West Virginia Lottery Director John Myers announced Tuesday that complications around network servers and the need to adhere to the federal Wire Act has caused the DraftKings Sportsbook to delay its launch.
It seems that after the WV Lottery indicated that DraftKings passed all the necessary testing, the Wire Act once again, is at issue.
Now, WV bettors must play the waiting game, yet again, as it seems to stay in compliance with the law is, and should be, a significant priority for both the WV Lottery and DraftKings.
DraftKings WV server problems
The most confusing part about the US Department of Justice’s Wire Act ruling is how online betting data moves. Even though gambling is only permitted in the states where it’s legal, the information generated from online wagering could possibly transmit across state lines, thus violating the law.
Myers and DraftKings thought everything was fine because the DraftKings’ network server for betting is inside the state. The problem comes from a required second server needed to determine if a customer has enough funds in their account to place their desired wager.
DraftKings’ secondary server, referred to as a wallet server, is in New Jersey.
Data moving through the wallet server wouldn’t constitute betting across state borders. DraftKings, however, is taking a cautionary approach by creating a separate wallet server to be housed in the state.
Myers commented on the situation regarding the servers. According to the Charleston Gazette-Mail, he said:
“I don’t know that they’re 100 percent confident from their side. I have to err on the side of caution. I don’t want any West Virginia citizen or any employees here to get into trouble.”
By taking the safe route, it appears that WV residents won’t be using a DraftKings Sportsbook anytime in the immediate future.
A DraftKings’ spokesperson remained vague when asked about it. They said:
“DraftKings has been taking part in the required testing phase. We do not have any firm date yet on next steps, including a soft launch or full public launch in West Virginia.”
The next step for DraftKings is to build a new network server in the state. Of course, that plan would take time to complete.
Myers added, “It could be football season before they get that built. It looks like it’s certainly going to be delayed.”
Unfortunately for the WV sports betting market, this appears to be another hurdle it must overcome.
Wire Act continues to impact WV sports betting
While all of this is unfolding in WV, a new Wire Act ruling has been determined by a Federal Court, affecting the entire US gambling industry.
US District Court Judge Paul Barbadoro said that the DOJ’s most recent opinion must be vacated and that the Wire Act only affects sports betting.
His verdict reads:
“I hereby declare that § 1084(a) of the Wire Act… applies only to transmissions related to bets or wagers on a sporting event or contest. The 2018 OLC Opinion is set aside.”
Now that the Wire Act has been clarified somewhat, it would make sense that WV can move forward in launching online casinos.
It seems unlikely that this is the end of the line, though. The Lottery said it would be 2020 before the first online casino opened.
Another thing to note, the ruling applied to those that filed the original case, in this case, the New Hampshire Lottery.
While this is still positive news, Barbadoro’s decision still leaves plenty of questions regarding online sports wagering. It’s clear the opinion is impacting DraftKings when it chooses not to use its NJ server at all for WV betting.
What’s truly interesting about all of this is how sportsbook operators appear handcuffed by the Wire Act now, when it’s actually been in effect since 2011.
States like Nevada and NJ have rolled out long lists of online sportsbooks and other mobile gambling apps. Why are states that are implementing these betting platforms now so worried?
It’s entirely possible that the newest interpretation of the Wire Act is a political tool to try and slow down gambling expansion. Coming out with a revised opinion might have simply been a reminder to individual states that there are strict rules in place.
Whatever the case, the DOJ will probably appeal Barbadoro’s decision. This battle of tug-of-war is nowhere near complete.