Last week the Department of Justice drafted an opinion stating that any on-line gambling (including sports betting) violates the Wire Act, 18 USC Section 1084. This reverses a DOJ decision in 2011, holding that the prohibition applied only to on-line sports. This is a major reversal, and calls into question the legality of any on-line betting system including sports betting. It may raise legal questions regarding on line fantasy sports systems such as Draft Kings and Fan Duel. It impacts state lotteries in two ways. First, lotteries may only use servers that are located within New York and do not involve “interstate commerce.” This could prevent the NY State lottery from using “cloud” servers. Also it could implicate lottery games and advertising that involve on-line internet services. The DOJ granted a 90 day period before it will enforce its decision.
Bottom line, on-line gaming, which is now allowed in New Jersey, may become illegal. This could impact stations in NYC that are accepting on-line gaming advertisement for New Jersey systems. There will be no immediate impact in New York as on-line gaming has yet to be approved and may not be approved absent a constitutional amendment.
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