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Internet Gambling Article
In October of 2006 the Unlawful Internet Gambling Enforcement Act (UIGEA) was signed in to law which has caused many questions concerning the legality of internet gambling as well as whether the United States government should be able to control what United States citizens can do in the privacy of their own home.
Professor I. Nelson Rose is an internationally known scholar, public speaker and writer and is recognized as one of the world's leading authorities on gambling law. Professor Rose granted ***********.com an exclusive first rights interview and we discuss a number of issues concerning online gambling, the WTO and we asked him his opinion on where online gambling stands now and what it looks like as we head in to the future.
Here is what Professor Rose shared with ***********.com viewers.
***********.COM: Professor Rose, we appreciate you taking the time for this interview. In the event that some of our readers are not familiar with your background, please share with us your credentials and experience in studying the legal issues surrounding the online gambling industry.
PROFESSOR ROSE:
I began seriously studying and writing about gambling law while a student at Harvard Law School. Through historical research, I discovered that legal gambling had swept across the U.S. twice before. Fordham published my first law review article in 1979, where I predicted that we were about to see a third wave of legal gambling sweep across the nation.
I practiced law in Hawaii for three years before joining Whittier Law School in 1983, where I developed and taught the first law school course in the United States on the law of gambling. Over the years I have taught gaming law to the F.B.I. and at universities in China, Slovenia, France, Spain, and at the University of Nevada Reno. Every June I teach in a Ph.D. program being set up by the University of Macau.
Most of my work now is through public speaking, before groups like GIGSE, the National Conference of State Legislatures, Congress of State Lotteries of Europe and the National Academy of Sciences. I also do a lot of work acting as a consultant and expert witness for players and the gaming industry, including for the largest internet companies, major law firms and casinos, and for local, state and national governments, including the federal governments of Canada, Mexico and the United States.
I started writing my column, Gambling and the Law®, in 1983. This led to my
1986 book by the same name. My most recent books are as co-author of Internet Gaming Law and the field's first casebook, Gaming Law: Cases and Materials. I can be reached at my website, www.GamblingAndTheLaw.com
***********.COM: The passage of the Unlawful Internet Gambling Enforcement Act in October of 2006 certainly had a significant effect on how offshore wagering portals facilitate financial transactions to and from their customers. What are some of the other ways in which the Act has changed online gambling?
PROFESSOR ROSE:
There have actually been two separate legal developments. The UIGEA obviously scared the publicly traded online gaming companies to stop taking bets from the U.S. But both before and after the passage of that Act, there has been a war of intimidation being waged by the U.S. Department of Justice against all internet gambling. It was the DOJ, not the Act, that scared credit card companies into blocking use of their cards for gaming, and forced Neteller from the market. The DOJ told Google and Yahoo to stop taking paid ads. Although very few people have been prosecuted, the fear that they might be breaking the law has prevented large non-gaming companies from getting into the business, and scared off Nevada licensed operators.
The entire industry has been hurt by the clouds of legal uncertainty. Even though I have found only one person in the history of North America who was ever charged with making a bet online, players are scared. I get more questions about whether it is legal to bet online than on any other subject.
The DOJ and UIGEA can actually be seen as anti-consumer protection, because the large, publicly traded companies now won't take bets from Americans.
Some of my clients, privately owned, are still taking bets from the U.S. and are honest and competent. But the exit of sites like PartyPoker has created openings and opportunities for unscrupulous operators.
***********.COM: With the attention received by Rep. Barney Frank's introduction of his Internet Gambling Regulation and Enforcement Act and more recently, Rep. Jim McDermott's letter to congress asking for support of that bill, it is beginning to look like a larger segment of those that make our laws have become more willing to have an open mind on the internet gambling issue. Those that are responsible for running the U.S. based brick and mortar casinos also seem to have had a change of heart regarding the regulation of internet gambling as they see all too clearly that literally billions of dollars are being sent abroad by U.S. bettors each year.
