Pixel Tracker

Monday, January 21 , 2019, 9:01 pm | Fair 53º


Veronique de Rugy: Cronies, Place Your Bets on the Federal Wire Act

Some members of Congress want the Department of Justice to know that they are unhappy. The source of their consternation is the correct DOJ’s finding in 2011 that the 1961 Federal Wire Act — long believed to prohibit all forms of interstate gambling — is in fact “limited only to sports betting.”

To show their displeasure, language was recently inserted into a Senate appropriations bill, which made the obvious point that the Wire Act didn’t change in 2011, and that it is up to state courts to interpret criminal laws.

The explanation for why this statement was slipped into a bill four years later is yet another cautionary tale of the corrosive effects of government-granted privilege to special interests, also known as cronyism.

Prior to 2011, the Wire Act — passed long before the emergence of the Internet — was interpreted to prohibit all manners of Internet gambling, from lottery sales to online poker.

This never made sense, as the statute expressly addresses “bets or wagers on any sporting event or contest,” among which lotteries and card games are not logically included.

This interpretation of the Wire Act was understood at the time it was passed as well. When asked during Senate hearings on the bill whether it would apply to other forms of gambling, Assistant Attorney General Herbert Miller replied, “This bill, of course, would not cover that because it is limited to sporting events or contests.”

The DOJ’s reversal of its earlier expansive interpretation was a move toward more faithful enforcement of the law, which ought to please Congress.

Contrary to the language in the Senate’s recent admonition, however, simply encouraging prosecutors to enforce law — rather than make it — is not the objective of the powerful interests bankrolling this fight.

The Senate language, which is now being pushed in the House, comes after years of failed attempts to enact the Restoration of America’s Wire Act, a bill championed by billionaire casino owner Sheldon Adelson

Adelson has no moral objection to gambling, he just doesn’t like it when people gamble somewhere other than one of his casinos.

The legalization of online poker in New Jersey, Delaware and Nevada — and the likelihood that others will soon follow suit — poses a direct threat to Adelson’s brick-and-mortar casinos. In response, he has spent a lot of money courting politicians to help protect his interests at the expense of consumers.

The irony of both RAWA and the Senate’s recent complaint is that even if the previous interpretation of the Wire Act (as including not just sports betting, but also other forms of gambling), the current efforts by states to legalize online gambling only for citizens within their borders still ought not to be prohibited.

This is because the Wire Act is an interstate prohibition, not an intrastate one. That’s why RAWA would go one step further and prohibit states from setting their own policies.

A House hearing last year on RAWA did not go well for its backers. Too many legislators saw it for what it is: a government handout and a blatant attack on federalism.

But rather than fold, its backers have decided to double down and are clearly looking for any opportunity to sneak through protections for the businesses of a favored donor.

So far, their efforts have failed to gain steam through the open legislative process. For them to fail in the future requires that lawmakers be extremely vigilant in recognizing cronyism, even when camouflaged as concerns for regulatory overreach.

— Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University, a columnist for Reason magazine and the Washington Examiner, and blogs about ecomomics for National Review. Click here to contact her, and follow her on Twitter: @veroderugy. Click here to read previous columns. The opinions expressed are her own.

Support Noozhawk Today

You are an important ally in our mission to deliver clear, objective, high-quality professional news reporting for Santa Barbara, Goleta and the rest of Santa Barbara County. Join the Hawks Club today to help keep Noozhawk soaring.

We offer four membership levels: $5 a month, $10 a month, $25 a month or $1 a week. Payments can be made using a credit card, Apple Pay or Google Pay, or click here for information on recurring credit-card payments and a mailing address for checks.

Thank you for your vital support.

Become a Noozhawk Supporter

First name
Last name
Select your monthly membership
Or choose an annual membership

Payment Information

Membership Subscription

You are enrolling in . Thank you for joining the Hawks Club.

Payment Method

Pay by Credit Card:

Mastercard, Visa, American Express, Discover
One click only, please!

Pay with Apple Pay or Google Pay:

Noozhawk partners with Stripe to provide secure invoicing and payments processing.
You may cancel your membership at any time by sending an email to .(JavaScript must be enabled to view this email address).

  • Ask
  • Vote
  • Investigate
  • Answer

Noozhawk Asks: What’s Your Question?

Welcome to Noozhawk Asks, a new feature in which you ask the questions, you help decide what Noozhawk investigates, and you work with us to find the answers.

Here’s how it works: You share your questions with us in the nearby box. In some cases, we may work with you to find the answers. In others, we may ask you to vote on your top choices to help us narrow the scope. And we’ll be regularly asking you for your feedback on a specific issue or topic.

We also expect to work together with the reader who asked the winning questions to find the answer together. Noozhawk’s objective is to come at questions from a place of curiosity and openness, and we believe a transparent collaboration is the key to achieve it.

The results of our investigation will be published here in this Noozhawk Asks section. Once or twice a month, we plan to do a review of what was asked and answered.

Thanks for asking!

Click Here to Get Started >

Reader Comments

Noozhawk is no longer accepting reader comments on our articles. Click here for the announcement. Readers are instead invited to submit letters to the editor by emailing them to [email protected]. Please provide your full name and community, as well as contact information for verification purposes only.