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Online Gambling (If Now Legal) May Be Big in 2012

By Stephanie Rabiner, Esq. on January 03, 2012 | Last updated on March 21, 2019

Is online gambling legal?

This is the question everyone is asking in light of a recently released Department of Justice opinion. New York and Illinois had asked the Office of Legal Counsel to clarify the Wire Act of 1961, which purportedly bans all online gambling.

According to the new opinion, however, that's not true. 

In fact, the Justice Department has arguably given the go-ahead to intrastate online gambling.

The federal government had previously held that the Wire Act of 1961 prohibited interstate transmissions of gambling-related communications. In other words, all online gambling was illegal.

But this new opinion clarifies the law's application. First, the Wire Act only applies to bets or wagers on sporting events or contests. And second, purely intrastate communications are not covered.

This arguably means that online gambling is legal when it:

  1. Does not involve sporting events, and
  2. All operators and bettors live within a jurisdiction where the practice is legal under local law.

Nevada and the District of Columbia are the only jurisdictions to have legalized online gambling, meaning they are the only places an online gambling start-up would work. Nevada actually plans to start licensing businesses who wish to operate gambling websites in the state.

But a number of other states are looking to online gambling as a way to raise revenue, according to the New York Times. This includes California, where legislators have considered at least 2 bills just this year.

So if online gambling is legal, it has a good chance of being the hottest start-up in 2012.

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