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By James
Johnson Correspondent for Wager On Football
In most jurisdictions around the
world, the law is still a long way behind the technology
and issues applying to online gambling. As a result, the
question of whether or not it is legal to gambling online
can rarely be answered definitively. It is probably fair
to say also, that government attitudes to online gambling
vary significantly, from whole hearted support, to strong
opposition, to indifference. What is clear though, is
that there is very little by way of legislation drafted
specifically to deal with online gambling, whether positive
or negative, and the application of existing laws is proving
problematic.
US State Gambling Laws
Up until reasonably recently, regulation of gambling
in the United States was left exclusively to the State
Legislatures, who determined the legality or otherwise
of gambling activities within their jurisdiction. Some
states have legalized many forms of gambling, while others
have legislated to make it illegal to participate in any
form of gambling other then the stats lottery. Nevada
is the obvious example of a State which has embraced gambling
as a legal form of commerce, while Utah is a noted for
its strong anti-gambling stance, and laws deeming all
forms of gambling within its jurisdiction illegal.
US State gambling laws were all drafted long before the
advent of the Internet, and they do not have provisions
dealing specifically with online gambling.
US Federal Gambling Laws
So far, US Government attempts to pass legislation dealing
specifically with online gambling have been unsuccessful.
Separate Bills sponsored by Sen. Kyle and Rep. Goodlatte,
which both attempted to ban online gambling both failed
to attract the required 2/3 majority Senate vote required
to become law. And while it is likely that there will
be more attempts to pass legislation dealing specifically
with online gambling (to regulate or ban), until such
legislation is passed existing federal legislation serves
as the only guide on this issue.
Federal laws relating to gambling were passed by Congress
more recently (than State laws) to deal with inconsistencies
in State based gambling laws, especially as they applied
to interstate commerce. Although passed recently, US federal
laws applying gambling activities were all drafted before
the advent of Internet gambling. There are a number of
current federal laws that have indirect application to
online gambling. These are discussed below.
1. The Wire Wager Act
The Wire Wager Act is the statute that may be applied
most directly to restrict the use of the Internet as to
gamble. It prohibits the use of a wire transmission facility
to foster a gambling pursuit. It provides, in part:
"Whoever being engaged in the business of betting
or wagering knowingly uses a wire communication facility
for the transmission in interstate or foreign commerce
of bets or wagers or information assisting in the placing
of bets or wagers on any sporting event or contest, or
for the transmission of a wire communication which entitles
the recipient to receive money or credit as a result of
bets or wagers, or for information assisting in the placing
of bets or wagers, shall be fined under this title or
imprisoned not more than two years, or both."
Exactly how this Act applies to Internet wagering is
hotly debated. One school of thought in legal circles
is that the Wire Act broadly covers any interstate use
of the Internet that is related to placing or receiving
bets. A second school of thought is that the Wire Wager
Act cannot be applied to online gambling generally for
two reasons. First, the words "wire communication
facility" only apply to transmissions that use wires
and the proliferation of wireless Internet access would
therefore fall outside the scope of the Act. Second, reference
to "bets or wagers on any sporting event or contest"
implies the Act might only apply to wagering upon sporting
events (not card games or other games based upon chance).
The above issues aside, it is clear that whether or not
the Wire Wager Act can be applied to Internet gambling,
it can only be applied to those "being engaged in
the business of betting or wagering." It cannot apply
against the online gambler or Internet service providers.
2. The Travel Act, The Interstate Transportation
of Wagering Paraphernalia Act, The Professional and Amateur
Sports Protection Act, The Federal Aiding and Abetting
Statute
The above 4 Statutes all contain provisions that could
be construed to apply to internet gambling. However, as
for the Wire Wager Act, the appropriateness of their application
is strongly argued, and even if they could be adjudged
to apply to Internet gambling, their application would
be restricted to operators only, and not players or peripheries
(ISP's etc).
