When President Donald Trump took office in January 2017 and nominated Senator Jeff Sessions for the position of United States Attorney General, many online gaming analysts were unsure of the potential impact on the industry. But that uncertainty quickly turned to pessimism during the Senate confirmation hearings when Senator Lindsey Graham asked Sessions about online gaming, to which Sessions responded that he intended to revisit the issue.
Over the past week, rumors began to swirl that Sessions was prepared to formally reverse the 2011 decision by the Department of Justice that removed online gambling and lotteries from the Wire Act. That interpretation allowed American states to take those decisions into the hands of their own state legislators and legalize the online games for regulatory purposes if they chose to do so. Sessions wants to change that by reversing that 2011 decision.
Why? Two words: Sheldon Adelson.
Money Can’t Buy Love. But It Can Buy Legislation.
Casino mogul Sheldon Adelson has been staunchly opposed to online gambling for years out of fear of cutting into his billions in profits from land-based casinos. Under the guise of caring for the youth of America and the potential for increased gambling addiction, Adelson formed a lobbying group and began to recruit allies in the government, as well as in the 2016 presidential campaigns.
Adelson ultimately donated millions to Trump’s campaign, as well as others who proved to be cohorts in his fight against online gambling. Members of Congress like Senators Tom Cotton and the aforementioned Graham, as well as Representatives like Jason Chaffetz, took up the cause of trying to pass the Restoration of America’s Wire Act (RAWA) to officially outlaw online gambling via the federal government. No efforts gained any ground, but it wasn’t for a lack of trying, as Graham tried to slide RAWA language into a budget bill at one point. That failed as well.
Sessions proved to be opposed to the 2011 DOJ decision regarding the Wire Act, as he articulated in his confirmation hearing testimony in response to a question from Graham. He vowed to revisit it.
Adelson has given millions of dollars to the Republican Party and members of it, to which Sessions proudly belongs. The billionaire also donated a record-setting $5 million to Trump’s inaugural committee, indicating that Adelson is continuing to buy the ears of the Trump administration on a variety of issues. Online gambling is one that is of the utmost important to him.
Gambling Compliance first reported last week on rumors that Sessions is prepared to overturn the 2011 DOJ decision sooner rather than later, and while there is no official confirmation from those close to Sessions in the Justice Department, speculation continues.
Why would this be on the docket now? There are several possible reasons and possibilities that add up to enough of a reason to keep a possible promise to Adelson.
- Sessions recused himself from investigations into Russian connections to members of the Trump campaign. That leaves him open to focus on other issues.
- Adelson is not getting any younger. He is 83 years old and not very mobile, but his limitations might make him hungrier to accomplish his goals. After fighting for the ban for several years, his patience is likely growing thin.
- The online gaming community is relatively small, meaning a decision to ban online casino games and poker is unlikely to create much backlash, at least on a national level. While many are focused on topics like immigration and healthcare, Sessions could make the decision quickly and relatively painlessly.
- One Adelson ally is leaving public office for the time being. Chaffetz announced this week his intention to return to private life when his current term is over in 2018, and hours later, he made it known that he may resign from office in the coming days and not even finish his term.
- Only three states have legalized the industry thus far, and only one of them – New Jersey – is likely to fight a DOJ decision in court. The hassle will be minimal, especially if Sessions makes his move before other states legalize online gaming.
RAWA sponsor Jason Chaffetz is not running for reelection!— Steve Ruddock (@SteveRuddock) April 19, 2017
Online Gaming Future Looks Murky
It is no secret that online poker and casino games are a tough subject for many states. Since Nevada, Delaware, and New Jersey legalized and regulated the industry within their own borders several years ago, no other state has been able to do the same. California has been debating the topic for ten years without any passable bill in sight. Pennsylvania and New York are the most likely to pass legislation this year, but those legislators keep hitting roadblocks as well.
1/ Re: PA HB271, hearing today that Senate CERD does not have a finished product, and that #iGaming taxation remains a sticking point.— Chris Krafcik (@CKrafcik) April 19, 2017
Should Sessions follow through with his likely plan to overturn that 2011 decision, states may have to order their online gaming businesses to shut down temporarily. There is a chance to obtain a court order to remain in business pending a full court decision on the issue, but that possibility depends upon the language of Sessions’ ruling.
Delaware is unlikely to fight the DOJ decision, as it garners a relatively small amount of revenue from the industry. Nevada only allows online poker and only one site is operational in the state. While that site is owned by Caesars Entertainment, a powerful enterprise in Nevada, a legal battle may be too expensive for one online poker website. However, New Jersey has developed a very lucrative online gaming industry, and that is the state that will likely pursue immediate legal action.
For now, the industry and the hopes of growing it all ride on US Attorney General Jeff Sessions.