Sue Schneider, a prominent figure in sports betting and a member of the Sports Betting Hall of Fame, recently shared her insights on the significance of the Wire Act in the ongoing discussion surrounding prediction markets. In her latest commentary, she emphasizes that this law should be a central focus in the debates that have taken center stage at recent conferences over the last 18 months.
The conversation about prediction markets is divisive in the United States, with clear divisions emerging among state legislators, gaming regulators, and tribal entities. Legal battles are escalating, with court rulings shifting frequently, increasing the anticipation that the Supreme Court may eventually weigh in on the matter.
Instead of reiterating the common pros and cons of this issue, Schneider directs attention to an aspect that is often overlooked in these discussions: the Wire Act itself.
The Interstate Wire Act of 1961 (18 U.S.C. § 1084) is a federal law originally designed to limit organized crime by prohibiting interstate wire communications for certain gambling activities, particularly sports betting. Enacted during Attorney General Bobby Kennedy's War on Crime, the act sought to disrupt the revenue streams of organized crime, especially in the realm of telephone sports betting. It aimed to prevent a bookie based in New York from accepting bets from clients in New Jersey.
Historically, the Wire Act, along with the Travel Act and other federal laws, formed the backbone of legal justifications against internet sports wagering. Throughout its legislative history, activities such as bookmaking, horse racing, and interstate telephone betting were frequently cited in the context of the Wire Act.
In 1978, the Interstate Horseracing Act (IHA or 15 U.S.C. §§ 3001–3007) was passed, regulating the interstate transmission of wagers on horse races and creating an exemption from the Wire Act. This legislation allowed for telephone and online betting on horse races, known as Advanced Deposit Wagering (ADW). These laws, including the subsequent Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006, were key in shaping the regulatory landscape for internet sports betting.
Products that require liquidity have been especially affected by the Wire Act. Poker proponents celebrated a 2011 legal opinion from the Department of Justice (DOJ) asserting that the Wire Act's restrictions applied solely to sports betting, not to poker or casino games. However, this interpretation was reversed in 2018.
Then, the 2021 case of New Hampshire Lottery Commission v. Rosen resulted in the U.S. Court of Appeals for the First Circuit rejecting the 2018 DOJ interpretation, clarifying that the Wire Act's prohibitions only apply to sports betting. This ruling is currently viewed as the leading federal appellate authority, and the DOJ has indicated it will adhere to this interpretation. In response, some poker operators have sought interstate compacts to broaden their liquidity, leading to the formation of agreements like the Multi-State Internet Gaming Agreement (MSIGA). Members of MSIGA, which enhance shared liquidity among states, include Delaware, Nevada, New Jersey, Michigan, Pennsylvania, and West Virginia.
The Wire Act has undeniably played a role in the U.S. gaming regulatory framework seen today, infusing state licensing requirements and geolocation services into the system. It has also hindered the establishment of betting exchanges in the U.S., which have flourished in other countries. Examples like Betfair, Betdaq, and Matchbook illustrate the challenges these products face due to the Wire Act’s restrictions.
Schneider notes her first encounter with the Commodity Futures Trading Commission (CFTC) in 2022 when PredictIt filed a lawsuit against the agency. Operating political markets since 2014, PredictIt was pushed to legally contest the CFTC’s efforts to restrict its activities, culminating in a settlement in July 2025 that allowed its continued operation. Other market players like Kalshi, which launched in July 2021, and Polymarket, which initially faced legal challenges in 2022 but acquired a licensed entity in July 2025, further illustrate the evolving landscape surrounding prediction markets.
The American Gaming Association (AGA) has expressed strong opposition against the licensing authority of the CFTC in the realm of sports betting. The AGA's formation in the mid-90s arose from efforts to prevent federal intervention in gaming regulations and taxation, concerns that intensified after the passage of the Gambling Impact Study Commission in 1996. Amidst these discussions, there appears to be little desire among industry trade groups to pursue revisions or repeals of the Wire Act.
While revisiting the Wire Act might not be the sole solution to the challenges faced by the industry, it is certainly a critical topic that merits discussion as stakeholders strive to find resolution to the current landscape.
