Cruise ship gambling has a tumultuous history in the United States. After the Great Depression, gambling cruises popped up on America’s coasts. Harry Truman outlawed them in 1948, less than a year after the same captain who staved off ax-wielding federal agents for two days had his second ship seized. Cruise ship gambling has never been that contentious since it was legalized again in 1991. However, modern gaming has created new legal questions that push the limits of maritime law.
And believe us, it’s messy.
How The Laws Of The Ocean Work For Gambling Vessels
Maritime law answers questions about who’s responsible for crimes committed on the ocean. It also draws boundaries around countries that separate the water into five different zones:
|Distance From Coast||Whether Gambling Is Permitted|
|Internal Waters||Ports inside United States||No Gambling|
|Territorial Sea||12 nautical miles from the coast||No Gambling|
|Contiguous Sea||12-12 nautical miles from the coast||Gambling Permitted|
|Exclusive Economic Zone||200 nautical miles from the coast||Gambling Permitted|
|High Seas||200+ nautical miles from the coast||Anything Goes|
American laws apply in its internal waters and its territorial sea. The territorial sea is United States territory that’s just ocean. It used to stretch three nautical miles from the coast until Ronald Regan pushed it to 12. In territorial waters, ships are subject to United States law–which often included prohibitions on gambling.
There was an easy solution to this problem, though. A gambling vessel could sail past the territorial sea into the contiguous sea. The United States has limited jurisdiction in the contiguous sea, which is the area 12-24 nautical miles from shore. American laws don’t apply, but the Coast Guard still has the right to seize ships operating unlawfully. But unless a gambling ship is participating in drug trafficking, it doesn’t have anything to worry about. 12.1 nautical miles from the American shore, gamblers may begin gambling.
The other two sections don’t concern gambling vessels. The Exclusive Economic Zone is where the United States calls dibs on natural resources. And of course, the High Seas are the rest of the ocean, where virtually anything goes.
American Cruise Casinos: From Pirates To Some 90’s Law
American ships that took bettors out to sea popped up after the Great Depression. It was a lucrative business, so it wasn’t hard to attract captains ready to take gamblers past the three-mile line to gamble. (Remember, it wouldn’t be a 12-mile line until 1988.)
One captain, Tony Cornero, captained the S.S. Rex, which had slot machines, bingo, and a horse parlor. His conflicts with law enforcement would play a role in banning cruise ship gambling for most of the 20th century. In November 1939, after several standoffs with state and federal law enforcement off California’s coast, Captain Cornero had to give the Rex up and go to prison.
After World War II, Cornero restarted his gambling ship business on a new vessel called Lux. This time, he went six miles out to sea. But California officials were sick of him after spending months trying to shut him down in the late ’30s. The state went after him again and shut him down in January 1947. At the California Governor’s urging, President Truman forbade gambling in U.S. territorial waters. For over 40 years, no American ship would be able to have gambling onboard.
But in 1991, the House of Representatives passed a law that would allow gambling on American cruise ships outside of American territorial seas. Foreign cruise ships were doing it, and the ban was hurting the cruise industry. After Captain Cornero’s standoffs with law enforcement, cruise ship gambling was back in the United States.
Today, cruise ship gamblers will find slot machines, table games, and even poker tournaments on board. The casino section will only be available when the ship is in international waters. But a new addition could set new precedents in maritime law.
Why Cruise Ship Sports Betting Is A Legal Mess
There’s nothing wrong with mobile gambling on a cruise ship. Gamblers can get their winnings immediately on board. There’s no waiting for bingo or slots winnings. The result is crystal clear. Cruise ships can also keep the gaming servers onboard, which control slots payouts. (Expect cruise slots payouts to be terrible. Cruise ships don’t care whether you’re happy with your gambling winnings.) Since the bets can be processed onboard, there’s no issue with it in international waters.
Some sports betting lines aren’t an issue, either. Game lines can be resolved while bettors are on board. If the ship spends enough time on the High Seas, they can process bets and deliver winnings before returning to United States waters. They could limit the games they offer to make those deadlines, solving any legal problems.
But there’s a thorny issue waiting to conflict with federal law: future game lines and futures bets.
The Ultimate Showdown: Cruise Ship Sports Betting Vs. The Wire Act
If a bettor takes a cruise in October and places a futures bet on the Super Bowl, how do they collect their money? Your first guess might be electronically. The cruise’s sportsbook could send the money to a bettor’s bank whenever they went back home.
