Interstate prohibition of sports gambling: The Wire Act must go
Updated: Oct 19
Sports gambling is a market that has not always been legal, but that has not stopped sports bettors from placing bets on sporting events and winning or losing their money accordingly. In May 2018, the U.S. Supreme Court found the Professional and Amateur Sports Protection Act of 1992 (“PASPA”) unconstitutional. PASPA, which federally banned states from creating and regulating their own sports gambling markets, was deemed a violation of the commandeering clause of the U.S. Constitution because it took away from the authority of state legislatures. After the Supreme Court found the law unconstitutional and overturned it, states began to expedite their efforts toward a regulated sports gambling market. Despite the lift of the ban to regulate sports gambling, other federal statutes still create severe obstacles to a national sports betting market.
The Federal Wire Act was enacted in 1961 to criminalize the use of interstate wire communications for “bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest.” The Wire Act was introduced by Attorney General Robert Kennedy and was signed into law by President John F. Kennedy. To unravel the roots of organized crime in society, Senator Estes Kefauver established the Special Committee to Investigate Crime in Interstate Commerce (“Kefauver Committee”). With the assistance of the Kefauver Committee, Attorney General Kennedy revealed the detrimental impact that organized crime had on the U.S., and their goal was to squash the influence of these mob families. After traveling across the country to squash organized crime’s impact on society, Chairman Kefauver revealed what he believed to be the best way to combat organized crime’s reign of terror: targeting their pockets. In Chairman Kefauver’s opinion, interstate sports gambling was the “lifeblood of organized crime.”
Congress’s intent in passing the Wire Act was to combat organized crime in the 1960s and beyond. However, the Wire Act’s use has diverged from Congress’s original intentions. Today, it is hardly used to combat organized crime since there are more impactful federal statutes that the government utilizes to prosecute mob-related criminal activity, such as the RICO Act. Instead, the Wire Act mainly acts as an obstacle for sportsbooks to reach a national presence. Since the repeal of PASPA, approximately 30 states have legalized sports gambling, and around 20 of those states have an online sports gambling platform. States with legal sports gambling earn tax revenues, which contribute millions of dollars toward education and subsidized housing options, among other programs. With that said, these states face an interstate prohibition of sports gambling. Suppose a person is a resident of a state that allows online sports betting. In that case, that person must be physically located within the state’s border while engaging in sports gambling due to geolocation technology that aids the prohibition of interstate sports wagering.
When the Wire Act was enacted, Attorney General Kennedy specially stated that it was intended to target organized crime’s influence in sports and cut the mob off from a heavy money stream stemming from sports gambling. The act was not meant to prevent laypeople from being able to participate in online sports gambling, as it currently does. State governments, gambling participants and sportsbook companies are all detrimentally impacted by the Wire Act. States receive less tax revenue as the interstate ban caps their participant pool. Gambling participants are forced to travel to states that have legalized sports gambling to access an online sportsbook they could have easily accessed from the comfort of their own home. Furthermore, sportsbooks are inherently limited by where they can actively participate and who their customers can be because the Wire Act illegalizes interstate sports gambling. The statute forces bettors to be within state lines and prevents sportsbooks from acquiring clientele from the 20 plus states that have yet to legalize sports gambling.
While the enactment of the Wire Act in 1961 was not contested due to the impact organized crime had on professional and amateur sporting events, it is simply out of place in the modern age of technology. The mob does not have the same presence as it once did in the 1960s and ‘70s. Continuing to allow an unnecessary obstacle to a national online sports gambling market takes earnings away from laypeople, state governments and the private companies that run the sports gambling markets. A repeal of the archaic Wire Act will provide a utilitarian benefit and allow the expansion of online sports gambling.