The fight for online gambling legalization in the United States has been a divisive one. While Nevada, New Jersey and Delaware have already declared victory in their battle to regulate the industry, the Keystone State continues to drag its feet on the issue.
While there seems to be more appetite for regulation in the state than ever before, opposition is still strong from moral objectors, casino mogul Sheldon Adelson, and the politicians in his pocket. Adelson, owner of the Las Vegas Sands Corp. and the Sands Bethlehem Casino in Pennsylvania, has tasked his political cronies and lobbyists with campaigning to roll back the original interpretation of the 1961 Wire Act via a piece of bespoke legislation called the Restoration of America’s Wire Act (RAWA).
How RAWA Could Derail Online Gambling
RAWA is a piece of legislation that has been promoted predominantly, though not exclusively, by Republicans. The federal bill was first introduced to Congress in 2014 and has been floated several times in subsequent sessions. In short, it aims to extend the scope of the Wire Act to ban most forms of online gambling, regardless of such activity being legalized and regulated by state governments.
No Lottery Exemptions
RAWA also doesn’t include any exemptions for existing state-regulated online gambling in New Jersey, Delaware or Nevada. Should it pass successfully through both chambers of Congress and be signed into law, the industry would immediately become illegal in those three states, causing significant damage to local economies while infringing on their state’s rights. In a post-RAWA landscape, even online lottery sales would be thrown in the unlawful basket, affecting currently legal activities in Michigan, Illinois and Georgia.
RAWA does, however, include carveouts that would exempt the activities of internet betting on horse racing and fantasy sports. The fact that these exceptions have been singled out casts serious doubts on the true motivations behind the bill.
While Adelson and his lackies serve up flimsy arguments of wanting to protect vulnerable children and the moral fiber of American society, such exceptions instead expose RAWA as a much more pragmatic measure of self-interest designed to safeguard billionaire Adelson’s lucrative land-based casino investments.
The 1961 Wire Act at a Glance
No family has left quite the same indelible mark on American politics as that of the Kennedy clan. After a tap on the shoulder to fill the influential office of US Attorney General, Robert F. Kennedy proposed to Congress that they pass legislation in the form of Senate Bill 1656, a.k.a. the Wire Act, which would render interstate gambling unlawful.
The bill states, “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.”
Kennedy’s intention was to assist the US Department of Justice (DOJ) in putting a stop to fraud, money laundering and other organized crime-related activity. The Wire Act found a willing ally in Kennedy’s brother, President John F. Kennedy, and was signed into law on September 13, 1961.
The Wire Act in Action
The Wire Act was, of course, created well before the internet was even conceived, and could not have foretold the rise of online gambling. But in 2006, the Unlawful Internet Gaming Enforcement Act (UIGEA) was passed, attached to an unrelated sea-port bill, incorporating language largely reflective of the Wire Act. The UIGEA effectively made transactions between US banks and online gambling operators illegal, putting Internet gambling sites in a tough position.
Post-UIGEA, some saw grey areas and what they believed to be legal loopholes, while others, like publicly traded online gambling sites, chose to pull out of the US market entirely. Some, like PokerStars, UB and Full Tilt Poker, elected to keep servicing their US-facing players, arguing that they were trading legally within their jurisdictions and upholding free trade agreements with the US.
Online Poker’s Black Friday
In April 2011, the DoJ made the bold move of seizing URLs and shutting down the three largest US-facing online poker rooms. Several key executives from these companies were also charged with bank fraud and money laundering for continuing to serve US players after the UIGEA went into effect.
In December of the same year, however, the Justice Department flip-flopped on its stance, releasing a formal legal opinion on the scope of the Wire Act and concluding that it only applied to online sports betting.
This ruling opened the door for online gambling websites to be established within a statewide, regulated framework, which includes state lotteries, online casinos and poker websites.
The three aforementioned states – New Jersey, Delaware and Nevada – have so far decided to legalize the industry, with Pennsylvania, New York, Michigan and others toying with the idea of doing the same.
RAWA’s Driving Force and Allies
Vocal online gambling objector Sheldon Adelson is widely believed to be the antagonist behind RAWA, which is designed to stamp out iGaming and prevent it from spreading to other US states. The legislation, originally titled the Internet Gambling Control Act, was written by Darryl Nirenberg, a registered lobbyist for the Republican super-donor Adelson.
