended period of time.”