Wire Act Prosecutions expected to increase with new DOJ opinion
The Department of Justice’s Office of Legal Counsel recently published an opinion reviewing the Department’s interpretation of the federal Wire Act.
The Wire Act has been a tool for prosecuting certain gambling activities since 1961. Codified as 18 U.S.C. § 1084, the Wire Act states that:
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.
Since 2011, the DOJ has only applied the Wire Act to prosecute businesses involved in sports gambling, based on the statutory language prohibiting “bets or wagers on any sporting event or contest.”
In the DOJ’s new opinion, however, the government has concluded that the phrase “on any sporting event or contest” only applies to the provision that immediately precedes it, only modifying “information assisting in the placing of bets or wagers.” Aside from that provision, the government now argues that the Act applies to anyone who uses a wire communication facility (such as telephone or internet) to transmit “bets or wagers,” “information assisting in the placing of bets or wagers,” or communications that entitle a recipient “to receive money or credit as a result of bets or wagers.”
Under this new interpretation of the Wire Act, a wide variety of “non-sports gambling” will now be prohibited, and online poker companies, virtual casinos, and internet betting markets will be increasingly targeted for federal prosecution.
While the DOJ is giving businesses 90 days to comply with this change in the law, those 90 days will likely be followed by a wave of Wire Act prosecutions. That’s why it’s important for federal criminal attorneys and their clients to be familiar with the DOJ’s new stance on the Wire Act.
Under the DOJ’s new reading of the Wire Act, any online business involved in sports or non-sports gambling can now be targeted for prosecution. Fortunately, however, there are defenses available, especially for businesses involved in non-sports gambling.
As the government seeks to increase its Wire Act prosecutions, federal criminal attorneys should challenge the Government’s new interpretation of § 1084(a), which impermissibly broadens the scope of the law beyond the plain language of the statute.
Federal criminal defense attorneys have plenty of ammunition to make that argument. In addition to the DOJ’s previous position that the Wire Act is limited to sports gambling, the Court of Appeals for the Fifth Circuit decided in 2002 that the Wire Act applies only to sports betting, holding that the “plain reading” of the Wire Act “clearly requires that the object of the gambling be a sporting event or contest.” The First Circuit agreed with this decision as recently as 2014.
It is also a defense to argue that the government cannot prove beyond a reasonable doubt that a defendant in a Wire Act prosecution acted with a criminal intent, meaning that the defendant knew that he was transmitting wire communications that contained information about bets and wagers. A defendant also has a valid defense if he or she can prove that the information they transmitted through the wires was for the purposes of reporting the news.
If you or your business are involved in the gambling business, the DOJ’s decision to target non-sports gambling through the Wire Act should be a cause for concern. It is important to contact an experienced federal criminal attorney who can advise you as the DOJ changes its enforcement priorities, and to defend you if you are targeted for a Wire Act prosecution.