In May, poker players from New Jersey, Nevada, and Delaware combined into one player pool on WSOP.com and 888 Poker. New Jersey was the newcomer to the pact, with Nevada and Delaware embracing a shared liquidity agreement back in 2014.
The other big news in May was the US Supreme Court’s decision on the NJ sports betting case. The 6-3 vote in favor of the Garden State caused an avalanche of sports betting news in that first week. But two weeks later, there are still questions about the ruling and what it means.
People assume that if poker players can combine into one betting pool across state lines, sports bettors can do the same. They are wrong — at least for now.
No sports betting across state lines
The Supreme Court ruled the Professional and Amateur Sports Protection Act (PASPA) unconstitutional and made legalized sports betting possible throughout the US.
Each state is responsible for enacting legislation and regulations around sports betting. That means some states will legalize it while others will not.
For sportsbooks, accepting wagers from everyone in a state with legalized sports betting is ideal. For now, all sports betting activity must occur within each state. That means no betting across state lines.
Why can’t sports betting pools be combined? The answer is simple — the Wire Act of 1961.
The Wire Act of 1961
The Wire Act of 1961 is a federal law enacted to tackle organized crime. Its primary goal was to help states enforce their gambling laws. It did that by prohibiting the transmission of wagers through wire communication.
The Wire Act makes it illegal to place a sports bet from one state to an entity in another state over the phone or any wired communication service — which includes the internet.
Plus, the Wire Act only pertains to the transmission of the bet and exempts the transfer of sports betting information used to place wagers.
For the record, poker is exempt from the Wire Act because the law relates specifically to sports betting. Therefore, the aforementioned combined poker player pools between Nevada, New Jersey, and Delaware falls outside of the scope of the law.
The US Department of Justice clarified this exact point in 2011:
“Interstate transmissions of wire communications that do not relate to a ‘sporting event or contest’ fall outside the reach of the Wire Act.”
Future challenges to the Wire Act? Maybe
Since the primary goal of the Wire Act was to help states enforce its laws, it stands to reason legal sports betting should be exempt. But it’s not exempt and for now, the Wire Act is the law of the land.
It is hard to imagine that the Wire Act will go unchallenged for any length of time. Sportsbooks with locations in multiple states may at some point challenge the law to allow multi-state sports betting.
Behnam Dayanim of Paul Hastings Law Firm in Washington, D.C., questions whether the Wire Act was intended to be applied to legalized sports betting. He said as much on a webinar with GamblingCompliance.
“There does not appear to be definitive case law on how or whether the Wire Act applies to the different aspects of an online sportsbook operation and there are also strong arguments the act was never intended to restrict lawful sports wagering being operated under a state-sanctioned regulatory regime.”
There is also the question of how aggressively the DOJ will pursue cases of sports betting between two states where it is legal to place a sports bet.
Some experts believe that the DOJ will not actively pursue such cases. In any case, it can be a risky strategy to move forward with interstate sports betting when the DOJ has said that wagers between states are in violation of the Wire Act.
Waiting for the first legal sports bet outside of Nevada
It has been a few weeks since the NJ sports betting decision, and the first sports bet outside of Nevada has not been placed.
The first bet should happen soon. Five states are close to launching:
- New Jersey
- Delaware sports betting
- Mississippi sports betting
- West Virginia sports betting
- Pennsylvania sports betting
The prediction on which state will be first to the expanded sports betting market changes daily. Legal Sports Report is keeping track of the progress in each state.
Everyone is waiting for the expanded sports betting market to launch. Getting several states online and working must happen before there is a challenge to the Wire Act of 1961.
The market will expand state by state and bets will stay within the borders of a state with legal sports betting for now. How long it will stay that way is the million-dollar question.