The issue has always been tied to the morality aspect of the debate but it appears that the American public is becoming more accepting of gambling, particularly with the rapid proliferation of the advantages that the internet offers.
Do you foresee a change philosophy in which U.S. Lawmakers will come to appreciate the tremendous tax revenue that could be realized by legalizing and regulating the industry in the U.S. and ?
PROFESSOR ROSE:
Nothing is going to happen this year. It's an election year, so the Republicans are pandering to the religious far right. They don't have that much trouble with gambling in other years; Trent Lott, then-majority leader of the Senate, was from Mississippi, the third-largest casino state. But, Republicans don't have any interest in internet gaming. Also, Pres. Bush would never sign a law allowing internet gaming.
Politics will play a role. When the Democrats took control of the Senate, Harry Reid, senator from Nevada, became majority leader. So, land-based casinos, which want a study and law allowing them to operate internet casinos, can get those, if the President is a Democrat. If John McCain wins, Republicans will take over the Senate, so nothing will change. Insiders know that if Hillary Clinton is the nominee, Democrats will lose the Senate, even if she wins the presidency. There will then be four years of deadlock.
Assuming Barack Obama is nominated and wins, the Democrats will keep control of Congress and there will be a change in the federal law. It might come as early as 2009. More likely, it won't be until 2010, or even later. For political cover, there could be an objective, scientific study done first, that proves that internet gambling can be kept safe from hackers, protecting the "vulnerables" (children and compulsive gamblers), and that states that don't want to allow can be blocked.
I expect the federal law will eventually be changed to allow a state to opt-in, exactly the system that exists for horseracing today. In December 2000, Congress amended the Interstate Horseracing Act to allow people to bet by phone and computer from their homes, so long as they were in as state where it was legal and the bet went to a state where accepting such bets was legal. The system is called Advanced Deposit Wagering, and at least 20 states have opted in. It make no sense for Congress to say that states are competent to decide for themselves whether their residents can bets from their homes on horse races, but not on dog races. And if the states of California, Nevada, New Jersey and - to get rid of a problem with the World Trade Organization, other countries, like Antigua - want to allow their licensed poker operators to have games online, where their residents can play for money, why should the federal government care?
This does not mean that things will be wide open. There will never be much online sports betting outside of Nevada and with the state lotteries in Oregon and Delaware, unless federal law is ruled unconstitutional. And states like Utah will be able to keep all gambling illegal.
The interesting political factor is that very few people care about Internet gambling, especially in Congress. The Poker Players Association and the few members of Congress who have sponsored bills to change the law or at least conduct studies have done a great service in bringing the issue to the attention of politicians and the American people. But still it is such a low priority that it is just easier for lawmakers to let things continue as they are. The tax revenue issue is a non-starter. The federal government has now spent nearly a trillion dollars on the Iraq war. They really don't care about a few hundred million dollars from taxing online gambling, especially if they think voters see it as immoral or dangerous.
***********.COM: A few weeks back, the New Jersey Assembly Thursday approved sending a referendum to the voters to legalize professional sports betting in Atlantic City casinos and three race tracks. Considering that the Professional and Amateur Sports Protection Act prohibits betting on sports in all but Delaware, Montana, Nevada and Oregon, the state legislators have acknowledged that actually implementing legalized sports betting will be a long shot.
Provided the referendum passes, what argument will New Jersey present in their attempt to gain an exception to the current federal law?
PROFESSOR ROSE:
The question can be answered by being turned on its head: What power did the federal government have to make a law like this? Congress can only enact laws if there is a provision in the U.S. Constitution giving it that power.
It looks like the ban on sports betting is based on the power to regulate interstate commerce and the power to protect privately owned trademarks and tradenames. Both of those don't make a whole lot of sense with this Act, because there are exemptions for sports betting in Nevada, Oregon and Delaware. The Delaware Lottery won the right to take bets on NFL games, so long as they use the names of cities, not teams. But Nevada sports books take bets using the actual names. There is also a question of whether interstate commerce covers activities that take place entirely within a single state.
