Sessions recusal may not be great news for bettors.
There was some pleasant news for American gamblers last week when it was announced that Jeff Sessions was recusing himself on all issues relating to online gambling, after he hired on Sheldon Adelson's Stop Internet Gambling lobbyist and lawyer Charles Cooper to defend him against charges relating to Russian interference in the 2016 elections. While not explicitly coming out against online gambling, Sessions tipped his hand as to which way he was leaning in his January confirmation hearings. South Carolina Senator Lindsay Graham asked Sessions if he would consider revisiting the 2011 DoJ opinion that stated the Wire Act only applied to sports wagering and opened the door to legal state run online gambling. Sessions replied that he was shocked to find out that the U.S. had regulated online gambling and he was prepared to revisit the opinion. In April Sessions seemed true to his word and started the process to re-criminalize online gambling, although several states and pro-gambling lobby groups were getting their ducks lined up to stop him.
So, the recusal should be great news for bettors, but his replacement that will take on the file is Rod Rosenstein, who possibly could be even worse for gamblers. As one analyst said to me "it's like the sparrows rejoicing that the hawk in the area has finally left only to find out it's been replaced by a cat."
For those unfamiliar with Rosenstein he was the U.S. Attorney for Maryland from 2005 to 2017 and has been responsible for some of the biggest charges against online gambling companies and payment processors. Rosenstein was one of the first attorneys to try to shut down NETeller when he first took office and he succeeded in shutting down many payment companies for online gambling in both 2009 and 2011, suggesting they were involved in money laundering. Rosenstein's initial intention, apparently, was to look into companies involved in mortgage fraud, but he decided to lump online gambling into his objective. In 2011 Rosenstein was responsible for the Blue Monday seizures which saw the domain names of Bookmaker.com, TruePoker.com and 9 other sites taken. And in 2012 Rosenstein was responsible for issuing the arrest warrants against Bodog executives, including Calvin Ayre, and the seizure of the Bodog.com domain. And, according to sources, whenever you hear of any arrests regarding online gambling sites of late New York and Maryland always seem to be lead the discussion, with Rosenstein's name at the forefront.
In issuing the seizures Rosenstein has been consistent in stating that the operators are committing a crime per Maryland law and that the money from illegal gambling is often used to fund organized crime and terrorism, although there's never been proof that's true.
Many people will argue that the arrests and seizures were all for offshore gambling sites and there's no reason to suspect that Rosenstein would have any reason to be as vigilant against legal state run gambling, but analysts I spoke to, who know Rosenstein, have stated that he is not a fan of any online gambling and they highly doubt he will take the side of any online gambling company. In addition, statements he's made in the past seem to indicate that he is not in favor of online gambling.
"People need to be familiar with the law in their particular state," Rosenstein said in a radio interview after Blue Monday. "Companies that are in the business of providing online gambling services are generally prohibited under U.S. law and prohibited from moving money back and forth through banks, which is how they operate. And so, these indictments target, not the users, but the businesses that are in violation of U.S. law by providing these services."
Rosenstein is registered as a Republican, although he worked under both the George W. Bush and Obama administration, and was highly regarded by both Presidents and pretty much everyone on Capital Hill. That's one of the main reasons bettors should be more fearful of Rosenstein than Sessions. Jeff Sessions was grilled at the confirmation hearings by many Democrats and Republicans who clearly didn't like his past history with African Americans and comments he made regarding the Ku Klux Klan (that he had no issue with them until he found out they smoked pot). Allegations of racism were bad enough, but suggestions that he had connections to the Russian interference in the 2016 election, which led to his recusal, just made many of those same Congressmen and Senators more leery. There's a good chance that on reputation alone Sessions would have had a hard time selling anything to Congress let alone the need for a law specifically making online gambling illegal. Rosenstein, on the other hand, doesn't have any obvious baggage and because he is so respected by both parties any objectives he puts forth will almost certainly be taken more seriously than they would have if Sessions introduced them. So, if Rosenstein decides to push for RAWA he may have a better chance of convincing his friends on the Hill than Sessions would have.
One other reason Rosenstein could be dangerous for bettors is that he is only 52 years old and, if he has larger political aspirations in the Republican Party, he may have to be friendly to those with sway. And that includes Paul Ryan, Marco Rubio, Lindsay Graham, Jason Chaffetz and a handful of others who openly supported Sheldon Adelson and RAWA. And Charlie Dent, who may be one of the most influential Congressmen on the Hill, has put in language into an appropriations bill that would make online gambling illegal. Moreover, Adelson makes huge contributions to the Republican Party which may put more pressure on Rosenstein to get onside with the unofficial party platform that opposes online gambling. And lastly, the initiative to revisit the 2011 decision and possibly make online gambling was already put in motion by Jeff Sessions, so it could be political suicide if Rosenstein makes waves and opposes his boss and the wishes of the party.
So, the appointment of Rosenstein over Sessions may not be that great a thing for bettors after all.
That said, there is a glimmer of hope for bettors since Rosenstein is an outspoken defender of states' rights and the 2011 DoJ opinion could be viewed as a states' right issue. In every seizure and arrest to date Rosenstein made it clear that those operators were violating Maryland laws and he did acknowledge in a couple of press releases that some states do allow online gambling and he was only concerned with enforcing the laws of his state. Thus, trying to justify a federal bill that rolls back the rights already affirmed to some states could be a hard sell and it may be something he opposes for personal reasons.
Adelson and his supporters want RAWA to be addressed sooner rather than later and the appropriations bill is on the table. How Rosenstein handles the issue in the coming months will indicate if he is indeed a cat that the sparrows need to fear more than the hawk.