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Ruling by Justice Dept. Opens a Door on Online Gambling
By EDWARD WYATT

Published: December 24, 2011



WASHINGTON — The Justice Department has reversed its long-held opposition to many forms of Internet gambling, removing a big legal obstacle for states that want to sanction online gambling to help fix their budget deficits.

The legal opinion, issued by the department’s office of legal counsel in September but made public on Friday, came in response to requests by New York and Illinois to clarify whether the Wire Act of 1961, which prohibits wagering over telecommunications systems that cross state or national borders, prevented those states from using the Internet to sell lottery tickets to adults within their own borders.

Although the opinion dealt specifically with lottery tickets, it opened the door for states to allow Internet poker and other forms of online betting that do not involve sports. Many states are interested in online gambling as a way to raise tax revenue.

New York has offered an online subscription service since 2005 that allows state residents to enter a string of Lotto or Mega Millions drawings.

The director of the New York Lottery, Gordon Medenica, said Saturday that the lottery had built a broader online gaming system for New York, but that the contractor that put the system together was wary about moving forward because it feared it could get into legal trouble.

“We’ve been waiting for a couple years,” Mr. Medenica said in a telephone interview. “We’re thrilled that this ruling has now come down and confirmed that our legal analysis was correct all along.”

As a result of the new policy, New York Lottery officials said they planned to add two additional jackpot games, Powerball and Sweet Million, to its current online lottery subscription service, and would allow New York residents to buy single-draw tickets online for the first time.

Mr. Medenica said it would take several months for the lottery to finalize the new offerings, and he said officials would “take a very cautious initial approach” in rolling out additional online options.

Michael Jones, the superintendent of the Illinois Lottery, said the request for clarification was prompted by research the state commissioned several years ago that indicated online sales could drive up participation. “When you look at the Internet, which is what everybody uses these days to buy everything, it seemed like a very, very logical thing to use the Internet to increase the player base,” Mr. Jones said. “States were in dire financial problems — the ability to use the lottery to raise revenue in a nontax way was a significant thing for states to do.”

He also said that online sales would enable the lottery to regulate purchases. “Right now we can’t guard against someone walking into a lottery retailer and buying too many tickets and behaving excessively,” Mr. Jones said. “Now with credit card purchases, we can guard against excessive play.”

Illinois could begin selling lottery tickets online in as soon as three months, he said.

The District of Columbia and Nevada have both approved limited forms of Internet gambling, and New Jersey has been considering legislation allowing sports betting and other forms of Internet gambling.

Steven Grossman, the Massachusetts state treasurer and the chairman of the state’s Lottery Commission, called the opinion a “turbocharged opportunity to engage new markets.”

“This will put additional pressure on Congress and others to allow online poker and other Internet gambling,” Mr. Grossman said.

Estimates of the size of the online gambling industry vary widely, from as low as $6 billion to as high as $100 billion. But even at the lower end, Mr. Grossman said, “that’s tens of billions of dollars that goes offshore.”

In a separate request in July, Senators Harry Reid, Democrat of Nevada, and Jon Kyl, Republican of Arizona, asked the Justice Department to clarify its position on Internet gambling, seeking either to affirm that federal law prohibits gambling over the Internet or to make sure that Congress has a role in drafting any expansion of online betting.



Elizabeth A. Harris, Thomas Kaplan and Sarah Maslin Nir contributed reporting from New York.



http://www.nytimes.com/2011/12/25/us/online-gaming-loses-obstacle-at-justice-department.htm?_r=2