Having said that, I still think it is a longshot. Courts have always given great respect to acts of legislatures to control or outlaw gambling.
***********.COM: The ruling in Antigua's complaint against the United States to the World Trade Organization has entered uncharted waters and the U.S. reluctant response to the ruling is unprecedented. Costa Rica has now also filed for WTO arbitration, seeking compensation from the United States as a result of the U.S. withdrawal of its commitment on cross-border gambling services. The next move in this dispute belongs to the USTR as they have been directed to provide Antigua with $21 million in compensation that the WTO has ruled they are entitled to.
At the end of the day, do you believe that the U.S. government will eventually concede to the hypocrisy in their policy and allow internet gambling to be offered by foreign and domestic companies?
PROFESSOR ROSE:
There are a lot of conflicting factors converging here. First, is the unbelievable arrogance and incompetence of the Bush Administration. I spent six weeks teaching international gaming law in China and became well aware of the tremendous efforts former presidents had made to bring China into the WTO. Now, the U.S. lost the dispute with Antigua and the Bush Administration has taken the position that it basically does not have to comply. Think about the message this sends to China, if it decides to block some U.S. product or service, such as automobiles. The Bush Administration and Republicans in Congress also were anxious to show that they could not be pushed around by a foreign "court." That's the arrogance. The incompetence comes in with how the Bush lawyers and trade representatives handled the details. The U.S. actually forced not only Costa Rica but the European Union, China and other countries to file claims for more than $100 billion, by unilaterally announcing that the U.S. was changing its treaty obligations. The treaty does allow this, but then imposes a short time limit on when claims for compensation have to be filed by other countries.
But another important factor is that gambling is a matter that is almost always left to the individual states. The U.S. would drop out of the WTO before it would agree to force a state like Utah to violate its public policy and have to accept gambling operators from Antigua.
The solution is allowing the states to opt-in, along with foreign nations that meet our standards, to a network of licensed operators and shared players.
***********.COM: If a Democrat is elected as the next U.S. President, combined with a Democratic majority in Congress, do you anticipate any major change in the existing policies of enforcement of existing laws and the legalization of internet gambling?
PROFESSOR ROSE:
I mentioned the probable change in the laws. I am less sure of the Dept. of Justice. The President does give guidance, though for gambling, it is more the Attorney General of the U.S. who will decide if there is going to continue to be a war of intimidation against Internet gambling. My guess would be that the war will greatly lessen, because the Democrats won't have a right-wing; religious A.G., law enforcement resources are better spent elsewhere; the war is somewhat of a fraud, because it is based on threatening operators and even players who are not violating any federal law; and this is a war that can't be won.
***********.COM: Many feel that the flagrant marketing practices of online gambling portals were flaunting their perceived impunity in the face of the U.S. government and that these actions were directly responsible for the hard line stance against online gambling that the DOJ has taken in recent years. These companies were capitalizing on the growing popularity of the World Series of Poker, were advertising on busses at sporting events and buying all the airtime and print space for ads that they could find to promote their sites.
The publicity surrounding the passage of the UIGEA has waned in recent months and the DOJ has not made a move against a licensed offshore bookmaker since the arrest of Gary Kaplan of BetOnSports. Do you sense that the U.S. government initially reacted strongly in an effort to intimidate the industry and is now content to focus on illegal gambling within the U.S. borders?
Will they be satisfied with having taken internet gambling out of the limelight and off the TV screen or do you anticipate that the DOJ will continue in their efforts to shut down internet gambling for U.S. citizens?
