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This is the second article in the Legislative Sausage Making series for Legal Sports Report. In this series, we will break down how federal gaming statutes evolved.
As there have been continued calls for the federal government to step in and establish some uniformity out of the ashes of PASPA, we have produced this series to take a look at just how difficult and time consuming it has been historically to pass gaming legislation in Congress.
While federal hearings are often regarded as exciting for those of us who follow the industry, excitement should be tempered. Hearings, especially initial hearings, frequently never result in any additional action. For instance, the May 2016 House Subcommittee on Commerce, Manufacturing, and Trade hearing has resulted in next to no new movement from DC legislators.
Here, we examine the process for passing the Wire Act, which deals with interstate sports betting.
The first hearing on a bill to criminalize gambling communications was held in 1950, months before the Kefauver Committee had even wrapped up its hearings.
During this hearing, Herzel Plaine, of the Department of Justice, announced that during World War II there were an estimated 150,000 bookmakers in the US. Plaine’s statement was shocking, but was tempered by the testimony of Assistant Attorney General James McInerney, who stated that in his opinion, crime was actually decreasing across the country and there was no evidence of a nationwide syndicate of bookmakers operating collectively.
This first hearing also saw Los Angeles bookmaker Russel Brophy educate Congress on just how bookmaking works. Brophy stated that a bookmaker will take a bet on “anything that the public would be interested in.” Brophy further educated Congress that contrary to the opinion of lawmakers at the time, horse racing was second to baseball in terms of popularity and handle.
Hearings that took place alongside the Kefauver Committee’s investigation were the first to begin to recognize the complexity of differentiating the types of information the wire services transmit.
This hearing was the first that proposed that the Federal Communications Commission (FCC) could serve as a gatekeeper to the wire services industry and issue licenses to “legitimate” news related-wires while taking action against those that supported the illegal gambling industry.
The plan to use the FCC to enforce what would become the Wire Act began to fall apart in 1954, in what seems to be a case of Congress forgot to ask the FCC if they would be capable of enforcing the proposed statute.
The FCC chairman testified that he viewed the prevention of the transmission of wagering information as a law enforcement problem and not an obligation of the FCC. The lack of support from the agency who was going to enforce the bill was likely the direct cause of the death of the proposed statute debated in 1954.
By 1956, the Department of Justice had come up with a more articulate justification for the proposed legislation, with Assistant Attorney General David Luce stating that the bill had two purposes:
Importantly, Luce stated that this bill was intended to only apply to gambling information relating to horse and dog racing (not baseball, not football, not poker, only horse and dog racing).
Luce went on to state that it was the opinion of the Department that organized crime had not syndicated sports bookmaking at this time.
Luce’s comments were countered by Rufus King, of the American Bar Association, who reminded Luce of the college basketball fixing scandals of the early 1950s. By 1956, the FCC had also come around and supported the legislation, which had been narrowed in scope.
After six years and four hearings, it appeared that the Kefauver Committee’s recommendations with respect to wire transmissions and gambling information were unlikely to ever materialize in passed legislation, but then the Kennedy administration was elected and Robert F. Kennedy was installed as Attorney General.
Kennedy launched a war against organized crime and the Wire Act would be his first legislative victory.
In the first of several 1961 hearings, Kennedy opened the hearing by comparing corner bookies to the tip of the iceberg, noting that what is visible is only the smallest part of organized crime’s grip on gambling.
Kennedy stressed the need for federal law to be passed because otherwise jurisdictional restrictions would prevent law enforcement from taking down the leaders who lived in different jurisdictions from the foot soldiers on the corner. It was also made clear by the attorney general that this proposed legislation was intended to be used against gambling as a business, not as a social activity between friends.
Following Kennedy’s testimony, there were significant questions over who was going to be responsible for enforcing the statute, as the version of the bill being debated appeared to require telephone companies to at least assist in law enforcement obligations.
The final Wire Act hearing took place across five days in June 1961. Kennedy once again opened the hearing and noted that the legislation was intended to help states, with federal tools, not take over state law enforcement.
Kennedy stressed the bill was very narrowly focused, so much so that:
“In fact, wireless communication was not included in this bill because it is our belief that the Federal Communications Commission has ample authority to control the misuse of this means of communication.”
Kennedy testified that while the bill “is not interested in the casual dissemination of information with respect to football, baseball or other sporting events between acquaintances[,]” the bill would apply to the professional gambler, who is a large layoff bettor, who attempts to avoid liability by stating, “I just like to bet. I just make social wagers.”
The legislation that became the Wire Act saw tremendous evolution over the 11 years of hearings before the bill was passed in 1961.
The original Wire Act would have had administrative agencies tasked with enforcing a statute targeting organized crime. Similarly, while aspects of the bill were narrowed, other aspects were broadened substantially, such as the evolution from only applying to horse and dog racing to sporting events and contests, as well as the language used in the passed version of the bill.
The Wire Act remains the subject of contentious debate, with both Republicans and Democrats continuing to debate recent interpretations of the bill. There have been bipartisan efforts in recent years to rewrite the Wire Act, to incorporate gambling beyond sporting events and contests.
The purpose of this series is two-fold; first it is to provide some background on how important gambling statutes came to be; and secondly, to show that proposed legislation frequently evolves over time and often over long periods of time.
Calls for hearings and hearings themselves at the federal level are but one step in a complicated and time-consuming process. Despite the calls from NBA Commissioner Adam Silver and Major League Baseball Commissioner Rob Manfred for federal legislation mandating uniform gaming requirements, don’t hold your breath for that coming anytime soon.