Everything We Know about the Interstate Wire Act of 1961

The Murphy decision overruled PAPSA, which served to prohibit sports betting within a state’s borders. In today’s post-Murphy environment, states are legalizing sports betting within their own jurisdictions. However, in order to legally wager within a state, one must be physically located within that state itself and cannot wager from outside of that state.

Impact on Land Gambling

This is a prohibition on the use of interstate commerce to assist in placing sports wagers. Although the statute refers to the use of a wire communication, it restricts the application of the statute to bets that are occurring interstate in order for the statute to not be unconstitutional under the Commerce Clause.

Impact on Online Gambling

Internet wagering is where the Wire Act has had a profound impact since most wagers are accepted interstate. In 2001, the Bush Administration opined that the prohibitions of the Wire Act applied to all forms of internet gambling. This viewpoint was addressed by the Fifth Circuit in a 2002 opinion in which it was stated that the Wire Act definitely applied to internet sports betting, but the impact on other forms of internet gambling is unclear. However, in 2011, the Justice Department clarified that the Wire Act did not apply to online gambling beyond sports. Other statutes continue to apply to online gaming.

Impact on States

The Wire Act has not prevented any states from legalizing gambling within their borders. This is because the authority under which Congress passed the Wire Act can not be used to regulate intrastate commerce. Since states began to expand legalized gambling, the Wire Act has not been a consideration.

The Wire Act After Murphy

There was an interesting paragraph in the Court’s decision in Murphy that left open the question of the law’s continued applicability as states legalize sports betting. The safest interpretation is that interstate sports wagering is still prohibited by the Wire Act. However, there was some uncertainty created by the language in Murphy. Specifically, the Court included a statement in the decision that federal law respects the policy choices of states in the area of gambling. The Court’s decision possibly suggested that a violation of state law may be a necessary predicate for a criminal violation of the Wire Act. Some commentators have suggested that, at best, the Court’s language could be read to permit the interstate transmission of information as opposed to the transmission of wagers themselves.

However, while this area is unclear, it is not an outright overruling of the Wire Act. Absent an explicit statement that strikes down the Wire Act, sportsbook operators would be playing with fire if they accepted interstate wagers from bettors.

The Future

Cross-state betting is still a far way into the future if it happens at all. In order to get there, the Wire Act would have to be overturned, whether it occurs judicially or legislatively. Given the interests of physical sportsbooks and their political power, it is difficult to envision any sort of repeal of the Wire Act gaining traction in Congress.

In order for the statute to be overturned by a court, it would require an actual case or controversy to reach a court for jurisprudence. Although the Supreme Court seems to have left the issue open in its decision, it would require a willing party to challenge the existing statute. This would ultimately necessitate that a state enacts a law that permits wagers to be accepted from those located outside of a state’s borders. Then, that state must be willing to weather any possible legal actions that may be taken as a result.

The best possible outcome for the gaming industry is that as many states as possible enact legislation permitting sports wagering as soon as possible so that everyone has access to legal sports gambling. It is unlikely that the Wire Act will simply go away, and a legal challenge to its continued applicability would be risky and would take years to go through the courts. There has been some recent talk of federal legislation to regulate sports wagering in the wake of Murphy that could clarify the applicability of the Wire Act, but there is unlikely to be an appetite to regulate what has been traditionally left to the states. Thus, for the foreseeable future, the Wire Act still applies until there is an explicit statement that it does not apply or no longer exists. That would now be in the province of Congress or the courts.