PROFESSOR ROSE:
It is never a good idea to thumb your nose at the FBI. The DOJ thought all Internet gambling was illegal, and it did indeed gall them to see those ads. But the DOJ also knew, and knows, that its war of intimidation has poor weapons: The federal Wire Act probably does make sports betting a crime, but not poker or lotteries or casino game; and the U.S. has almost no way to get at a foreign national sitting in his own country who is licensed by that country. Notice that no operator of Internet poker was ever arrested. The DOJ did not want to go to court and lose. But when the SuperBowl came around last year, it announced criminal charges against Neteller. I personally think the war is continuing at about the same level. It's not escalating, or we would see affiliates arrested. But it is not going away; online sports betting operators, acting on my advice, are no longer coming to the U.S. and so can't be easily arrested. Some foreign operators are in settlement talks with the DOJ.
***********.COM: After the initial hysteria that accompanied last year's passage of the UIGEA, many U.S. bettors settled down once they realized the Act did nothing to make internet gambling a crime where it was not previously. The general consensus seems to be, they can feel confident that they are not breaking the law except in states that have passed legislation specifically criminalizing the activity:
Considering that U.S. Attorney Catherine Hanaway admitted in a 2007 House hearing that just placing wagers online isn't against federal law, do U.S. based internet bettors have any reason to be concerned with being prosecuted under any existing federal statute?
PROFESSOR ROSE:
No. There is no federal law or regulation that makes mere betting a crime, even if you use a phone or computer to connect with an illegal bookie in another state. A bettor can get in trouble if he helps, say by collecting debts from other bettors. About half the states do have laws on the books making it a crime under some circumstances to make a bet, but no one is going to go to jail for that. The real danger is administrative: meaning colleges and workplaces have the right to know how you are using their computers and can punish you for betting online. And civil: which goes to the question of whether you can collect if the operator refuses to pay or you feel you have been cheated.
***********.COM: I think what aggravates the average person is there are many forms of gambling all around us. Many states have lotteries, horse racing, poker, bingo and regulate many other types of gambling and many U.S. citizens find it to be increasingly hypocritical of the U.S. government to attempt to control how Americans spend time on their computer, in the privacy of their own home?
It seems that the Poker Players Alliance has made an attempt to separate their interests from the overall debate in an attempt to capitalize on the public's overall acceptance of Poker. In your opinion is this position misguided and do you feel it is feasible to form an alliance between the leaders in the Poker industry, sportsbook and casino operators, and land based casino corporations to promote the legalization of online gambling?
PROFESSOR ROSE:
Of course it is hypocritical, but except when there is complete prohibition, that has always been the way gambling is treated. Gaming is a morally suspect industry. It is usually outlawed. When it is made legal it is done piecemeal, starting with a form that is considered harmless, like charity bingo or state-licensed horse racing. This leads to pressure for more forms to be made legal. But there will always be types of gambling that government will never allow, like betting on high school sports.
The PPA was politically smart to try to carve out poker. People, including voters and politicians, do treat different forms of gambling differently. For example, it is fairly easy to legalize charity bingo or a state lottery, but nearly impossible to get a vote of the people to amend the state constitution to bring in high-stakes casinos (which is why almost all states with casinos brought them in through acts of the state legislatures or Indian tribes). If poker can be seen as being as harmless as bingo, it has a chance of being exempted from the ban on internet gambling.
***********.COM: Professor Rose, we would once again want to thank you for your time and I know I speak for many others in the internet gambling community when I say that I always enjoy reading your insight on these issues.
Please leave our readers with a few of your thoughts on the current state of online gambling and what the future might have in store for the industry as a whole.
PROFESSOR ROSE:
The U.S. is becoming more and more isolated in the world. The big breakthrough was when the U.K., a world power, decided that internet gambling was acceptable if regulated. Eventually the U.S. will have to give in, allowing states to decide for themselves. Meanwhile, players can make any kind of bet online that they can make in the real world. Since the federal government pretends this is either not happening or is illegal, it is up to bettors to look out and protect themselves.
***********.com would like to give credit to forum moderator "the judge" for help with forming many questions for Professor Rose.
