Alabama Republican Senator and U.S. Attorney General nominee Jeff Sessions rekindled a contentious debate among the gaming community Tuesday after he said that he was "shocked" by the Obama administration's interpretation of a law that has implications for online gambling.
Sessions comments came during his confirmation hearing on Capitol Hill after he was asked about the Department of Justice's interpretation of the Wire Act by online gambling opponent Sen. Lindsey Graham (R-SC).
In 2011, the Department of Justice ruled that the 1961 Interstate Wire Act only prohibits interstate sports betting and that the issue of online gambling was best left to individual states. That ruling was a reversal from previous interpretations of the law as prohibiting all forms of gambling across state lines.
"I did oppose [the DOJ ruling] when it happened, and it seemed to me to be unusual. I would revisit it or make a decision about it based on careful study. I haven't gone that far to give you an opinion today," Sessions testified.
At the time, the ruling was highly criticized by Las Vegas Sands (LVS) CEO Sheldon Adelson, who felt that online gambling would cannibalize revenue from brick and mortar casinos. However, companies like MGM Resorts Int'l (MGM) and Caesars Entertainment (CZR) , who are invested in online gaming, applauded the ruling.
In 2015, Graham reintroduced his Restoration of America's Wire Act legislation that would renew federal restrictions on online gambling and reinstate previous interpretations of the Wire Act to encompass all interstate betting.
Michelle Minton, Consumer Policy Fellow at the Competitive Enterprise Institute, which opposes broadening the interpretation of the Wire Act, told TheStreet that it is clear that the architects of the Wire Act in 1961 intended the law to address interstate sports betting only. The 2011 DOJ ruling was more in line with the original intention of the law, and the previous expansions of the law before Obama's administration were the true reinterpretations, Minton said.
"To have the government reverse its previous view of this issue would cause a lot of problems, including lawsuits, and open the door for the Supreme Court to decide on the issue," Minton said.
Currently, Nevada, Delaware and New Jersey are the only states that allow online casino gambling, with California and Pennsylvania considering legislation. However, if Sessions were to reverse the previous administration's interpretation of the law, as many as 20 states currently involved in online lottery gaming could also be affected.
Minton does not see Graham's legislation gaining much traction in Congress, but she did say that a Sessions led DOJ ruling in Graham's favor would open the door for interested parties like Adelson to sue states engaged in online gambling.
Las Vegas Sands shares were down 2.18% to $55.38, MGM fell 2.63% to $28.34 and Caesars Entertainment declined 1.7% to $8.65 in afternoon trading Wednesday.