Page 38 - GS190402

Education

Non-sports-related Other prohibitions also apply

The OLC also determined in the 2018 opinion that the
gambling reversal other prohibitions that satisfy the other elements of 1084(a)
apply to non-sports-related gambling. Those prohibitions
include the knowing use of a "wire communication facility"
for "the transmission in interstate or foreign commerce of
bets or wagers" by someone "engaged in the business of
betting or wagering."
In other words, the OLC has essentially determined in
the 2018 opinion that non-sports-related online interstate
gambling is now illegal under 1084(a).

Related to the 2018 opinion, the United States Deputy
Attorney General recently issued a memorandum on Jan.
15, 2019, advising DOJ attorneys that they should adhere to
By Josh Herndon the 2018 opinion, which is the DOJ's operative position on
Global Legal the meaning of 1084(a).

eginning in 2011, businesses involved in ongo- However, the memorandum also advised DOJ attorneys
ing non-sports-related interstate gambling had that, as an exercise of discretion, they should refrain
good reason to believe certain prohibitions from applying 1084(a) in criminal or civil actions to
B pertaining to the knowing use of a wire com- persons who engaged in conduct that violated 1084(a)
munication facility to place bets or wagers, assist in plac- in reliance of the 2011 opinion prior to Jan. 15, 2019 (the
ing bets or wagers, and/or transmit information assisting date of the memorandum), and for 90 days thereafter. The
in placing bets or wagers did not apply to them. However, Memorandum notes that the 90-day window will give
that is no longer the case, based on a new opinion from the businesses that relied on the 2011 opinion time to bring
Department of Justice's Office of Legal Counsel. their operations into compliance with federal law.

On Nov. 2, 2018, the OLC issued an opinion titled Window closing soon
Reconsidering Whether the Wire Act Applies to Non-Sports However, the memorandum also emphasized that the
Gambling (www.justice.gov/olc/file/1121531/download) that 90-day window is an "internal exercise of prosecutorial
reversed an opinion it issued in 2011 regarding the discretion" and that the 90-day window is not a safe harbor
applicability and scope of Section 1084(a) of the Wire Act, for violations of 1084(a) or the Wire Act.
18 U.S.C. § 1084, to sports-related gambling. Section 1084(a)
states: Businesses with operations that may be subject to 1084(a)
have little time remaining to bring their operations into
"Whoever being engaged in the business of betting compliance with 1084(a), as the 90-day window for doing
or wagering knowingly uses a wire communication so will soon slam shut. Businesses that fail to bring their
facility for the transmission in interstate or foreign operations into compliance with 1084(a) will soon be in
commerce of bets or wagers or information assisting violation of federal law for engaging in activities that
in the placing of bets or wagers on any sporting would not have violated federal law only a few short
event or contest, or for the transmission of a wire months ago.
communication which entitles the recipient to receive
money or credit as a result of bets or wagers, or for If your company processes payments for businesses that
information assisting in the placing of bets or wagers, may be subject to 1084(a), make sure they know about this
shall be fined under this title or imprisoned not more change so they can consult an attorney as soon as possible
than two years, or both." to determine what is necessary to bring their operations
into compliance with 1084(a) before the window for doing
The OLC determined in 2011 that the prohibitions in so slams shut.
1084(a) were limited to sports-related gambling. However,
it determined in 2018 that the prohibitions in 1084(a)
are not limited to sports-related gambling. Rather, the Josh Herndon is an attorney at the Global Legal Law Firm, whose attor-
OLC determined in the 2018 opinion that only one neys are well recognized as top payments industry experts. Herndon
specific prohibition in 1084(a) – which criminalizes "the works in the compliance field helping electronic payment companies
transmission … of … information assisting in the placing avoid violating rules, as well as avoid being fined, arrested or sued from
of bets or wagers on any sporting event or contest," is internal or external threats. He is also involved in litigation in the pay-
limited to sports-related gambling. ments space. He can be reached at jherndon@attorneygl.com.

38