If you would like to use this interview on your website, contents must be displayed as is with credit back to the ***********.com website
Copyright © 2008 - Cappers **** – All Rights Reserved - 3/5/2008
Professor I. Nelson Rose is an internationally known scholar, public speaker and writer and is recognized as one of the world's leading authorities on gambling law. Professor Rose granted ***********.com an exclusive first rights interview and we discuss a number of issues concerning online gambling, the WTO and we asked him his opinion on where online gambling stands now and what it looks like as we head in to the future.
Here is what Professor Rose shared with ***********.com viewers.
***********.COM: Professor Rose, we appreciate you taking the time for this interview. In the event that some of our readers are not familiar with your background, please share with us your credentials and experience in studying the legal issues surrounding the online gambling industry.
PROFESSOR ROSE:
I began seriously studying and writing about gambling law while a student at Harvard Law School. Through historical research, I discovered that legal gambling had swept across the U.S. twice before. Fordham published my first law review article in 1979, where I predicted that we were about to see a third wave of legal gambling sweep across the nation.
I practiced law in Hawaii for three years before joining Whittier Law School in 1983, where I developed and taught the first law school course in the United States on the law of gambling. Over the years I have taught gaming law to the F.B.I. and at universities in China, Slovenia, France, Spain, and at the University of Nevada Reno. Every June I teach in a Ph.D. program being set up by the University of Macau.
Most of my work now is through public speaking, before groups like GIGSE, the National Conference of State Legislatures, Congress of State Lotteries of Europe and the National Academy of Sciences. I also do a lot of work acting as a consultant and expert witness for players and the gaming industry, including for the largest internet companies, major law firms and casinos, and for local, state and national governments, including the federal governments of Canada, Mexico and the United States.
I started writing my column, Gambling and the Law®, in 1983. This led to my
1986 book by the same name. My most recent books are as co-author of Internet Gaming Law and the field's first casebook, Gaming Law: Cases and Materials. I can be reached at my website, www.GamblingAndTheLaw.com
***********.COM: The passage of the Unlawful Internet Gambling Enforcement Act in October of 2006 certainly had a significant effect on how offshore wagering portals facilitate financial transactions to and from their customers. What are some of the other ways in which the Act has changed online gambling?
PROFESSOR ROSE:
There have actually been two separate legal developments. The UIGEA obviously scared the publicly traded online gaming companies to stop taking bets from the U.S. But both before and after the passage of that Act, there has been a war of intimidation being waged by the U.S. Department of Justice against all internet gambling. It was the DOJ, not the Act, that scared credit card companies into blocking use of their cards for gaming, and forced Neteller from the market. The DOJ told Google and Yahoo to stop taking paid ads. Although very few people have been prosecuted, the fear that they might be breaking the law has prevented large non-gaming companies from getting into the business, and scared off Nevada licensed operators.
The entire industry has been hurt by the clouds of legal uncertainty. Even though I have found only one person in the history of North America who was ever charged with making a bet online, players are scared. I get more questions about whether it is legal to bet online than on any other subject.
The DOJ and UIGEA can actually be seen as anti-consumer protection, because the large, publicly traded companies now won't take bets from Americans.
Some of my clients, privately owned, are still taking bets from the U.S. and are honest and competent. But the exit of sites like PartyPoker has created openings and opportunities for unscrupulous operators.
***********.COM: With the attention received by Rep. Barney Frank's introduction of his Internet Gambling Regulation and Enforcement Act and more recently, Rep. Jim McDermott's letter to congress asking for support of that bill, it is beginning to look like a larger segment of those that make our laws have become more willing to have an open mind on the internet gambling issue. Those that are responsible for running the U.S. based brick and mortar casinos also seem to have had a change of heart regarding the regulation of internet gambling as they see all too clearly that literally billions of dollars are being sent abroad by U.S. bettors each year.
