U.S. Gambling Statutes Inspire Fear And Loathing But No Lobbying

June 23, 2022
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Antiquated gambling laws loom as potential roadblocks to the industry’s future progress, but there is little, if any, interest in lobbying Congress to update federal gaming regulations.

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Antiquated gambling laws loom as potential roadblocks to the industry’s future progress, but there is little, if any, interest in lobbying Congress to update federal gaming regulations.

The U.S. Wire Act is a relic written decades before the internet was invented, but still forces online gaming operators to find ways to comply with its 61-year-old prohibitions related to interstate betting.

Two other federal laws — the Indian Gaming Regulatory Act of 1988 and the Unlawful Internet Gambling Enforcement Act of 2006 — also could use facelifts as the gambling marketplace becomes increasingly digital.

But the attitude of the gaming industry seems to come down to this: the devil you know is better than the devil you don’t.

There simply is not much concern that this approach might prove to be short-sighted and could haunt gaming in the long run.

Carl Sottosanti, a gaming consultant who retired in 2020 as executive vice president of Penn National Gaming, cites two axioms he learned from mentors.

“The perfect is the enemy of the good, and two, don’t suggest legislation because you don’t know where it’s going to end,” Sottosanti said on May 18 during a gambling conference at Seton Hall University in Newark, New Jersey.

It would be difficult to disagree with Sottosanti’s philosophy given the gaming industry’s relative financial health as sports betting flourishes and the COVID-19 pandemic dissipates.

Frank DiGiacomo, a veteran gaming attorney with the Duane Morris law firm in Cherry Hill, New Jersey, noted the gaming industry’s success under the current federal regulatory scheme.

“The industry is so adapted to the current legal obstacles out there and navigating around them that I don’t really think that the federal solution is the manna from heaven that some think it would be,” said DiGiacomo, who appeared on the same panel as Sottosanti at Seton Hall.

Despite the Wire Act’s prohibition of the transmission of sports bets and certain betting information across state lines, the gaming industry would be prudent to refrain from lobbying to change the law, according to Ryan Rodenberg who is a professor at Florida State University.

“To do so could put a U.S. attorney on notice about the current data transmissions flowing into and out of states where sports betting is currently illegal,” Rodenberg told VIXIO GamblingCompliance in an email.

The industry’s chief lobbying firm in Washington, D.C. — the American Gaming Association (AGA) — is not planning a campaign to amend the Wire Act, the Indian Gaming Regulatory Act or the Unlawful Internet Gambling Enforcement Act.

“Pursuing changes to federal law is difficult, especially during an election year,” said Chris Cylke, the AGA’s senior vice president of government relations.

“Today, we are focused on repealing the federal sports-betting excise tax, increasing the slot reporting threshold; prompting federal enforcement action against illegal online operators and grey market machine manufacturers; ensuring states get sports-betting frameworks right, and expanding payment choice for consumers,” Cylke said.

While the gambling industry continues to expand its influence across the nation, it still ranks relatively low on the food chain of issues before Congress and many federal lawmakers simply do not understand the business.

“The mainstream gaming industry has an entrenched, long-standing and visceral opposition to federal involvement in gambling regulation — and for good reason,” said Behnam Dayanim, a gaming attorney with the Paul Hastings law firm in Washington, D.C.

“The risk in seeking congressional attention to antiquated legislation is new legislation that is equally or more burdensome or restrictive,” Dayanim said.

Even worse, Dayanim said, gambling opponents in Congress could impose restrictions on internet gaming which is struggling to expand beyond six states where online casinos are legal.

“Moreover, the states and tribes themselves have vested interests in maintaining their primacy in gambling regulation,” Dayanim said.

Dayanim acknowledged the gaming industry would benefit from an amendment to the Wire Act, which would allow interstate sports betting if states regulated such activity.

But he added any amendment to the Wire Act should wait until internet gambling is legalized in more states and California and Texas join the sports-betting market.

Under that scenario, Dayanim said a “federal effort to retrench would become politically and practically infeasible. At that point, a concentrated federal modernization effort might make sense.”

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