Although past transitions from Democratic to Republican administrations have led to fundamental changes in federal policy on online gambling, the second Trump administration is not expected to revisit its first-term initiative to reinterpret the Wire Act.
The first Trump administration sent shockwaves throughout the U.S. gambling industry on January 14, 2019 when the Department of Justice’s Office of Legal Counsel (OLC) published an opinion reversing its prior position on the 1961 Wire Act and stating that it considered the law to apply to all interstate gambling transmissions, not just sports betting.
The OLC opinion overrode an earlier 2011 memo issued under the Obama administration that cleared the path for states to regulate online casino and lottery games, while essentially restoring the position of the DOJ under the past Republican administration of George W. Bush that all internet gambling was prohibited based on the 1961 federal law.
Despite the policy shifts of administrations past, legal experts are not expecting to see the Wire Act revisited again as a new Republican president prepares to take office to succeed a Democratic incumbent.
“I would be surprised if a Trump Justice Department were to look to reinterpret the Wire Act in a more aggressive fashion,” Behnam Dayanim, a partner with law firm Orrick in Washington, D.C. and expert in federal laws related to internet gambling, told Vixio GamblingCompliance.
“Of course, much will depend on the next Attorney General, but — unless she or he is an anti-gambling crusader — I would not expect the administration to try to roll back the expansion of mobile sports betting or the prospects for iGaming in that fashion.”
There are several obvious reasons why the Wire Act is much less likely to be revisited under the second Trump administration than it was during the first.
The 2019 opinion was shelved by a federal court in New Hampshire a few months later, following a successful legal challenge brought by the New Hampshire Lottery Commission with support from other gambling industry interests.
That district court ruling was then upheld by the U.S. Court of Appeals for the First Circuit on January 20, 2021 — the day of President Biden’s inauguration.
The Biden administration predictably declined to appeal that appellate ruling to the U.S. Supreme Court, which has never issued a definitive ruling regarding the scope of the Wire Act.
Nevertheless, the First Circuit decision has established a clearer legal precedent that the Wire Act cannot be interpreted as applying beyond sports betting than existed at the time of the first Trump administration’s 2019 memo.
Secondly, growth of the industry means any effort to constrain or even abolish online gambling via the Wire Act would involve even higher stakes than five or six years ago.
In 2019, the U.S. online industry was limited to relatively small markets for internet gaming and sports betting in New Jersey, online poker in Nevada and Delaware, plus iLottery programs in a half-dozen states.
Today, online sports betting is legal in 32 states — both Republican- and Democrat-led — while iGaming is available in eight and iLottery in 12. In 2023, internet gaming and sports betting generated more than $3.6bn in total tax revenue for state governments, versus just tens of millions at the time of the 2019 OLC opinion.
Meanwhile, the political and lobbying dynamics related to online gambling have also fundamentally changed.
The 2019 memo was widely reported to have been driven by lobbyists connected to Sheldon Adelson, the late CEO and chairman of Las Vegas Sands and Republican Party mega-donor who died in early 2021.
The Adelson-backed Coalition to Stop Internet Gambling now appears to be dormant and although Adelson’s widow Miriam remains a major donor to both President-elect Trump and other Republicans, the gaming company where she has become largest individual shareholder is now itself expanding into the online market.
“Although there remain at least some in the retail gaming industry who oppose or have reservations about iGaming, I don’t foresee the same kinds of political tailwinds that existed in the first Trump term that would be needed to push that kind of change,” Dayanim said of another Wire Act reversal.
New Administration, New Policies For Tribal Gaming
That is not to say that a Trump White House will mean continuity in all policy areas related to gambling.
The U.S. gaming industry at large will be affected by all manner of policy shifts likely to be overseen by the Trump administration through various agencies, including the Internal Revenue Service, Federal Trade Commission and even the U.S. Treasury Department’s Financial Crimes Enforcement Network that oversees anti-money laundering compliance by casinos.
Policy change of some kind is also inevitable for tribal gaming, which is subject to several layers of federal oversight and regulation via the U.S. Department of Interior.
Past transitions from Democrat to Republican administrations and vice versa have similarly led to clear shifts in policies regarding the acquisition of new lands for tribal casinos and so-called off-reservation gaming, among other matters.
The incoming Trump administration will be expected to appoint new officials to key roles within the Interior Department’s Bureau of Indian Affairs and those officials will be able to influence tribal gaming through certain decisions that are subject to their discretion, said Kathryn Rand, a law professor who teaches Indian gaming law at the University of Nevada, Las Vegas (UNLV) and University of North Dakota.
Still, the Biden administration also concluded a major rulemaking initiative earlier this year by adopting significant new sets of regulations governing land acquisitions and tribal gaming compacts.
Those regulations will continue to be binding on the new administration, Rand said, whereas certain past policy changes on tribal gaming following a change in government involved less formal agency guidance that, at least in theory, was much easier to either rescind or reverse.
One critical question will be whether February’s new federal rules governing the approval of tribal gaming compacts will be among the many Biden-era regulations that the new Trump administration will seek to consign to the history books.
In 2023, at least one Republican governor and 20 Republican state attorneys general were among those who voiced opposition to the new compact regulations through a formal consultation process on an initial draft of the rules.
However, one central focus of their criticism — a proposal that states with any form of Class III gaming would be obliged to negotiate a compact with tribes that covered all forms — was not included in the final version of the regulations as enacted earlier this year.
The Republican officials also criticized new rules that formally recognize the possibility of tribes conducting state-wide mobile gaming via a compact.
But Rand noted that the new federal regulations actually grant states significant “control” over tribal online betting by requiring both state law and a compact to recognize any transactions as occurring on servers located on tribal lands.
It was also a Republican governor in Ron DeSantis of Florida that pioneered the so-called “hub-and-spoke” model for tribal sports betting via the landmark 2021 compact with the Seminole Tribe that was approved before the adoption of the new formal regulations and then ultimately upheld by federal courts.
Even though there have been meaningful differences in policies on tribal gaming between past Democratic and Republican administrations, the growth of the industry has remained consistent, said Steve Light, a professor of political science and distinguished fellow in tribal gaming policy at UNLV.
“It’s difficult to imagine a situation where there would be so much difference between the administrations that that general success and expansion of tribal gaming wouldn’t continue,” Light said.
“But it is punctuated by whoever sits in key positions at [the U.S. Department of] Interior, Bureau of Indian Affairs, Bureau of Land Management and certainly the National Indian Gaming Commission as well.”