The Federal Interstate Wire Act of 1961 – commonly called the Wire Act – was a bill conceived by the Senate as part of their over-arching Interstate Anti-Crime Acts package. Ostensibly to stop the various New York mafia families from running state-to-state sports gambling operations, the law sought to make accepting a sports bet from a resident of another state illegal.
The Wire Act was suggested to the 87th US Congress by Attorney General Robert F. Kennedy, and after passage, it was signed into law by his nepotistic brother President John F. Kennedy. Both men were later assassinated due to presumably unrelated offenses and usurpations. Unfortunately, their Wire Act lives on.
The language of the Wire Act begins with the following:
“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...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...shall be fined under this title or imprisoned not more than two years, or both.”
On the surface, this seems to be a fairly cut-and-dried piece of anti-gambling legislation, making it illegal for folks to place bets via telephone, fax, or telegram. As it turns out, the law didn’t have the desired effect, either on the mob or the tens of millions of US residents who continue to bet on sports. If anything, the perceived “illicit” nature of sports betting was a positive boon to the industry, and participation continues to grow exponentially.
The Wire Act loophole – or “loophole,” because it isn’t really an abuse of the law as written – is twofold. First, the law mentions entities “engaged in the business of betting or wagering.” This is vague, and it can be (and is) successfully argued that it applies only to the service provider, or the bookmaker. Customers are not customarily viewed as “engaging” in a “business.” Thus, there is plenty of wiggle room for private individuals placing sports bets to claim that the law does not apply to them. This remains the prevailing interpretation today.
The second Wire Act “loophole” concerns the geographical limitations of the act. As the “Interstate Wire Act,” the law can be said to apply only to state-to-state transactions. Yes, the word “foreign” appears in the synopsis, but it seems to apply only to the first portion of the act, tying it to the “business” aspect of the declaration. Individuals placing bets with foreign bookmakers are not engaged in “foreign business,” and they are thus argued to be exempt from prosecution.
A third (and legally more tenuous) “loophole” re the Wire Act is more current, as wireless communications are often debated to not fall under the definition of “wire communications.” With the advent of the Internet and wireless cellular data, the Wire Act may have less teeth than ever, albeit this interpretation has been overruled in other cases regarding the applicability of wire-tap protection laws to modern wireless communication methods.
Fortunately, none of the above laws actually stopped people from spending their own money as they see fit, as offshore betting shops are perfectly safe and legal for US residents to use. Some politicians (a.k.a. petty tyrants and criminals) believe that the offshore sports betting “loophole” takes advantage of poor language written into the laws, and perhaps it does. That said, offshore online sportsbooks follow American law to the letter, and it remains 100% within that law to use them as you wish.
Here’s why: The Wire Act and PASPA both made it illegal to accept wagers in a commercial or for-profit capacity (excepting Nevada bookmakers), and the UIGEA went after banks that knowingly processed such transactions. Since these laws never made it illegal for a US resident to actually place a bet or penalized banks for unknowingly processing betting transactions, the only entities actually affected were non-Nevada-based US bookies themselves. These bookies simply left the country, got licensed elsewhere, and continued their operations.
The effect of the Wire Act on MLB betting has been appreciably nil. Since the law never actually did what it purported to do (i.e. stop interstate sports betting), the most bet-on sport in the land (at the time) continued to dominate the public consciousness. To be sure, many mafia families “went legit” and invested heavily in a strong Las Vegas presence, but the infrastructure for interstate sports betting was hardly altered, and betting on MLB baseball continued to wreak non-havoc on the sport.
Now that most MLB betting has moved offshore, it’s clear that attempting to limit such a popular pastime as sports betting has ended up costing the US government a substantial bit of regulatory income. With legal online sportsbooks accepting thousands of new MLB bettors every day, there is no end in sight for the failures of the Wire Act to correct themselves without comprehensive legislative or judicial restructuring.
The future of the Wire Act on MLB betting is uncertain, though it is also irrelevant. The law has been effectively neutered by the advent of legal online sportsbooks, and it never worked as intended to begin with. In September of 2011, the US Department of Justice released an opinion exempting other forms of wagering from the Wire Act’s purview, weakening it considerably, and the US Fifth Circuit Court of Appeals has confirmed the stance that the law only applies to sports betting. Still, the law is largely ignored domestically, and it has no bearing internationally, particularly since offshore sportsbooks operate outside of US jurisdiction.
That said, with the current state of Nevada-monopolized sports betting being challenged in the Supreme Court by New Jersey (with the support of more than a dozen other states), there may be a necessary alteration to the Wire Act forthcoming. If each state is allowed to implement its own sports betting legislation and regulation, the Wire Act may finally be pertinent to a degree, as most states will want to funnel all sports betting originating within their borders to their own official, taxable, regulated sportsbooks.
Alternatively, legalized sports betting throughout the states may also prompt some necessary interstate partnerships, which would require an exemption from the mandates of the Wire Act. In particular, states with smaller populations or tourist attractions may wish to “combine forces” or enter into various tourism arrangements that make interstate wagering more profitable for each party involved. The Wire Act of 1961 is an anachronism in 2018 (it was an anachronism in 1962), and – at the very least – you can expect massive changes to its import in the near future.