But the Federal Wire Act prevents that transaction. The Wire Act prevents sports wagers from crossing state or international lines. The goal was to curtail organized crime in the ’60s. However, now that sports betting is being legalized across the country, more gaming operators want to offer it. States can make it work by requiring a geofence around its state. But a cruise ship can’t send winnings electronically.
So, what can the cruise ships do?
Violating The Spirit Of The Wire Act
There are a few ways to get around the letter of the Wire Act. Cruise ship companies could mail a check with winnings if a bettor wins a wager on an event that took place after the cruise. The sportsbook company could do the same thing. If a cruise’s sportsbook company was legal in a bettor’s state, it could record the wager and award winnings like normal. But that doesn’t solve the problem for bettors who come from states without legal sports betting.
Cruise ships could cling to the language in the Wire Act to award winnings after the cruise on a technicality. A cruise ship could argue that the High Seas don’t count as “interstate [or] foreign” sources. But that’d be pitifully weak. A transaction coming from the ocean and arriving in Texas would not go unnoticed by Ken Paxton.
And Texas certainly wouldn’t be the only state enraged by its state sovereignty being undermined by a cruise ship.
There are technicalities that cruise ships could try to use to get around the Wire Act’s text. But there doesn’t seem to be a clean for cruise ships to award winnings on games that happen after bettors return to shore. Everything seems to risk a legal standoff that’ll determine the Wire Act’s scope and application.
How A Legal Battle Could Play Out
There are many ways a legal battle between cruise ships and the courts could play out. Cruise ships could limit the games they offer lines on to wagers that resolve themselves during the cruise. They may have to factor in payment processing time, but that seems like the best way to avoid controversy.
Cruise ship companies willing to embrace severe legal risk could find themselves limited to ports in states with legal sports betting. Then they could award winnings in port and have more flexibility coordinating their voyages with popular sporting events. That would work for cruises in the northeast, but Pacific cruises would struggle. (At least, until Oregon transitions to a private-run sports betting industry.)
The worst-case scenario is cruise ships losing the right to offer sports betting at all. Since sending payments to bettors after the cruise could be interpreted as an illegal transaction under the Wire Act, sports betting may be forbidden on cruises as the result of a bitter legal battle.
However, the corollary possibility is a cruise ship company’s lawsuit leading to the Wire Act’s repeal. The Supreme Court would have to hear the case, but the conservative super-majority would have a good chance of favoring a private company over a government rule from the 1960s. But any anti-gambling stances from the justices–especially its three most recent justices–could dash those hopes, too.
Bottom Line: New Legal Precedent Is On The Horizon
The ambiguous legal authority cruise ships are using to try offering sports betting is setting the stage for a legal showdown. Profound questions about the limits of maritime law on the high seas will be tested. It’s one thing when illegal entertainment is enjoyed on the High Seas. But the full transaction involved in that illegal entertainment must necessarily cross state lines.
It’s unclear who will bring the inevitable lawsuit. The Justice Department could file on behalf of the federal government. An anti-gambling group from an affected state could sue a cruise ship company that offers sports betting. The South’s angriest states’ rights group could steal this issue for themselves. There are many angles to attack this from.
But we do know the limits of sports betting legalization are about to be tested. A lawsuit would be unlikely to go in a cruise ship company’s favor. A foreign server completing a transaction that’s legal in less than half the country isn’t going to slip past federal prosecutors. However, a lawsuit that favors a cruise ship company could create a regulatory environment that paves the way for the federal legalization of sports betting. It’s a long-shot that depends on the details of the case.
The Second Cruise Ship Revolution
If this all sounds like abstract guessing, this issue will soon become concrete. Princess Cruises is the first cruise line to offer sports betting onboard. Bettors will be able to wager on future games and place futures bets.
The cruise ship industry has gone through a tumultuous legal rollercoaster. It began with small-time gambling and ended with a California captain who shot at federal officers with a fire hose. It began again with a 1991 law to allow gambling on American cruise ships in international waters. Whether this is the legal battle that sets cruise ships back again or launches them forward into a new epoch remains to be seen.
But we’ll be watching how what will likely become a complicated legal battle with far-reaching consequences closely in the months ahead.