The issue has always been tied to the morality aspect of the debate but it appears that the American public is becoming more accepting of gambling, particularly with the rapid proliferation of the advantages that the internet offers.
Do you foresee a change philosophy in which U.S. Lawmakers will come to appreciate the tremendous tax revenue that could be realized by legalizing and regulating the industry in the U.S. and ?
PROFESSOR ROSE:
Nothing is going to happen this year. It's an election year, so the Republicans are pandering to the religious far right. They don't have that much trouble with gambling in other years; Trent Lott, then-majority leader of the Senate, was from Mississippi, the third-largest casino state. But, Republicans don't have any interest in internet gaming. Also, Pres. Bush would never sign a law allowing internet gaming.
Politics will play a role. When the Democrats took control of the Senate, Harry Reid, senator from Nevada, became majority leader. So, land-based casinos, which want a study and law allowing them to operate internet casinos, can get those, if the President is a Democrat. If John McCain wins, Republicans will take over the Senate, so nothing will change. Insiders know that if Hillary Clinton is the nominee, Democrats will lose the Senate, even if she wins the presidency. There will then be four years of deadlock.
Assuming Barack Obama is nominated and wins, the Democrats will keep control of Congress and there will be a change in the federal law. It might come as early as 2009. More likely, it won't be until 2010, or even later. For political cover, there could be an objective, scientific study done first, that proves that internet gambling can be kept safe from hackers, protecting the "vulnerables" (children and compulsive gamblers), and that states that don't want to allow can be blocked.
I expect the federal law will eventually be changed to allow a state to opt-in, exactly the system that exists for horseracing today. In December 2000, Congress amended the Interstate Horseracing Act to allow people to bet by phone and computer from their homes, so long as they were in as state where it was legal and the bet went to a state where accepting such bets was legal. The system is called Advanced Deposit Wagering, and at least 20 states have opted in. It make no sense for Congress to say that states are competent to decide for themselves whether their residents can bets from their homes on horse races, but not on dog races. And if the states of California, Nevada, New Jersey and - to get rid of a problem with the World Trade Organization, other countries, like Antigua - want to allow their licensed poker operators to have games online, where their residents can play for money, why should the federal government care?
This does not mean that things will be wide open. There will never be much online sports betting outside of Nevada and with the state lotteries in Oregon and Delaware, unless federal law is ruled unconstitutional. And states like Utah will be able to keep all gambling illegal.
The interesting political factor is that very few people care about Internet gambling, especially in Congress. The Poker Players Association and the few members of Congress who have sponsored bills to change the law or at least conduct studies have done a great service in bringing the issue to the attention of politicians and the American people. But still it is such a low priority that it is just easier for lawmakers to let things continue as they are. The tax revenue issue is a non-starter. The federal government has now spent nearly a trillion dollars on the Iraq war. They really don't care about a few hundred million dollars from taxing online gambling, especially if they think voters see it as immoral or dangerous.
***********.COM: A few weeks back, the New Jersey Assembly Thursday approved sending a referendum to the voters to legalize professional sports betting in Atlantic City casinos and three race tracks. Considering that the Professional and Amateur Sports Protection Act prohibits betting on sports in all but Delaware, Montana, Nevada and Oregon, the state legislators have acknowledged that actually implementing legalized sports betting will be a long shot.
Provided the referendum passes, what argument will New Jersey present in their attempt to gain an exception to the current federal law?
PROFESSOR ROSE:
The question can be answered by being turned on its head: What power did the federal government have to make a law like this? Congress can only enact laws if there is a provision in the U.S. Constitution giving it that power.
It looks like the ban on sports betting is based on the power to regulate interstate commerce and the power to protect privately owned trademarks and tradenames. Both of those don't make a whole lot of sense with this Act, because there are exemptions for sports betting in Nevada, Oregon and Delaware. The Delaware Lottery won the right to take bets on NFL games, so long as they use the names of cities, not teams. But Nevada sports books take bets using the actual names. There is also a question of whether interstate commerce covers activities that take place entirely within a single state.
