For nearly a decade, the Department of Justice (DOJ) ignored a Fifth Circuit Court of Appeals ruling declaring that the (Federal) Wire Act covers only sporting events, not games of chance. The DOJ reversed itself in 2011, returning to states the right to regulate online gambling.
This was an excellent move for states’ rights. Legal gambling sites use technological methods to restrict their business to the states where online gaming is allowed, so states that don’t permit such gaming are not affected. And the DOJ’s previous interpretation of the Wire Act was incredibly broad – it effectively banned all Internet gambling, even within a single state.
Nevada, Delaware, and New Jersey have legalized online gaming and nearly a dozen more states – including Michigan – are considering following suit. Seeing this trend, Sheldon Adelson tried – unsuccessfully – to build an online gaming business. Since failing to capitalize on the market, his company, Las Vegas Sands, has been terrified that online gaming represents a competitive threat to the profitability of brick-and-mortar casinos. With more states looking to legalizing online gaming, the threat appears to be growing.