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Crash Course in Gambling Law for Would-be Attorney General Sessions

Anticipating intense scrutiny from Senate Democrats, Sen. Jeff Sessions (R-AL) dedicated much of his confirmation hearing on Tuesday to insisting that as Attorney General of the United States, he would be committed to “fairness and impartiality and equal justice under the law.” The position, he asserted, called for a person willing to stand up to top officials, special interests, and influential contributors and tell the President “no,” when necessary. This fidelity to law above all else, he insisted, extends to the structural protections built into our nation’s founding documents, principles like federalism and a separation of powers. Yet, as he answered questions on matters of specific policy, it became clear that his commitment to such ideals might not be unconditional.

Of particular note was Sessions’ answer to a simple question posed by Sen. Lindsey Graham (R-SC) who has been pushing for a national prohibition on Internet gambling (at the behest of a powerful GOP donor) for over three years. “What is your view of the Obama administration’s interpretation of the [Federal Wire Act] to allow online video poker,” Graham asked, referencing a memo issued by the Department of Justice’s Office of Legal Counsel (OLC) in 2011. The memo clarified that a law from the 1960s—the Wire Act—was not applicable to intrastate online gambling unless the gambling was on sporting events or contests. This opinion, Graham and a handful of other lawmakers have argued, amounted to a unilateral reinterpretation of the law by the Obama Justice Department. However, reading the law and studying the context in which it was enacted makes it clear that OLC’s opinion merely restored the Wire Act to its original intent.

Unfortunately, it appears that Sen. Sessions failed to engage in such careful study before forming his own opinion. “I was shocked at the memorandum…and criticized it,” he told Graham. “Apparently there’s some justification or argument that can be made to support the Department of Justice’s position, but I did oppose it when it happened,” he stated. Yet, when asked about revisiting the opinion as Attorney General he offered that any decision “would be based on careful study and I haven’t gone that far to give you an opinion today.”

If confirmed as the U.S. Attorney General, Sessions will need to give it that careful study and research the fifty-year history of the Wire Act before jumping to conclusions. That’s why today, a coalition of free market groups sent a letter to Sessions, along with Vice President-elect Mike Pence, summarizing the arguments for Congress and the executive branch to reject calls for a national gambling prohibition.

Furthermore, CEI has created a cheat-sheet—a crash course—on the history of the Wire Act to educate Sessions and other policymakers. If he reads this, he’ll see that not only was the Justice Department’s 2011 opinion correct, but it rectified a grave violation of the separation of powers committed by previous Department of Justice staff. Hopefully, this lesson will help Sen. Sessions avoid a similar mistake.

Q: Was the 1961 Federal Wire intended to ban all online gambling?

A: No, at the time of the Wire Act’s passage, members of Congress clearly understood that it applied only to interstate betting on sports.

In the 1960s Robert F. Kennedy—then attorney general—wanted to tackle the leviathan of mafia crime and he thought the only way to do so was to target their revenue stream. He introduced a package of bills aimed at curtailing mob-operated gambling rackets. Among the bills was the Wire Act, intended to specifically target criminals using “wire transmissions in interstate commerce” related to “bets or wagers placed on any sporting event or contest.” There is little doubt that Kennedy and the Congress that enacted the Wire Act believed it was limited to sports gambling, as illustrated by the fact that the House Judiciary Committee report accompanying the Wire Act was titled, “Sporting Events—Transmission of Bets, Wagers, and Related Information.”

Furthermore, when asked point blank by members of Senate if the Wire Act applied to other types of gambling, like “numbers games” conducted via telephones, Assistant Attorney General Herbert J. Miller testified that “this bill, of course, would not cover that because it is limited to sporting events or contests.”

Additionally, it is crystal clear that neither Kennedy nor Congress intended to create a new sweeping federal prohibition on any kind of gambling, but rather a tool for Federal law enforcement to enforce existing laws. In written testimony, Attorney General Kennedy noted that “the purpose of this legislation is to assist the various States, territories, and possessions of the United States and the District of Columbia in the enforcement of their laws pertaining to gambling,” by prohibiting “the transmission of certain gambling information in interstate and foreign commerce.” [Emphasis added]

The Senate and House reports accompanying the Wire Act echoed Kennedy’s statement, both noting that “the purpose of the bill is to assist the various States and the District of Columbia in the enforcement of their laws pertaining to gambling.”

Q: Did the 2011 Office of Legal Counsel memo reverse the longstanding interpretation of the Wire Act?

A: No, it was only in the Clinton Department of Justice that the Wire Act began to be interpreted as applying to Internet gambling and later that it applied to all forms of gambling.

Up until the 1990s, the Wire Act was understood to be limited to “wire” transmissions, like telegraph and telephone communications. Under President Bill Clinton, the Department of Justice took the view that this extended to online communications. It was until President George W. Bush’s administration that the Justice Department applied it not only to sports betting, but all forms of gambling. It was then that the Department made the error of reinterpreting the Wire Act, ignoring both legislative history and court decisions to the contrary and provided no rationale for the shift in opinion. The Office of Legal Counsel’s thoroughly considered 2011 opinion represents not a reinterpretation, but a restoration of the original intent of the Wire Act.

Evidence that Congress understood the Wire Act to be limited in scope is illustrated by the fact that almost from the day it was enacted there were members introducing legislation to broaden its scope. All failed.

  • In 1995 Sen. Jon Kyl (R-AZ) introduced the Crime Prevention Act, which included an amendment to the Wire Act to broaden the activities and technologies covered by the law.
  • In 1996 Rep. Tim Johnson (D-SD) introduced the Computer Gambling Prevention Act, which would amend the Wire Act by striking the words “on any sporting event or contest.”
  • In 1997 Sen. Kyl introduced the Internet Gambling Prohibition Act, which added a definition of “bets and wagers” that included contests, sports, and games of chance. He said the bill “dispels any ambiguity by making it clear that all betting, including sports betting, is illegal. Currently, non-sports betting is interpreted as legal under the Wire Act.”
  • In 1999 Sen. Kyl reintroduced the Internet Gambling Prohibition Act.
  • In 2002, Rep. Bob Goodlatte (R-VA) introduced the Combating Illegal Gambling Reform and Modernization Act, which added a definition of “bets and wagers” to the Wire Act to broaden it to ban all forms of gambling, including games of chance.
  • In 2005 Rep. Jim Leach (R-IA) introduced the Internet Gambling Prohibition and Enforcement Act, which sought to rewrite the wire act to define bets and wagers as including “games predominantly subject to chance and lotteries,” and to apply to “fixed or mobile” wireless communications. 
  • 2014 Rep. Jason Chaffetz (R-UT) and Sen. Lindsey Graham (R-SC) Introduced the Restoration of America’s Wire Act, which would rewrite the Wire Act by excising language sports gambling and adding language explicitly prohibiting gambling transmissions over the internet.
  • In 2015 Chaffetz and Graham reintroduced the Restoration of America’s Wire Act.

Arguing that the Office of Legal Counsel opinion represented executive overreach—that lawyers in the bowels of the Justice Department somehow bypassed Congress—ignores the decades of legislation Congress considered and rejected that would have made the Wire Act applicable to all Internet gambling. Far from sidestepping the normal legislative process, the opinion merely reversed the Department’s own erroneous reinterpretation.

In his hearing Sen. Sessions cautioned that Justice Department opinions “cannot amount to an amendment of law” and that “agency attorneys and members don’t have the ability to rewrite the law to make it say what they’d like it to say.” It should only take a quick study of the history of the Wire Act to understand that reversing the Office of Legal Counsel’s 2011 opinion would do just that.