Trump DOJ Nominee Unlikely to Bend to Anti-Gamblers’ Will

Though most people have never heard of it, the Office of Legal Counsel inside the Department of Justice (DOJ) is one of the most influential legal offices within the federal government. Described as the “President’s law firm,” OLC determines the constitutionality of executive action. Unfortunately, for the handful of lawmakers hoping to get OLC to create a federal prohibition on Internet gambling, Steven Engel—Trump’s nominee to head this powerful office—indicated during his confirmation hearing that would not be swayed by political pressure or convenience.

Sitting before the Senate Judiciary Committee, Engel described the importance of OLC in “ensuring that ours remains a nation governed by laws” and the job of OLC lead counsel as “advising the executive branch on the requirements of the law in order to fulfill the President’s constitutional duty to take care that the laws be faithfully executed.” This could be a problem for those hoping to create an online gambling ban, like Senator Lindsey Graham (R-SC) who sits on the Judiciary Committee and has twice failed to enact legislation seeking to reverse a legal opinion issued by Obama’s OLC in 2011. 

Graham and other online gambling opponents view the OLC’s 2011 opinion as a “reinterpretation” of the Wire Act; a law enacted by Congress in 1961 that sought to prohibit interstate sports gambling using the telephone. In reality, OLC’s opinion actually restored the Wire Act to its original intent. However, in clarifying the scope of this statute, it also paved the way for states to legalize non-sports related Internet gambling; something Graham and his benefactor, casino mogul and bigtime GOP donor Sheldon Adelson, want to see reversed.

The problem for Graham and friends is what they want would put Mr. Engel in the untenable position of 1) pretending Congress meant to limit online gambling – in 1961! – and 2) ignoring Congress’s purported interest in preserving state sovereignty.

The letter of the law (18 U.S. Code § 1084) prohibits “transmission in interstate or foreign commerce of bets or wagers…on any sporting event or contest” using our nation’s “wire communication facilities.” But, since its enactment some have argued that the language leaves room to interpret it as prohibiting such transmissions over the internet and related to all gambling—not just sports gambling. This interpretation, however, is fairly new. It was only after the rise of home computing and Internet gambling that the Department of Justice—under President George H. W. Bush—chose to view the law as a blanket prohibition on Internet gambling. Tellingly, when it made this leap in the 1990s, DOJ provided no rationale for the new interpretation.  

That led to a conflict between the Wire Act and a more recent statute, the Unlawful Internet Gambling Enforcement Act (UIGEA), which prohibited payments related to interstate Internet gambling prohibited by any other state or federal statute. However, UIGEA specifically exempted Internet gambling transmissions “initiated and received or otherwise made exclusively within a single state” when that state has expressly authorized such online betting. This confusion led the New York and Illinois lotteries to ask the DOJ for clarity on whether or not the Wire Act’s prohibitions would prohibit their intrastate online lotteries. After many months of considering the language of the law, jurisprudence, and other evidence about Congress’s intend when it enacted the Wire Act, the OLC issued its opinion that the law, indeed, only prohibited interstate online gambling related to sporting events.

Based on his testimony during his confirmation hearing, it’s doubtful Engel’s OLC would be amenable to suggestions that his office reverse OLC’s previous determination simply for political expediency. However, should he try to reverse the 2011 opinion he will have to return to that already-resolved conflict between UIGEA and the Wire Act. Even more difficult, he will have to give a compelling argument against the piles of evidence showing Congress intended the Wire Act to limit sports gambling.

  • For example, while deliberating over the Wire Act, Sen. Estes Kefauver (D-MD) asked then-assistant attorney general Herbert J. Miller whether or not the proposed law would prohibit over-the-phone lotteries, which were a common money-making scheme operated by organized crime. Miller—whose boss was the architect of the law—answered that “this bill, of course, would not cover that because it is limited to sporting events or contests.” It’s pretty difficult to misinterpret that frank statement.
  • Miller’s boss, then-attorney general Robert F. Kennedy, who was the Wire Act’s chief architect, introduced a number of other bills alongside it. In the Interstate Transportation of Wagering Paraphernalia Act (18 U.S.C. § 1953), for example, the gambling activities it regulated are listed as “bookmaking, wagering pools with respect to a sporting event, numbers games, policy games, bolita, or similar games.” The Wire Act refers merely to “sporting events or contests.”

As the Department of Justice Office of Legal Counsel noted in its 2011 memo:

  • Congress thus expressly distinguished these lottery games from “bookmaking” or “wagering pools with respect to a sporting event,” and made explicit that the Interstate Transportation of Wagering Paraphernalia Act applied to all three forms of gambling. 18 U.S.C. § 1953(a). Congress’s decision to expressly regulate lottery-style games in addition to sports-related gambling in that statute, but not in the contemporaneous Wire Act, further suggests that Congress did not intend to reach non-sports wagering in the Wire Act.
  • In testifying on the Wire Act, Kennedy stated that he was not “undertaking the almost impossible task of dealing with all the many forms of casual or social wagering,” nor creating a brand new prohibition on any particular type of gambling, but that the purpose of his bill was to “to assist the various States and the District of Columbia in the enforcement of their laws pertaining to gambling, bookmaking, and like offenses and to aid in the suppression of organized gambling activities…” [Emphasis added].
  • This purpose and understanding was echoed by Congress in 1961. In the house report on the Wire Act (H.R. No. 87-967), the Judiciary Committee noted that the problem they hoped to address was the fact that “modern bookmaking depends in large measure on the rapid transmission of gambling information by wire communication facilities” and that “the availability of wire communications facilities affords opportunity for the making of best or wagers and the exchange of related information almost to the very minute that a particular sporting event begins.” This makes it abundantly clear that Congress’s intent was focused solely on gambling related to sports.

Even if he can ignore all that evidence, Engel and the DOJ must be willing to spend the time and money to defend such a reversal in court. The dozen-plus states with legal online lotteries and the three with legal online casino-style gambling will almost certainly respond to attempts to reinterpret the Wire Act with litigation. After all, one wouldn’t expect them to give up the millions in tax revenue they’ve been happily collecting over the last four years without a fight. Any of the internet casino operators, which have been raking in hundreds of millions from their new offerings, could file for a simple declaratory judgement to clarify the scope of the Wire Act.

However, any one of the gambling states could choose to sue on the grounds that the Wire Act—as interpreted by Engel—is a violation of their 10th Amendment right (which reserves powers not delegated to Congress or prohibited to the states to the states and individuals). Should they win such a case, Engels would not only have dashed the hopes of those wishing to stop the states from legalizing online gambling, but would also pave the way for the states making the same case with regards to sports gambling.

Ironically, a new reinterpretation of the Wire Act could prompt a court to help the Trump administration make good on its promise to be “pro-business” by “scaling-back years of disastrous regulations…imposed by our out-of-control bureaucracy.” An adverse court ruling just might not be the method Trump had in mind.