Having said that, I still think it is a longshot. Courts have always given great respect to acts of legislatures to control or outlaw gambling.
***********.COM: The ruling in Antigua's complaint against the United States to the World Trade Organization has entered uncharted waters and the U.S. reluctant response to the ruling is unprecedented. Costa Rica has now also filed for WTO arbitration, seeking compensation from the United States as a result of the U.S. withdrawal of its commitment on cross-border gambling services. The next move in this dispute belongs to the USTR as they have been directed to provide Antigua with $21 million in compensation that the WTO has ruled they are entitled to.
At the end of the day, do you believe that the U.S. government will eventually concede to the hypocrisy in their policy and allow internet gambling to be offered by foreign and domestic companies?
PROFESSOR ROSE:
There are a lot of conflicting factors converging here. First, is the unbelievable arrogance and incompetence of the Bush Administration. I spent six weeks teaching international gaming law in China and became well aware of the tremendous efforts former presidents had made to bring China into the WTO. Now, the U.S. lost the dispute with Antigua and the Bush Administration has taken the position that it basically does not have to comply. Think about the message this sends to China, if it decides to block some U.S. product or service, such as automobiles. The Bush Administration and Republicans in Congress also were anxious to show that they could not be pushed around by a foreign "court." That's the arrogance. The incompetence comes in with how the Bush lawyers and trade representatives handled the details. The U.S. actually forced not only Costa Rica but the European Union, China and other countries to file claims for more than $100 billion, by unilaterally announcing that the U.S. was changing its treaty obligations. The treaty does allow this, but then imposes a short time limit on when claims for compensation have to be filed by other countries.
But another important factor is that gambling is a matter that is almost always left to the individual states. The U.S. would drop out of the WTO before it would agree to force a state like Utah to violate its public policy and have to accept gambling operators from Antigua.
The solution is allowing the states to opt-in, along with foreign nations that meet our standards, to a network of licensed operators and shared players.
***********.COM: If a Democrat is elected as the next U.S. President, combined with a Democratic majority in Congress, do you anticipate any major change in the existing policies of enforcement of existing laws and the legalization of internet gambling?
PROFESSOR ROSE:
I mentioned the probable change in the laws. I am less sure of the Dept. of Justice. The President does give guidance, though for gambling, it is more the Attorney General of the U.S. who will decide if there is going to continue to be a war of intimidation against Internet gambling. My guess would be that the war will greatly lessen, because the Democrats won't have a right-wing; religious A.G., law enforcement resources are better spent elsewhere; the war is somewhat of a fraud, because it is based on threatening operators and even players who are not violating any federal law; and this is a war that can't be won.
***********.COM: Many feel that the flagrant marketing practices of online gambling portals were flaunting their perceived impunity in the face of the U.S. government and that these actions were directly responsible for the hard line stance against online gambling that the DOJ has taken in recent years. These companies were capitalizing on the growing popularity of the World Series of Poker, were advertising on busses at sporting events and buying all the airtime and print space for ads that they could find to promote their sites.
The publicity surrounding the passage of the UIGEA has waned in recent months and the DOJ has not made a move against a licensed offshore bookmaker since the arrest of Gary Kaplan of BetOnSports. Do you sense that the U.S. government initially reacted strongly in an effort to intimidate the industry and is now content to focus on illegal gambling within the U.S. borders?
Will they be satisfied with having taken internet gambling out of the limelight and off the TV screen or do you anticipate that the DOJ will continue in their efforts to shut down internet gambling for U.S. citizens?
