Gradually, US states are warming to different forms of gambling, both online and physical casinos, as a revenue source, fueling the need for US merchant accounts. Currently, 40 of 50 states have some type of legalized gambling in place.
Will more states take advantage of gambling for an added revenue source? We think they will, but a major hurdle appeared last week when the U.S. Department of Justice, without warning, reversed its 2011 decision regarding the Wire Act and online gambling.
The issues that surround gambling are never far away from the news.
Recently, we blogged about a movement in the UK that is committed to outlawing the use of credit cards for gambling, in brick and mortar houses and online. Should that pass (we don’t think it will), it would be a landmark decision that would simply force consumers to turn to another payment solution to fund gambling – mobile wallet accounts – a slightly less convenient option than a credit card, but a viable alternative.
With the DOJ reversal, the US has a more significant problem: it puts online gambling and sports betting (now legal in New Jersey) into a grey area.
A refresher on the Wire Act of 1961
The Interstate Wire Act was enacted to curb criminal gambling, particularly, sports betting and match fixing, through the use of wire communication. Last year, the Supreme Court nullified a law that prohibited betting on sports, thus paving the way not only for New Jersey to legalize sports betting, but other states to begin setting up the framework for such.
We think the U.S. Department of Justice has some explaining to do. At least that’s what gambling experts and enthusiasts feel.
A.G. Burnett, the former Chairman of the Nevada Gaming Control Board, expressed his dismay in a recent guest column in the Nevada Independent:
“As the former chairman of the Nevada Gaming Control Board (NGCB), I’ve spent my career crafting regulations that work – both for consumers and the industry. I’ve seen firsthand how states can efficiently and effectively regulate both on-site and online gaming. The DOJ’s recent opinion is unnecessary, uninformed and, frankly, a reckless overreach.”
Mr. Burnett poses an excellent point. What US state oversees sports betting and gambling in all of its forms better than Nevada?
The possible fallout from the Wire Act
The Department of Justice’s decision to reverse its 2011 interpretation of the Wire Act has understandably caused confusion in the U.S. gambling industry. From a US merchant accounts standpoint, we wonder if we’ll see fewer applications and even inquiries for such. Among the more significant fallout may include the following:
- Collusion between states: Currently, the three states in which online gambling is legal – Nevada, Delaware and, most recently, New Jersey – have an interstate agreement for online poker (online gambling enthusiasts can play on websites in either of those states). The Wire Act reversal puts such collusion in jeopardy.
- Online gambling websites: Because we receive inquiries regarding US merchant accounts for online casinos, poker, blackjack and all things related, does the Wire Act amendment include online gambling?
- What now for New Jersey? Having just legalized sports betting, New Jersey could be taking two steps back with the DOJ’s ruling. The Garden State is/was counting on sports betting legalization as (needed) revenue, and to jumpstart a fading gambling industry in a fading city (Atlantic City).
- And what about DraftKings and Fanduel? Does the DOJ reversal cover the two fantasy sports giants in the US? We are curious as to how the Wire Act impacts the thousands (millions?) of Draftkings and Fanduel members who choose their NFL, NHL, NBA and MLB fantasy teams each week.
US merchant accounts for online gambling, casinos, etc…
Truthfully, we’re at a loss as to where this leaves the sports betting and online gambling industry in the US. Additionally, it will no doubt impact the demand for US merchant accounts considering the present state of confusion for the industry.
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