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Gaming Report: U.S. Department of Justice Issues New Opinion on Wire Act & Online Gambling, the Country’s Military to Utilise Poker Bot Technology & More

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  • Namita Ghosh January 19, 2019
  • 4 Minutes Read

If U.S. boasts of the world’s biggest live gambling hub, i.e. Las Vegas, it has also seen a remarkable opening of the online sports betting segment through 2018, after the country’s apex court let states implement legal framework for regulated sports betting. However, the new legal opinion let out by the U.S. Department of Justice (DOJ) earlier this week has iterated that the prohibitions of the 1961 Interstate Wire Act are applicable not only to sports betting but also to most forms of interstate online gambling. The new DOJ opinion has sent state’s lawmakers, regulatory authorities and gambling companies into a tizzy and put a big question mark on the future of online gambling in the country.

Poker Bot technology in the meantime is being acknowledged as a tool that can help the U.S. army streamline its war strategies. Tuomas Sandholm, the man behind developing the famous poker bot Libratus that famously defeated four accomplished poker players in a game of poker in 2017, has now been contracted by the U.S. army to apply his poker bot technology in war game simulations.

Sports betting legislation seems to be the flavor of the season in the U.S, as the representative from North Dakota, Jason Docktor has filed legislation seeking sports betting legalization in the state, and if approved, the state may soon open its doors to legal sports wagering.

In updates coming from Europe, leading German online licensed lottery provider ZEAL Network will be soon reacquiring digital lottery broker Lotto24. The company’s shareholders voted with a huge majority for the decision in a meeting held at London this Friday.

U.S. Department of Justice Issues New Opinion on Wire Act & Online Gambling

Early this week, the U.S. Department of Justice (DOJ) publicized a new legal opinion on the Interstate Wire Act of 1961, asserting that the Act’s prohibitions extended not only to sports betting but also to most forms of interstate online gambling.

US DOJ

The new DOJ opinion effectively reverses a 2011 OLC opinion that led to a number of U.S. states launching online lottery, poker and casino products for their residents. It has also shaken the country’s gaming industry. Industry components fear that growth of online betting industry would now get limited across U.S. states.

To stamp down the reigning confusion, Deputy Attorney General Rod.J Rosenstein has issued a memo to prosecutors asking them not to implement the new opinion for 90 days. This would, Rosenstein said, “give businesses that relied on the 2011 OLC opinion time to bring their operations into compliance with the federal law.”

That the latest DOJ opinion will have far-reaching ramifications on the U.S. online gambling industry is certain. It could make it difficult for states like Michigan to usher in legalized sports betting.

Already, the gaming regulators of Pennsylvania have warned their online licensees to ensure that their operations are compliant with the DOJ’s new interpretation of the Wire Act. The Pennsylvania Gaming Control Board (PGCB) on Friday issued a memo to its online gambling licensees, giving them 30 days to clarify how their individual operations could be affected by the DOJ’s new opinion of the Wire Act.

The new DOJ opinion has also put the online poker liquidity sharing pact between Delaware, New Jersey and Nevada operators in jeopardy.

Notably, the DOJ had on April 2011, unsealed indictments and a civil complaint that targeted leading global online poker sites that were forced out of the country. In December the same year, a memo by the then Assistant Attorney General Virginia Seitz was made public. In the memo, Seitz opined that the Wire Act only applied to sports betting and not other forms of gambling.

Taking Seitz’s memo as a benchmark, lawmakers of different U.S. states began to discuss possibilities for online gambling legislation. The first regulated online poker site was launched by Nevada in 2013 and the same year, Delaware and New Jersey also introduced legislation to introduce online gambling. Pennsylvania became the fourth state to pass similar legislation in 2017. Towards the end of 2018, Michigan lawmakers also tabled a bill for online gambling but the bill was vetoed by outgoing governor Rick Snyder.

The recent change in DOJ’s official stand on online gambling is being attributed to GOP mega-donor, Chairman and CEO of Las Vegas Sands, Sheldon Adelson. Adelson donated $113 Million to support Republican campaigns in 2016 and has always argued that web-based gambling would hurt children, invite criminal activity and produce little actual revenue for states.

Though legal experts feel that the latest DOJ opinion may not withstand a legal challenge, the change in DOJ’s official stance has sent the U.S. growing gambling industry into a spin.