PROFESSOR ROSE:
It is never a good idea to thumb your nose at the FBI. The DOJ thought all Internet gambling was illegal, and it did indeed gall them to see those ads. But the DOJ also knew, and knows, that its war of intimidation has poor weapons: The federal Wire Act probably does make sports betting a crime, but not poker or lotteries or casino game; and the U.S. has almost no way to get at a foreign national sitting in his own country who is licensed by that country. Notice that no operator of Internet poker was ever arrested. The DOJ did not want to go to court and lose. But when the SuperBowl came around last year, it announced criminal charges against Neteller. I personally think the war is continuing at about the same level. It's not escalating, or we would see affiliates arrested. But it is not going away; online sports betting operators, acting on my advice, are no longer coming to the U.S. and so can't be easily arrested. Some foreign operators are in settlement talks with the DOJ.
***********.COM: After the initial hysteria that accompanied last year's passage of the UIGEA, many U.S. bettors settled down once they realized the Act did nothing to make internet gambling a crime where it was not previously. The general consensus seems to be, they can feel confident that they are not breaking the law except in states that have passed legislation specifically criminalizing the activity:
Considering that U.S. Attorney Catherine Hanaway admitted in a 2007 House hearing that just placing wagers online isn't against federal law, do U.S. based internet bettors have any reason to be concerned with being prosecuted under any existing federal statute?
PROFESSOR ROSE:
No. There is no federal law or regulation that makes mere betting a crime, even if you use a phone or computer to connect with an illegal bookie in another state. A bettor can get in trouble if he helps, say by collecting debts from other bettors. About half the states do have laws on the books making it a crime under some circumstances to make a bet, but no one is going to go to jail for that. The real danger is administrative: meaning colleges and workplaces have the right to know how you are using their computers and can punish you for betting online. And civil: which goes to the question of whether you can collect if the operator refuses to pay or you feel you have been cheated.
***********.COM: I think what aggravates the average person is there are many forms of gambling all around us. Many states have lotteries, horse racing, poker, bingo and regulate many other types of gambling and many U.S. citizens find it to be increasingly hypocritical of the U.S. government to attempt to control how Americans spend time on their computer, in the privacy of their own home?
It seems that the Poker Players Alliance has made an attempt to separate their interests from the overall debate in an attempt to capitalize on the public's overall acceptance of Poker. In your opinion is this position misguided and do you feel it is feasible to form an alliance between the leaders in the Poker industry, sportsbook and casino operators, and land based casino corporations to promote the legalization of online gambling?
PROFESSOR ROSE:
Of course it is hypocritical, but except when there is complete prohibition, that has always been the way gambling is treated. Gaming is a morally suspect industry. It is usually outlawed. When it is made legal it is done piecemeal, starting with a form that is considered harmless, like charity bingo or state-licensed horse racing. This leads to pressure for more forms to be made legal. But there will always be types of gambling that government will never allow, like betting on high school sports.
The PPA was politically smart to try to carve out poker. People, including voters and politicians, do treat different forms of gambling differently. For example, it is fairly easy to legalize charity bingo or a state lottery, but nearly impossible to get a vote of the people to amend the state constitution to bring in high-stakes casinos (which is why almost all states with casinos brought them in through acts of the state legislatures or Indian tribes). If poker can be seen as being as harmless as bingo, it has a chance of being exempted from the ban on internet gambling.
***********.COM: Professor Rose, we would once again want to thank you for your time and I know I speak for many others in the internet gambling community when I say that I always enjoy reading your insight on these issues.
Please leave our readers with a few of your thoughts on the current state of online gambling and what the future might have in store for the industry as a whole.
PROFESSOR ROSE:
The U.S. is becoming more and more isolated in the world. The big breakthrough was when the U.K., a world power, decided that internet gambling was acceptable if regulated. Eventually the U.S. will have to give in, allowing states to decide for themselves. Meanwhile, players can make any kind of bet online that they can make in the real world. Since the federal government pretends this is either not happening or is illegal, it is up to bettors to look out and protect themselves.
***********.com would like to give credit to forum moderator "the judge" for help with forming many questions for Professor Rose.
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