Here is what happened, the Adelson led group got the Justice Department to reverse a 2011 position that only sports betting is banned under the 1961 Wire Act.
Now the interpretation says the 1961 Wire Act applies to all online betting, and thus it effectively bans all types of online gambling, not just sports betting.
The reason it is an effective ban and not full ban is because the Wire Act [according to Bloomberg, the site I got this information from originally] “prohibits transmission of wagers and related information across state lines.”
This means that you can place online bets at Adelson’s casino in Vegas (where a workaround lets you place bets in Nevada from your phone), but can’t for example place bets with the competition outside of Nevada.
While this rule change is clearly aimed at stopping competitors from competing with Nevada-based casinos, it also has implications for crypto… as many cryptos have popular online gambling apps.
Crypto betting apps may be able to get around this due to the fact they are global projects (and if that is the case, it could actually be bullish for crypto; as crypto would provide the only alternative to going to Nevada), but it should be noted that almost every cryptocurrency with a betting app (I’ll avoiding listing them to avoid FUD)… transmits wagers and related information across the world via the internet.
That means that, unless there is some nuance that can be argued for (like its not across state lines, it is across the globe) and unless this interpretation is successfully challenged in court (it is very likely to be challenged), one might want to be cautious about using crypto gambling apps until there is clarity.
Now with that said, I’m not a legal expert, I’m just drawing some logical conclusions based on the decision.
Maybe it is that cryptos can find a loophole and argue that this doesn’t apply to them. However, since this just happened and we don’t know details yet. you might want to assume this rule change applies to any online gambling as a safe harbor.
To learn more, see Bloomberg’s U.S. Online Gambling Reversal Puts ‘Chilling Effect’ on Industry.
- U.S. Online Gambling Reversal Puts ‘Chilling Effect’ on Industry. Bloomberg.com.