The initial version of the bill was formally introduced on March 26, 2014 in the Senate by Republican Lindsey Graham of South Carolina, and in the House by Utah Republican Jason Chaffetz . Both bills incorporated identical language. A plan to hold a lame duck hearing on RAWA in the House was scuttled in late November 2014, however.
Chaffetz and Graham have continued to be major proponents of the legislation, reintroducing it in the House in February 2015 (H.R. 707) and in the Senate (S. 1668) that June respectively. Graham’s RAWA submission was notably co-sponsored by Republican 2016 presidential hopeful Marco Rubio, Rep. from Florida.
The bill saw little action in 2016, though proponents shifted away from arguing for federal prohibition and moved towards a stance against illegal offshore operators. RAWA cosponsor Rubio has indicated that he might also be open to a potential online poker carve-out, which he considers a game of skill.
May 2016 brought the latest backdoor effort to get RAWA signed into law courtesy of the bill’s Senate sponsor, Lindsey Graham. The longtime RAWA supporter inserted a committee report with pro-RAWA language into a $56.3 billion funding bill authored by the Senate Appropriations Committee. The attempt failed to make it to the finish line, however.
While there were fears that RAWA would be passed at the last minute during the lame duck session through a secret agreement between Adelson and outgoing Democratic Nevada Sen. Harry Reid, the election of Donald Trump to the presidency and Republican majorities in both the Senate and the House foiled such concerns.
Will the Trump-Pence Partnership see RAWA Pass?
With 2017 ushering in a new Presidential team, there has been widespread speculation on just how the incoming Trump-Pence administration would view attempts to ban online gambling. President Trump is a former casino owner and has previously stated that he supports online gambling. Pence, on the other hand, has been openly anti-online gambling in the past. As of yet, the admin has yet to show its hand one way or the other.
An early push to have the incoming Trump administration impose a federal ban on online gambling via the Wire Act came before inauguration in December 2016 from 10 US State Attorneys General, including Nevada AG Adam Laxalt.
It comes as no surprise that Laxalt’s 2014 election campaign, much like President Trump’s, received funding from Adelson, the architect and financial sponsor of the anti-iGaming movement.
RAWA in Pennsylvania
PA has been in the news regularly with reports of numerous attempts to legalize and regulate online gambling. In the summer of 2017, both the Senate and the House authorized a gambling expansion bill that includes online poker and casino games, and while the controversial add-on of video gaming terminals threatens to poison the bill, most sources point to the passage of the legislation by the end of the year.
That hasn’t stopped Adelson’s allies from flying the anti-online gambling flag while deliberation continues. Since early July 2017, Pennsylvania Republican Rep. Charlie Dent has taken a prominent role in efforts to ban the industry in the US. It has been reported that Dent was ready to attach RAWA-style language to a congressional appropriations bill on July 13th, but the attempt didn’t proceed.
Dent represents the state’s 15th District, which includes the Sands Casino Resort Bethlehem, owned by none other than Sheldon Adelson. What’s more, the congressman is a longtime Adelson ally and has been working at the casino mogul’s political behest for some time. In May 2016, Dent and Democratic Rep. Henry Cuellar from Texas tried to sneak through RAWA-inspired text via the House Appropriations Committee in a budget bill, but the opposition was fierce and the pair withdrew their measure before it even got to a vote.
For all its financial backing, RAWA seems to be losing momentum and has yet to find much effective support or an avenue for passage. It appears Adelson’s own attempts to push the new US Attorney General, Jeff Sessions, to reverse the 2011 DOJ decision have failed too.
During Sessions’ confirmation hearing, Lindsey Graham specifically brought up online gambling, asking the then nominee where he stood on the issue. Sessions replied that he was surprised by the 2011 DOJ opinion which paved the way for iGaming, and would reconsider the ruling.
Since that time, however, the AG has been forced to recuse himself from the issue entirely due to his close ties to Adelson and because of potential conflicts of interest.
Instead, all eyes will be on Dent’s movements to see if a rumored backup plan exists, or if his rhetoric is just tactical posturing. Anything he does with RAWA will likely be somewhat secretive. If the anti-gambling legislation was to gain traction at the federal level, it would ostensibly spell chaos for the online gambling legalization plans of states like Pennsylvania and Illinois, where players have been buoyed by regulation apparently nearing its home stretch.
