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Boom in Internet gambling ahead? US policy reversal clears the way.

The Justice Department has reversed a longtime view that online poker and lottery wagering are illegal. With the move, states are expected to engage in a high-stakes pursuit of new gambling-related tax revenues.

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Cash-strapped states betting on new online poker and lottery revenues won a major victory with a recent Department of Justice announcement that it is reversing its interpretation of the federal 1961 Wire Act, clearing the way for a potential boom in online gambling.

Until now, the Justice Department had held that the Wire Act makes even intrastate online gambling illegal. Its new interpretation, written by Justice Department attorneys in response to requests for clarification from New York and Illinois, concluded that the law instead specifically outlaws such wagering on sports, not nonsports gambling within states or even across state borders.

"The ordinary meaning of the phrase 'sporting event or contest' does not encompass lotteries," wrote Assistant Attorney General Virginia Seitz. "Accordingly, we conclude that the proposed lotteries are not within the prohibitions of the Wire Act."

With global online gambling now worth an estimated $30 billion, and with online poker worth a potential $6 billion annually in the US, some are heralding the decision as a means for financially strapped states to leverage new revenue from legalized online gambling – and stave off at least some cuts to bureaucracies, entitlements, and public employee pension systems.

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