JW Probes How DOJ Quietly Reversed Online Gambling Law

Judicial Watch is investigating yet another Obama Justice Department scandal this time involving the reversal of a law passed by Congress decades ago banning all forms of online gambling, a move that allowed companies—and big Democratic Party donors—with connections to Attorney General Eric Holder to amass huge profits.

It involves the Wire Act, enacted by Congress in 1961 as an antiracketeering measure to prohibit the use of wire communications for the interstate transfer of bets or wagers. When the internet came around years later the law was naturally applied to online gambling and U.S. courts, as well as the Department of Justice’s (DOJ) own criminal division, agreed with the application in the absence of legislation specifically aimed at internet gambling.

In fact, up until recently the DOJ went after offshore-based online poker companies operating in the U.S. The feds slammed them with serious criminal charges like wire fraud, money laundering and bank fraud. The agency’s cases were strengthened thanks to a 2006 measure Unlawful Internet Gambling Enforcement Act (UIGEA) passed by Congress to go after online gambling firms in the U.S. The Federal Bureau of Investigation (FBI), which operates under the DOJ, even issued a warning reminding that it’s illegal to gamble online in the United States. That means no cyber bets on sporting events or in virtual card games; no transferring money electronically for gambling and no wagers in offshore internet casinos if you live in the U.S., according to the FBI bulletin.

A few years later the Holder DOJ quietly reversed key parts of the Wire Act of 1961 at the request of two states—Illinois and New York—seeking to sell lottery tickets online. In its legal opinion the DOJ found that the Wire Act only prohibited wagers on sporting events or contests, lifting a long-standing federal ban on internet bets placed on non-sporting events. This applies to poker and slots, the very industries the DOJ was indicting years earlier. The reversal also contradicts the 2006 law (UIGEA) passed by Congress and allows states to decide if they want to offer online gambling.

Following the DOJ’s 180-degree reversal a federal audit found the close ties between Holder and businesses that have raked in profits as a result of the change. This news story reveals the curious connections that exist between Holder and the companies’ profits based on the DOJ’s decision to override the gambling law passed by Congress. The story goes into specific numbers, including peculiar increases in stock prices after the feds reversed the online gambling measure.

Also of interest is the Illinois connection. The Assistant Attorney General in the Office of Legal Counsel that actually wrote the reversal, Virginia Seitz, was a partner at a Chicago law firm where Michelle and Barack Obama met and worked until they married. After two years as one of the president’s top legal advisors, Seitz returned to her old law firm, Sidley Austin LLP, in mid-September. The firm has more than 1,800 attorneys in 18 locations worldwide and this time Seitz is working in the Washington D.C. office located just blocks from the White House.

The former Assistant Attorney General for the Office of Legal Counsel may have left her government job, but her print on the law is long-lasting and JW plans to find out how it all went down. In a Freedom of Information Act request filed with the DOJ recently, JW asks for any and all records related to the December 23, 2011 ruling to legalize non-sports betting over the internet. This includes any records on the legal bases for the ruling under the Unlawful Internet Gambling Enforcement Act of 2006.