Betting history 101: The story behind the 1961 Wire Act

Last Updated: Jan 3, 2012 3:24 AM ET
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Editor's note: The Department of Justice conceding its war against online betting is great news for poker players but sports bettors are still getting unfairly singled out. Our industry writer Larry Josephson explains the current situation in a three-part series. This week, the story behind the Wire Act of 1961.

Slow and cautious is out. Pedal to the metal is in.

Last month’s Dept. of Justice memo which appeared to open the door wide to most forms of Internet gambling has, in just a few paragraphs, changed the online landscape. In Vegas, corporate types are ripping up three-month projections and plans.

Lottery software engineers are spending this week trying to figure out how to reconfigure their sites to sell tickets online. Giddy pro-gambling legislators are busy dusting off legislation that can help grease the skids for state legalization. Get ready for the Wild Wild West.

The DoJ’s decision to call off the dogs on Internet gambling was basically an admission that it could no longer effectively fold a newspaper in the middle of a hurricane. Many state and federal lawmakers had come to the same conclusion that gamblers and anyone with a third of a brain had long ago reached – that people were going to gamble whether or not lawyers in the U.S. government thought it was a good idea.

In state legislatures, Congress and courtrooms, the tide was turning. Even conservatives, so instrumental in passing anti-gambling legislation, were starting to smell the coffee.

The DoJ’s wagon was being pursued by some fast, hungry dogs, and the government decided it best to slow down the pursuers by tossing some meat out the back. And so, decreed the DoJ in a 180 that would make Mitt Romney proud, the Wire Act no longer will be interpreted to apply to any wagering except sports betting.

The 1961 Wire Act was the baby of then-Attorney General Robert F. Kennedy, who was empowered by his brother, President John F. Kennedy, to take down the mob. RFK and JFK figured the job was theirs by default because the person who had the most resources to get the job done, FBI Director J. Edgar Hoover, was busy chasing communists and didn’t even admit that the mafia existed. So without the FBI to worry about, the bad guys were shooting at a lot of open nets, and RFK saw an opportunity to bust their chops and earn a name for himself.

Organized crime in the early 1960s had yet to fully discover the profitability of hooking Americans on drugs and then selling them the product. Instead, the mafia’s bread and butter consisted of infiltrating and milking labor unions, shaking down businesses and running gambling rings.

Mindful that the gambling heart of the country beat in Nevada, a state with only three electoral votes, RFK decided to pick some low-hanging fruit, and when his office crafted the 1961 Wire Act legislation, it went after gamblers. Hard.

It started out:

Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.

Robert Kennedy wasn’t interested in stopping you from betting your Uncle Joe a fin on the Giants-Colts game or even cleaning out the guys who ripped off the Vegas count rooms and sent suitcases of cash back to bosses in Chicago and Kansas City. He wanted to 9x12-foot accommodations for the real-life Goodfellas – the Giancanas, Lucianos and Castellanos – the guys who more and more were controlling the streets of urban America. To RFK, gambling wasn’t the problem. He wanted to set giant rat traps for the creeps who controlled the business.

With RFK pushing the buttons and JFK backing it, the Wire Act passed Congress and was signed into law, less than a year into the Kennedy’s abbreviated presidency. The Vietnam War had not yet ripped apart the country and the Cuban Missile Crisis was still a little more than a year away when the Wire Act into law – a piece of legislation that was both all about gambling and nothing about gambling.

David Schwartz, a University of Nevada-Las Vegas professor who may be the world’s leading authority on the Wire Act, had this to say about the legislation [Schwartz’s comments were made in 2010, a full year before the DoJ’s ruling]:
“Anti-gambling legislation passed by Congress in the summer of 1961 was actually an anti-organized crime measure that only attacked purveyors of gambling because of their important position in the organized crime chain of command. It was not then intended as a sweeping federal effort to curtail public access to gambling.”

However, in the act’s half-century lifespan, the DoJ has used it to restrain Internet gambling and punish those who have exercised their right to either establish legitimate businesses or gamble online. Moralists in Congress used the Wire Act as a platform for the 2006 Unlawful Internet Gambling Enforcement Act, which has done nothing to stop Internet wagering and everything to create chaos in the industry.

Now the Dept. of Justice has finally shrugged it shoulders and called a halt to the much of the madness, even if it was under duress. Sanity in the process was long overdue.

Next week: The Wire Act and sports betting

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