After a remarkable u-turn by the US Justice Department, American remote gambling laws are now in question after the legislation which resulted in hundreds of millions of dollars in fines, and executives jailed turns out not to relate to non-sporting gambling operators.

The legislation in question related to the Wire Act 1961, which had been used to fine and intimate operators on gambling companies. It had been claimed that gambling over states lines by either US based companies in other states or those offshore constituted an illegal act. Payment companies as well as big names such as Google, Yahoo and Microsoft were also sued for significant amounts under the act. Gambling operators paid hundreds of millions of dollars to ensure they were not pursued.

In a legal opinion posted Friday, the Justice Department did an about-turn on its long-held view, saying in a statement that online betting unrelated to sporting events falls outside the reach of federal law. The Department's Office of Legal Counsel has analyzed the scope of the Wire Act, 18 U.S.c § 1084, and concluded that it is limited only to sports betting, USA Deputy Attorney General James Cole wrote Friday.

The Department's legal eagles noted: We conclude that the Criminal Division's premise is incorrect and that the Wire Act prohibits only the transmission of communications related to bets or wagers on sporting events or contests.

The American Gaming Association, which represents operators and gambling equipment makes has suggested the need for federal legislation of online gambling:

"The Department of Justice's interpretation regarding the scope of the federal Wire Act validates the urgent need for federal legislation to curb what will now be a proliferation of domestic and foreign, unlicensed and unregulated gaming websites without consistent regulatory standards and safeguards against fraud, underage gambling and money laundering.”