Throughout its relatively short life, RAWA has come under fire by a diverse collection of groups and individuals across the political spectrum.
In the days following the original introduction of the bill in March 2014, several groups went on record to lodge their distaste for the Adelson-led attempt to outlaw online gambling, including the National Conference of State Legislators (NCSL).
Member James Ward sent a letter on behalf of the NCSL to Senators Harry Reid and Mitch McConnell, Speaker John Boehner, and Minority Leader Nancy Pelosi expressing strong opposition to RAWA, and urged them to respect the sovereignty of states’ rights to determine the lawfulness of the industry.
Similarly, US Lotteries vocalized their own complaints with RAWA, which if passed would outlaw any system of legal online betting already in place, like multi-state lotteries such as Mega Millions and Powerball. David Gale, Executive Director of the North American Association of State and Provincial Lotteries issued a letter to Sen. Graham opposing RAWA, also invoking arguments for protecting states’ rights to make decisions as they relate to gambling within their respective borders.
In November 2014, Texas Libertarian Rep. Ron Paul wrote an op-ed for Eurasian Review, labelling RAWA as a “blatantly unconstitutional infringement of our liberties that will likely expand the surveillance state; which worst of all is being done for the benefit of one powerful billionaire.”
September 2015 saw a coalition of 12 organizations band together to voice their own defense of the Tenth Amendment. Led by the Center for Freedom and Prosperity (CF&P), they stated their opposition to RAWA via a letter to Judiciary Committee Rep. Bob Goodlatte, urging the judicial body to uphold the power of states to regulate their own affairs.
Lobbying organizations like the Poker Players Alliance (PPA) have been watching the efforts of Graham, Chaffetz and friends closely for years. Whenever a member of Congress decides to move on RAWA – or something similar in purpose – online gambling and states’ rights advocates come out in droves to grow awareness and call out the proposal.
At the federal level, Texas Rep. Joe Barton continues his lengthy campaign to legalize the game of poker online. Barton’s Internet Poker Freedom Act (H.R. 2888), most notably floated in July 2013 and again in June 2015, calls for the regulation of online poker at the federal level to “restore the right of people to play the ‘All American game’, while at the same time protecting them from fraud.”
It also mandates for the implementation of technology that prohibits underage players and for funding to provide aid for problem gamblers. At its core, Rep. Barton argues that it is not for the federal government to tell private citizens what they can and cannot do in their own homes, especially when it is not harming anyone else.
Many conservatives, including Sen. Rand Paul of Kentucky, are opposed to the passing of RAWA simply because of the control it would give the federal government over the Internet. Sen. Paul says he opposes restrictions to online gambling and that it is not the business of the federal government.
Sen. Ted Poe of Texas recently stated that restricting online gambling would be just about as effective as prohibition was, and believes it would create an underground market of gambling on the Internet.
We’ve already touched on the fact that the passage of RAWA would threaten to undermine the Tenth Amendment, which states that the federal government possesses only those powers delegated to it by the United States Constitution. All remaining powers are reserved for the states or the people. In this context, this refers to the rights of each state to determine whether online gambling should be regulated and operated legally within their respective borders.
Many of those opposed to online gambling cite issues of exposing minors to unsavory habits, encouraging gambling addiction, or its potential use as a platform for fraud, money laundering, and other forms of organized crime. Politicos who take an openly anti-online gambling stance invoke the same arguments to justify their efforts to get RAWA passed through Congress.
However, if RAWA were to pass, a more realistic expectation would be the growth of the offshore online gambling market, which operates in less than ideal circumstances and without the checks and balances that accompany a regulated environment.
The Offshore Threat
US players would be forced to seek out alternative sites operating outside of the nation’s borders to enjoy poker, blackjack or their favorite video slots online. This is the very circumstance that would likely allow for the proliferation of unregulated and unscrupulous offshore operators, exposing US online gamblers to fly-by-night sites looking to make a quick buck with little regard for their players’ safety or security.
That said, with so many challenges to RAWA and the lack of congressional interest in the issue of online gambling in general, it seems that Adelson’s pet bill will struggle to make it to a vote, let alone be passed into law.
The debate continues and Sheldon Adelson remains relentless, but what can’t be argued with in today’s cash-strapped climate is that RAWA would have a damaging effect on the economic benefits currently enjoyed through legalized and regulated online gambling as already seen in the states which have already given the industry a green light.