Given these Statutes questionable validity with regard
to their application to online gambling, and also the
fact that US prosecutors will always have a difficult
time coercing defendants to appear in the United States
to stand trial, actual prosecutions in the US in this
area are extremely rare.
Be aware that all of the sportsbooks on our recommended
list are fully licensed by, and completely legal in, the
countries where they reside.
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More Thoughts
Reprinted without permission from: https://www.profreedom.com/
Since 1996, several Members of Congress have sought to
ban bets or wagers online. This year, Representative Jim
Leach, a Republican from Iowa, and Senator Jon Kyl, a
Republican from Arizona, have introduced H.R. 21 and S.
627 respectively, unjustly titled the "Unlawful Internet
Gambling Funding Prohibition Act."
We would like your help to ensure you keep your right
to place bets and wagers on the Internet. Many of us believe
that instead of an outright ban on Internet gambling,
why not simply regulate online play?
Late last year, Time Magazine published its list of the
100 Dumbest Ideas of the 20th Century - unsurprisingly,
alcohol prohibition was selected as the single dumbest
idea. George Santayana warned us that those who do not
learn from history are doomed to repeat it. We can only
hope that the prohibitionists in Congress find themselves
reading about the 1920's sometime soon.
Why We Should Regulate NOT Prohibit Internet Gaming
Attempts to prohibit Internet gaming are unlikely to
succeed; they will have substantial unintended consequences,
and they may have adverse implications for other forms
of e-commerce.
Because of the inter-state and international nature of
the Internet, it is nearly impossible to establish a prohibition
and enforcement regime which does not compromise individual
privacy and/or deputize private sector entities to enforce
social policy. Most Internet gaming prohibitions, if enacted,
would only succeed in driving Internet gaming underground
and keeping it offshore. H.R. 21 and S. 627, currently
under consideration in Congress, would drive payment processing
from the most transparent forms (credit card transactions)
toward the least transparent (blind e-cash). Finally,
if the U.S. sets the precedent of using settlement (meaning
payment processing) as the regulatory choke-point for
e-commerce, it is reasonable to conclude that governments
at every level in every country will do the same –
that could make e-commerce unworkable.
Licensing and regulation of Internet gaming will extend
appropriate protection against minor gambling, problem
gambling, and money laundering.
Many jurisdictions, from the United Kingdom and Australia
to Curacao and Antigua have commenced the process of regulating
Internet gaming. They have found that appropriate regulations
can ensure that Internet gaming operators know their customers,
watch for signs of problem gaming, and follow established
money-laundering criteria applicable to other industries.
Licensing and regulating Internet gaming could be a substantial
revenue source for U.S. jurisdictions.
Today, in the absence of U.S. licensing, the U.S. Internet
gaming market is estimated to be $2 billion, and that
is expected to grow. If the operators processing those
wagers were U.S. based, that growth will yield many millions
of dollars to state governments and the federal government
as well. However, because the U.S. chooses not to license,
those wagers are placed offshore. If Internet gaming is
going to exist, and it is clear that it will, then U.S.
jurisdictions should take appropriate steps to ensure
that their revenue interests are protected.
A U.S.-based licensed and regulated Internet gaming industry
would "suck all of the oxygen" out of an off-shore
industry without U.S. licenses.
Rep. Bobby Scott (D-VA) put this well in hearing when
he said, "If people in the U.S. have a choice between
betting at Offhshore.com or Caesar'sPalace.com, they are
going to go to Caesar's every time. The marketing potential
of U.S. branding, combined with the confidence that players
would feel with a U.S. licensed entity would allow U.S.-licensed
operators a substantial advantage.
In sum, licensing and regulation of Internet gaming is
the best way to ensure appropriate consumer protections,
appropriate protections against money-laundering, and
an appropriate revenue stream to U.S. jurisdictions. Efforts
at prohibition are unlikely to achieve any of these.
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