U.S. Military to Make Use of Tuomas Sandholm’s Poker Bot Technology

In 2017 a team of researchers from Carnegie Mellon University led by professor Tuomas Sandholm developed Libratus’- a poker bot or ‘poker playing robot.’ Libratus hit the headlines after it defeated four seasoned poker players – Jason Les, Bjorn Li, Dong Kim and Doug Polk at No-Limit Hold ‘em, as part of the epic ‘Brains vs AI challenge’ that was held at Rivers Casino in Pennsylvania. Two years later, Sandholm’s is on his way to apply the Libratus technology to develop automated decision making in war games. Through Sandolm’s efforts the poker bot technology will be adapted by the U.S. military in military strategy.

Tuomasv Sandholm
Tuomas Sandholm

While players can see their opponent’s pieces and accordingly take decisions in games like Chess and Go, this doesn’t happen in poker. Sandholm’s Poker bot software applied computational game theory to devise smart betting strategies including the ability to bluff.

When pitted against the aforementioned poker players, Libratus won more over $1.8 Million in play money. This ability to defeat human pros was seen as a milestone in Artificial Intelligence (AI) technology since the card game features making complex decisions that are lacking in board games. Back then, Sandholm had stated, “Since the earliest days of AI research, beating top human players has been a powerful measure of progress in the field.”

In 2018, Sandholm founded a startup called Strategy Robot, with the larger goal to adapt his lab’s game-playing technology to government use, like war-simulations, exploring military strategy and planning.

Later, in August, Sandholm’s company received a two-year contract of $10 Million from the US Army. Described as a project “in support of” a Pentagon agency called the Defense Innovation Unit that works on expediting U.S. military adoption of new technology, the project could prove crucial in improving military simulations.

North Dakota to Introduce Sports Betting Legislation

Ever since the U.S. Supreme Court gave the green signal to states to permit legalized sports betting, a number of states have brought in laws to enforce regulated gambling inside their borders. At present, there are seven states that have implemented a legal sports betting structure. North Dakota will soon be joining this list as it is on its way to file legislation for the legalization of sports betting.

North Dakota

Earlier this week, Representative Jason Docktor from North Dakota has filed legislation seeking to legalise sports betting in the state. This legislation aka House Bill 1254 will allow residents of the state to place bets with licensed charitable organisations throughout the state. Apart from the state’s tribal casinos, charitable organisations are the only legal means for state residents to gamble.

In case the bill is passed, these organisations will be able to apply for licenses from the state. Since there’s no limit on the number of licenses handed out by the state as of date, there could be a big number of such organisations lining up to seek a license, once the bill is approved.

In case approved, the bill will become a law on August 1, 2019. However, the bill propounded by Doktor only allows sports betting during hours when alcoholic beverages are allowed to be sold. The bill doesn’t detail the tax rate that these charitable organisations will be charged at. It is also unlikely that the state will legalise mobile betting apps anytime soon.

ZEAL to Re-Acquire Lottery Broker Lotto24 After Shareholder Approval

ZEAL Network, German online provider of state licensed lotteries will soon initiate the procedure to re-acquire digital lottery broker Lotto24.

Zeal Network

On Friday, a general meeting of ZEAL held in London saw the company announce that its shareholders have approved its plan to add Lotto24 back to its portfolio of brands. The company’s shareholders have, it announced rejected a rival plan from online lottery operator Lottoland, and instead voted by an overwhelming 60% majority to acquire Lotto24.

CEO of ZEAL, Helmut Becker congratulated the shareholders for sharing the company’s vision of re-uniting ZEAL and Lotto24 that it had disconnected from in 2012 in a bid to create “the leading private digital lottery broker in Germany.” Becker also claimed that bringing Lotto24 back would create “significant value” for shareholders of both companies as well as their customers. ZEAL would now continue with its pitch to Lotto24 shareholders.

Interestingly, Lottoland holds 5.5% stake in ZEAL and announced a rival plan last week, to acquire ZEAL’s German-facing secondary lottery unit Tipp24.com.

CEO of Lottoland, Nigel Birell has expressed disappointment over the shareholders’ decision and claimed that acquiring Lotto24 was the wrong step for ZEAL.

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