Wire Act

Introduction
Commentators most often mention the Wire Act, when discussing federal criminal laws that outlaw Internet gambling in one form or another. Early federal prosecutions of Internet gambling generally charged violations of the Wire Act. In fact, perhaps the most widely known of federal Internet gambling prosecutions, United States v. Cohen, involved the conviction, upheld on appeal, of the operator of an offshore, online sports book under the Wire Act.

In general terms, the Act outlaws the use of interstate telephone facilities by those in the gambling business to transmit bets or gambling-related information. Offenders are subject to imprisonment for not more than two years and/or a fine of the greater of not more than twice the gain or loss associated with the offense or $250,000 (not more than $500,000 for organizations). They may also have their telephone service canceled at law enforcement request, and a violation of section 1084 may help provide the basis for a prosecution under 18 U.S.C. §§1952 (Travel Act), 1955 (illegal gambling business), 1956 and 1957 (money laundering), and/or 1961-63 (RICO).

Elements of the Wire Act
The elements of the Wire Act extend to anyone who: 1. being engaged in the business of betting or wagering 2. knowingly 3. uses a wire communication facility 4. A. for the transmission in interstate or foreign commerce
 * 1. of bets or wagers or
 * 2. information assisting in the placing of bets or wagers on any sporting event or contest, or
 * B. for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or
 * C. for information assisting in the placing of bets or wagers. . ..

As a general matter, the Wire Act has been more sparingly used than some of the other federal gambling statutes, and as a consequence it lacks some of interpretative benefits which a more extensive case law might bring.

Engaged in the Business of Betting or Wagering
The Act is addressed to those “engaged in the business of betting or wagering” and therefore apparently cannot be used to prosecute simple bettors.

Knowingly
The government must prove that the defendant was aware of the fact he was using a wire facility to transmit a bet or gambling-related information; it need not prove that he knew that such use was unlawful. The courts have also rejected the contention that the prohibition applies only to those who transmit, concluding that “use for transmission” embraces both those who send and those who receive the transmission.

Interstate Transmission
Grammatically, interstate transmission appears as a feature of only half of the elements (compare, “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,” (4.A.1 & 2. above), with, “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,” (4.B. & C. above). Nevertheless, virtually every court to consider the question has concluded that a knowing, interstate or foreign transmission is an indispensable element of any Section 1084 prosecution.

Gambling on Sporting Events
The execution of a similar interpretative exercise might lead to the conclusion that the section applies only to cases involving gambling on sporting events (compare 4.A.1 & 2. with 4.B. & C. again). The vast majority of prosecutions involve sports gambling, but cases involving other forms of gambling under Section 1084 are not unknown, and the limitation is contrary to a literal reading of the statute. Nevertheless at least one federal appellate panel has concluded that the Wire Act applies only to sports gambling.

Defense
Construction of the Act is further complicated by the defense available under Section 1084(b). Read casually it might suggest a general defense, but the district court in the Internet gambling] case in the Southern District of New York has highlighted its more restrictive scope, “the §1084(b) exemption by its terms applies only to the transmission of information assisting in the placing of bets, not to the other acts prohibited in §1084(a), i.e., transmission of (1) bets or wages or (2) wire communications entitling the recipient to money or credit as a result of bets or wagers. With regard to transmissions of information assisting in the placing of bets, the exemption is further narrowed by its requirement that the betting at issue be legal in both jurisdictions in which the transmission occurs. No exemption applies to the other wire communications proscribed in Section 1084(a), even if the betting at issue is legal in both jurisdictions. See United States v. McDonough, 835 F.2d 1103, 1105 (5th Cir. 1988).” The Second Circuit panel in Cohen, endorsed the court’s construction.

Accomplice Liability
An accomplice who aids and abets another in the commission of a federal crime may be treated as if he had committed the crime himself. The classic definition from Nye & Nissen v. United States>ref>336 U.S. 613, 619 (1949). explains that liability for aiding and abetting attaches when one “in some sort associates himself with the venture, participates in it as in something that he wishes to bring about, [and] seeks by his action to make it succeed.” The Department of Justice advised the National Association of Broadcasters that its members risked prosecution for aiding and abetting when they provided advertising for the online gambling operations.

Conspirator Liability
In addition to such accomplice liability, a conspirator who contrives with another for the commission of a federal crime is likewise liable for the underlying crime and for any additional, foreseeable offense committed by a confederate in furtherance of the common scheme. Pinkerton v. United States, 328 U.S. 640, 645-48 (1946); Salinas v. United States, 522 U.S. 52, 62-63 (1997) (“The partners in the criminal plan must agree to pursue the same criminal objective and may divide up the work, yet each is responsible for the acts of each other”). The conspiratorial agreement is itself a separate crime under 18 U.S.C. §371 (“If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both. If, however, the offense, the commission of which is the object of the conspiracy, is a misdemeanor only, the punishment for such conspiracy shall not exceed the maximum punishment provided for such misdemeanor”); United States v. Bruno, 383 F.3d 65, 89 (2d Cir. 2004); United States v. Hanhardt, 361 F.3d 382, 392 (7th Cir. 2004).