The Prospects for the Restoration of America's Wire Act ('RAWA') in 2017 Will Congress and the Trump Administration Ban Online Gaming? Frank J. Chesky III Executive Vice-President & General Counsel Sportech, Inc. January 6, 2017

What is RAWA? Federal bill that would extend the federal Wire Act of 1961's ban to most forms of online gambling regardless of whether legalized or regulated at the state level. The bill would not make online games themselves illegal, but rather would prohibit use of the communications network to play games like poker or bingo over the Internet. Reverses the 2011 Department of Justice's opinion that the Wire Act only applies online sports betting.

What is RAWA? 26 co-sponsors in the House and 9 co-sponsors in the Senate (mostly Republicans with key support from Sen. Rubio and Rep. Chaffetz). Strong public support from Sheldon Adelson – early drafts of the bill indicate that it was drafted by an Adelson-retained lobbyist. 10 attorneys general in Louisiana, Michigan, Nebraska, Nevada, North Dakota, South Dakota, Oklahoma, South Carolina, Texas & Utah sent a letter to Mike Pence urging him and Donald Trump to "help in restoring the Wire Act's provisions."

The Arguments for RAWA Arguments For However… Too easy for minors to gamble online. Problem gambling is more prevalent online. Online gambling costs 'bricks and mortar' jobs. Money laundering and terrorist financing easier to commit online. Avoiding taxes on winnings. Most, if not all, of these arguments have been rebutted by the New Jersey's online gaming model, which has robust protections of minors and problem gambling, a strict compliance regime for money laundering and terrorist financing, and tax reporting requirements.

What it Means? In a word… Uncertainty… No carve-outs for existing state-regulated online gambling (Delaware, Nevada & New Jersey affected). State-run online lotteries would be exempt, but existing online lotteries in Illinois, Michigan & Georgia would not fall within exemption as currently worded. Senate and House versions of the RAWA bill differ in scope. Current draft exempts daily fantasy sports and regulated online horse betting from RAWA's restrictions.

… And More Uncertainty. Key differences between House & Senate versions of the bill: Slightly different take on lottery carve out. Senate version exempts online bets made on "physical premises" of a gambling establishment from RAWA's prohibition. State charitable gaming exempt under House version. If re-introduced in the 115th Congress, the final version of the bill could – and will likely – change. Online gambling is likely not a priority for the new Congress or the incoming Trump Administration.

The "Trump" Card The impact of a Trump presidency on online gambling is unknown During the presidential campaign, President-elect Donald Trump indicated he has no objection to online gambling. Vice President-elect Mike Pence has been a staunch opponent of all forms of gambling, and will wield considerable influence in the Trump White House. Attorney General nominee Jeff Sessions may revisit the 2011 DOJ opinion and the scope of the Wire Act. Sheldon Adelson contributed over $25 million to Trump's campaign and will likely push hard for RAWA passage. Does Trump give Chris Christie a 'consolation prize' by grandfathering New Jersey's online gambling or push for a repeal on the federal ban on sports betting (PASPA)?

The Impact of RAWA's Passage Potential chilling effect on states considering online gambling legislation (i.e., New York and Pennsylvania). 20 online gambling sites active in New Jersey could be shuttered. Final bill could impact state lotteries with online aspirations, as well as DFS and horse racing industries. The black market for Internet gambling will become even more prevalent and a problem for states. Lost tax revenue due to business going to off-shore Internet gambling companies.

The Impact of RAWA's Passage Similar anti-gambling laws could gain traction. For example. S. 3376, introduced in September 2016, would prohibit financial institutions from processing Internet gambling transactions, and overturn the DOJ's 2011 opinion. For tribal nations, RAWA could limit possible adverse economic impacts of Internet gambling on brick-and- mortar operations.  However, a carve-out for Internet poker could provide tribal nations with a basis to demand all federally recognized tribes have equal access to enter the market.  

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