Late last week, the Pennsylvania Gaming Control Board responded to the change of opinion on the 1961 Wire Act by the United States’ Department of Justice – the new opinion stated that the law applied not only to sports betting but also all other forms of online gambling. This reversal of the same law back in 2011 caught a number of people by surprise even though there have been significant lobbyists efforts supporting the move. As expected, there will be casualties and as it stands, the interstate poker sharing arrangement between certain states are the ones going to be hit the hardest.
In response to the new law, the Keystone State’s gaming regulator, through its Kevin O’Toole, the executive director, wrote a letter to the licensed casino operators asking them to comply with the new opinion by making all forms of gambling entirely intrastate. In the letter, the executive director said that the operators had an obligation to comply with the federal and they would have 30 days to avail plans for compliance with the new interpretation of the Wire Act. He further pointed out that the goal of the directive is to minimize risk for the state and its casino industry – fortunately, removing all risk is not in the cards at the moment thanks to the ambiguity of the DOJ memo which is likely to face some opposition in the courts of law.
What It Means
The impacts of the new Wire Act opinion, while far-reaching and considerably extensive, are not set to impact the Commonwealth profoundly primarily because the state is yet to offer online poker in tandem with Nevada, New Jersey, and Delaware which already have thriving online poker industry and have inked a liquidity sharing agreement with each other. Naturally, these plans have now been shelved with the state now focusing on ring-fencing its online gaming industry.
However, there are more changes that the online gaming industry in Pennsylvania will have to go through. Before the new opinion on the 1961 Wire Act was issued, Pennsylvania allowed its licensees to have their interactive gaming devices and associated gaming equipment located in other parts of the United States. This is no longer the case as all the aspects of any online gambling operation are to be conducted within Pennsylvania. This also happens to include payment processing services related to online gaming.
Online sports betting is likely to be unaffected, in most part, by the new ruling since most of the states that implemented regulations for the sector had to adhere to the federal law since sports betting was already in the Wire Act. Still, it would not be surprising to see a few reversals that will mostly impact brick-and-mortar sports betting operators – some of them are not headquartered in Pennsylvania but they offer their services in the state.