Is gambling on the Internet legal?
By random dude, Section News
Posted on Mon Oct 04, 2004 at 07:12:00 PM PST
This article attempts to address the question, "What is the legality of gambling on the internet?" Is it against the law? Is it against international law? Is there a different law for the owners of the casino than for the players?
I am not an attorney. The following is not meant to be legal advice. This article is for entertainment purposes only. My thoughts on gambling on the Internet are not worth a hill of beans in any court proceedings. If you want a legal opinion, ask a lawyer.
Some state and federal law enforcement officials declare flatly, "yes, it's gambling on the Internet is all illegal." Yet with hundreds of web sites taking billions of dollars in wagers each year, fewer than 25 people have ever been prosecuted for online gambling. Most were bookies who were also taking sports bets by telephone. A few were unusually foolish and got caught.
Federal governments are not usually concerned with gambling. They do care about organized crime. So there are federal laws in the United States which make it a crime, under some circumstances, to take a bet, if you are in the gaming business.
This means that players are not violating any federal laws by merely placing bets. Senator Jon Kyle's first draft of his proposed Internet Gambling Prohibition Act would have made betting a federal crime. But, the U.S. Department of Justice, remembering the bad old days when it had to enforce the earlier Prohibition on alcohol, stated publicly that it did not want to go after $5 bettors. So, today, no one is even proposing making it a federal crime to merely place a bet.
Some smaller governmental units, particularly states in the United States, are rushing through acts prohibiting wagering online. State anti-Internet gambling laws take one of two forms: They either prohibit all forms of Internet gambling, or they only appear to prohibit online gaming, while actually authorizing their local legal gambling operations to take bets online.
With regard to the international aspects of the legislation, the United States needs to be very sensitive to issues of international law and comity in the Internet context. Because other countries, such as Australia, have declared their intention to permit Internet gambling operations to accept bets and wagers via the Internet, it will be difficult to enforce Internet gambling prohibitions against operations located outside the United States. More specifically, a foreign national who is operating a licensed Internet-based casino in his country will not be violating his country's laws if he solicits or accepts bets from United States citizens. If we demand that foreign countries investigate, on our behalf, non-fraudulent gambling-related conduct that is legal in their countries, we must be prepared to receive and act upon foreign requests for assistance when the conduct a foreign country complains of is legal, or even constitutionally protected, in the United States.
For example, if we ask a foreign country to investigate gambling that is legal in the foreign state, that state may ask us to investigate constitutionally protected speech transmitted on the Internet from the United States that arguably violates that country's hate speech laws. Considering all of the challenges facing law enforcement in the information age, we believe current efforts should focus on conduct which either is, or should be, universally prohibited, rather than conduct which many states in this country, and many foreign countries, deem permissible.
According to Professor I. Nelson Rose, one of the world’s leading authorities on gambling law: "no United States federal statute or regulation explicitly prohibits Internet gambling, either domestically or abroad." Still, the US government has taken the position that certain things are illegal, and more importantly, certain things are worthy of prosecution.
Nevada has enacted a law which expressly makes it a crime in Nevada for a person located anywhere in the world to accept a wager over the Internet from a person physically located in Nevada. This statute meets the test for overcoming the presumption that a law will not have extraterritorial reach. However, it fails an additional constitutional test, at least to the extent it impacts legal Internet operators in the United States.
Applying state law to Internet gambling risks the Internet activities being subjected to conflicting laws, imposed by different states with different priorities. A related concern is the risk that a tiny, conservative state or country, or even county or city, could effectively impose its standards of morality on the rest of the planet. This threat materialized in 1995, when CompuServe temporarily blocked access worldwide to over 200 Internet sites, after a single prosecutor in Munich, Germany, alleged that the sites contained sexual and other material that violated German law.
Nevada's statute very likely violates the Dormant Commerce Clause, because it is so clearly designed to protect Nevada gaming interests at the expense of all out-of-state competitors. Other state prohibitions on Internet gambling would also be unconstitutional, if they unreasonably interfered with the sovereign powers of other states or nations. One author analyzed the Louisiana statute outlawing all Internet gambling and concluded that its language was so broad and vague that it could potentially prevent regular business transactions, like buying real estate. It would be impossible for the rest of the United States, let alone the rest of the world, conform their commercial activities to fit this new Louisiana law.
It is possible that a state, particularly one which completely prohibits Internet gambling, does have the police power to prosecute foreign operators for accepting bets over the Internet from residents of that state. The state government would have to first enact a carefully drafted statute and second be able to force any potential defendant to come physically to that state for trial. Under present law, it is almost impossible for a state to bring an overseas operator to trial. For the law of nations also holds that governments are almost never allowed to impose their criminal laws on foreign citizens in foreign States. It takes an extraordinary situation for a country, like the United States, to invade another country -- say Panama -- to arrest a citizen of that country, Manuel Noriega, for violating American drug laws. Extradition is difficult; extradition treaties may cover criminal fraud, but never illegal gambling.
WASHINGTON, Sept. 17 /PRNewswire/ -- Experts met in Washington yesterday to discuss Internet gambling, and ways to regulate it. Hosted by BETonSPORTS plc, the world's largest online wagering service, the summit was part of a national public policy initiative called "Proposition 1: To Regulate or Prohibit Online Gambling." Designed to create a framework for lawmakers to regulate the industry, today's summit was the second in a series of meetings to be held across the U.S. this month.
My guess is that Internet gambling is not going to go away. Over time, the governments will reluctantly agree to it and try to get some tax revenue from it. That's just my opinion though. I'm not lawyer. My opinion isn't relevant in any trial.
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