Should the United States Gamble and Repeal the Wire Act?

CRISTOPHER GALIS—On April 8, 2019, Texas Tech played Virginia in the NCAA Men’s Basketball Final, bringing March Madness to an end. Throughout March Madness approximately forty-seven million American’s wagered somewhere near eight and a half billion dollars on March Madness. This is the first year that some of that money could legally be bet outside of the sports books in Las Vegas, Nevada as a result of the Supreme Court’s decision to overturn the Professional and Amateur Sports Protection Act (PAPSA) in Murphy v. National Collegiate Athletic Association last May. PAPSA was the law passed by Congress which limited sports wagering to Las Vegas; however, some barriers remain to parties who wish to enter the sports wagering field.

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Foremost among these barriers is the Wire Act. Essentially, the Wire Act makes placing bet or wager on a sporting event across state lines illegal. The Act also makes transmitting information related to a bet illegal; however, there is a carve out for sports gambling under this act.

A number of practical problems stand in the way of the repeal of the Wire Act. The origins of the Wire Act raise questions over how cross-border transactions will be handled under the Wire Act in light of the overturning of PAPSA. The purpose of the Wire Act originated to target bookies and who had large interstate operations to limit the risk exposure and organized criminal activity. As a result, sports book operators will be required to gain licensing and establish business in each jurisdiction they intend to have any operations. This is because interstate sports wagering is still unlawful under the Wire Act. In January, the Department of Justice changed courses and determined that the Wire Act no longer applies to just sports wagering. This seems to breathe new life into the Wire Act. Because sports wagering can only happen in an organized manner through interstate commerce if Wire Act is repealed, this begs the question: should the wire act be repealed?

The current effect of the Wire Act seems to be in conflict with the intent of the Act’s passage. The legalization of sports gambling will allow sports books to open in any state which decides to allow sports wagering. Sports wagering has been done over the phone within the borders of Nevada, as the Wire Act does not limit intrastate communications. For cities that could serve markets across multiple states, the Wire Act seems an unreasonable impediment to taking wagers over the phone given that in this context no organized crime will be limited by the Wire Act.

Given that the Wire Act is not fighting organized crime in this context, the federal government should remove itself from regulating sports wagering and allow the states to decide the policy. When two states agree to allow wagering within their borders, the federal government should not impede the decisions made at the state level. This will allow the minimal unnecessary interference with the sports gambling industry. This will maximize the potential taxable income in the industry. The current estimate for the market cap of the sports wagering industry in the United States could be nearly  seventy-three billion dollars. More of this money will be wagered in a taxable manner if impediments like the Wire Act are removed.

The Wire Act should be repealed, or include a carve out for for major sports book operations, because the wire act does not perform its purpose in this act, the regulation of gaming is best performed at the state level, and repealing impediments will maximize taxable income.