DOJ’s Online Gambling Policy Influenced by Adelson Lobbyist’s Memo
The Wall Street Journal reports that the Justice Department’s reversal of a longstanding opinion on online gambling closely tracked with a memo sent by Sheldon Adelson’s lobbyists to top Justice Department officials. The anti-online gambling memo was sent to the US Department of Justice in April 2017 by one of Adelson’s lobbyists.
The WSJ’s reporting opens the door to questions of whether the Justice Department is playing political favorites by changing its interpretation of a limited 1961 law designed to catch mobsters (pictured: Hollywood version) running their sports betting rings into an expansive, global enforcement mechanism that tramples states rights. Critics of Monday’s decision come from across the political spectrum, especially those concerned about federal authority encroaching on state jurisdiction.
That means the debate about the legality of online casinos and card rooms might be an squabble between opposing factions in the Republican Party.
Sheldon Adelson’s Crusade against Online Gambling
Sheldon Adelson has spent millions to ban online gambling again in 8 years since the Department of Justice originally run that online poker and online casinos were legal. In early 2014 — only months after Delaware, Nevada, and New Jersey legalized online gambling at the state level — Sheldon Adelson said he would spend “whatever it takes” to see online gambling banned in the United States.
In the 2016 US presidential election, Sheldon Adelson spent nearly $100 million to help Donald Trump’s election campaign and other Republican Party causes. That made Adelson, the founder and CEO of Las Vegas Sands Corp., the single largest GOP donor in the 2016 election cycle.
In the 2018 midterm campaign, Adelson is estimated to have spent $130 million to help GOP candidates hoping to maintain control of the House and Senate. Once again, that made the LVS owner the largest Republican contributor.
Sheldon Adelson’s Influence in Trump Admin
The Trump administration showed Sheldon Adelson — the richest gaming industry mogul in the world — its appreciation in a number of ways. In late 2018, President Donald Trump awarded the Presidential Medal of Freedom to Miriam Adelson, the casino mogul’s wife, for her decades of philanthropic work.
The reversal of the DOJ’s opinion on online gambling is another show of consideration to Sheldon Adelson for his contributions. The ban on all forms of online gambling is a huge victory for the Las Vegas Sands executive, as he’s spent 5 years and tens of millions of dollars to see it happen.
April 2017 Memo to DOJ
The Wall Street Journal reported the behind-the-scenes machinations which led to the reversal. In April 2017, only months after his record contributions to the historic win by Donald Trump and the Republican Party, one of Sheldon Adelson’s lobbyists sent a memo to the Justice Department’s Criminal Division, asking for it to reconsider its stance on the 1961 Federal Wire Act.
According to the WSJ article (paywall), the Criminal Division sent that memo to the Office of Legal Counsel, which issued the 2011 opinion which changed its earlier stance on which forms of online gambling are illegal in America. The Office of Legal Counsel presumably reviewed the Federal Wire Act and agreed with the DOJ opinion issued by Virginia A. Seitz in 2011.
Criminal Division Issued Reversal
In the end, it was the DOJ’s Criminal Division which decided to ban online casinos and poker sites. The opinion was written and sealed on November 2, 2018 — five days before President Donald Trump fired US Attorney General Jeff Sessions as head of the Justice Department.
Brian Benczkowski, who was confirmed as the new Assistant Attorney General of the Criminal Division in July 2018, was in charge of the department which the memo was drafted in November of last year. The memo was opened on Monday of this week. The next day, Deputy Attorney General Rod Rosenstein announced a 90-day grace period for operators to get in line with the new policy and for sides to debate the new policy.
Coalition to Stop Internet Gambling (CSIG)
Most of Sheldon Adelson’s political contributions do not revolve around online gambling policy. Instead, the Coalition to Stop Internet Gambling (CSIG) is the public policy group which lobbies on behalf of Adelson’s anti-online gambling stance. CSIG is funded by Adelson, while it in turn funds attack ads and pr campaigns to undermine pro-online gambling bills and politicians.
When Pennsylvania was considering whether to legalize online gambling, CSIG launched several controversial ads to attack politicians who backed the iGaming bill. One attack ad showed images of a 6-year old child while the narrator said online gambling lured underage children into illegal gambling.
Ironically, licensed and regulated online gambling sites have strict age verification policies — backed by technology — which assure the safety of underage children. A ban on online gambling drives such activities underground, where unlicensed and unregulated sites might not have such protections in place. The CSIG stance makes it more likely that underage children will gamble online.
Neverthless, former Arkansas Senator Blanche Lincoln, a spokeswoman for CSIG, released a statement after the DOJ’s reversal stating: “Today’s decision seamlessly aligns with the Department’s longstanding position that federal law prohibits all forms of Internet gambling, as well as with Congress’s intent when it gave law enforcement additional tools to shut down the activity through the overwhelmingly-passed Unlawful Internet Gambling Enforcement Act (UIGEA) in 2006.”
“Today’s landmark action to rightfully restore the Wire Act is a win for parents, children and other vulnerable populations.”
Does Federal Wire Act Ban Casino Gambling, Poker?
Interpretations of the 1961 Federal Wire Act turn on what a determination of what type of interstate gambling was banned under the law. The Wire Act stated that interstate gambling over the telephone lines was illegal.
Lawmakers passed the law to catch organized crime leaders who ran sports betting rings. Bettors would place bets on sporting events over the phone lines. Since it was hard to catch mobsters involved in their bread-and-butter rackets, federal prosecutors often would tap their phone lines and catch them running sports betting rackets.
For that reason, sports betting undoubtedly is banned under the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006, which stated online gambling activities banned for phone lines under the Wire Act were also banned for the Internet under UIGEA. No one disputes that UIGEA bans online sports betting.
Wire Act Interpretations on Gambling
The 2011 DOJ opinion stated that bettors in 1961 were not placing phone calls to bet on poker, blackjack, or slot machines, so the Wire Act did not ban casino betting or poker. Under that interpretation, the UIGEA did not ban online casinos or poker rooms. The Office of Legal Counsel pointed out that the Wire Act specifically noted sports betting, but no other forms of gambling. In the 50 years between the 1961 passage of the act and the 2011 opinion, no one had been prosecuted for telephone betting on casino games or poker.
The 2019 DOJ opinion supported by Brian Benczkowski, Sheldon Adelson, Blanche Lincoln, and Sen. Lindsey Graham suggests — if poker, blackjack, or slots could have been wagered over the phone lines — then the lawmakers who passed the 1961 Wire Act certainly would have banned those activities. It’s assuming a lot and misrepresenting the history of Wire Act prosecutions down through the years.
Of course, the purpose of making huge political contributions is to install officials who listen to your opinions. From the moment a GOP administration took office, it was certain that the CEO of Las Vegas Sands would get his way on a few of his top policies.
Lawsuits are certain to come which will determine if the Justice Department has gone too far — both from groups who oppose the GOP on most things and from Republicans who oppose federal authority over states’ rights. Last Monday’s DOJ opinion is not the last word on online gambling in the United States.