Tag Archives: Gambling prohibition

UnSAFE for online gambling

October 4, 2006 12:44 pm

Many people have been writing about the Unlawful Internet Gambling Enforcement act, so I thought it might be a good idea to punch up the actual text of the SAFE Port Act, H.R. 4954, which the House and Senate passed and have forwarded to the president, along with my comments. So what will this bill mean for you? And does the law actually LEGALIZE online gambling in Nevada? It certainly looks like.

Here are some of the relevant parts of Section 802 of the bill, which deals with “unlawful internet gambling”:

Sec. 5362. Definitions

`In this subchapter:

`(1) BET OR WAGER- The term `bet or wager’–

`(A) means the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game subject to chance, upon an agreement or understanding that the person or another person will receive something of value in the event of a certain outcome;

`(B) includes the purchase of a chance or opportunity to win a lottery or other prize (which opportunity to win is predominantly subject to chance);

`(C) includes any scheme of a type described in section 3702 of title 28;

`(D) includes any instructions or information pertaining to the establishment or movement of funds by the bettor or customer in, to, or from an account with the business of betting or wagering; and

`(E) does not include–

`(i) any activity governed by the securities laws (as that term is defined in section 3(a)(47) of the Securities Exchange Act of 1934 for the purchase or sale of securities (as that term is defined in section 3(a)(10) of that Act);

`(ii) any transaction conducted on or subject to the rules of a registered entity or exempt board of trade under the Commodity Exchange Act;

`(iii) any over-the-counter derivative instrument;

`(iv) any other transaction that–

`(I) is excluded or exempt from regulation under the Commodity Exchange Act; or

`(II) is exempt from State gaming or bucket shop laws under section 12(e) of the Commodity Exchange Act or section 28(a) of the Securities Exchange Act of 1934;

`(v) any contract of indemnity or guarantee;

`(vi) any contract for insurance;

`(vii) any deposit or other transaction with an insured depository institution;

`(viii) participation in any game or contest in which participants do not stake or risk anything of value other than–

`(I) personal efforts of the participants in playing the game or contest or obtaining access to the Internet; or

`(II) points or credits that the sponsor of the game or contest provides to participants free of charge and that can be used or redeemed only for participation in games or contests offered by the sponsor; or

`(ix) participation in any fantasy or simulation sports game or educational game or contest in which (if the game or contest involves a team or teams) no fantasy or simulation sports team is based on the current membership of an actual team that is a member of an amateur or professional sports organization (as those terms are defined in section 3701 of title 28) and that meets the following conditions:

`(I) All prizes and awards offered to winning participants are established and made known to the participants in advance of the game or contest and their value is not determined by the number of participants or the amount of any fees paid by those participants.

`(II) All winning outcomes reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of the performance of individuals (athletes in the case of sports events) in multiple real-world sporting or other events.

`(III) No winning outcome is based–

`(aa) on the score, point-spread, or any performance or performances of any single real-world team or any combination of such teams; or

`(bb) solely on any single performance of an individual athlete in any single real-world sporting or other event.

SAFE Port Act – THOMAS (Library of Congress)

The key sections here definitively outlaw sports betting, but poker is a grey area, and freeroll tournaments are definitely permitted. So, strictly speaking, it will still be legal to play poker on the Internet, but not to wager money on it–something that might be a moot point, but maybe not. Could you charge a $100 monthly membership for a site, then offer freeroll tournaments whose prize isn’t based on the number of partcipants? I think the law allows that.

Could Harrah’s Entertainment allow casino players to redeem Total Rewards points for entry into a satellite tournament for the World Series of Poker? I think that, under section viii/II, this would be allowed.

Let’s go on, to find out just what “unlawful Internet gambling” is:

`(10) UNLAWFUL INTERNET GAMBLING-

`(A) IN GENERAL- The term `unlawful Internet gambling’ means to place, receive, or otherwise knowingly transmit a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is unlawful under any applicable Federal or State law in the State or Tribal lands in which the bet or wager is initiated, received, or otherwise made.

`(B) INTRASTATE TRANSACTIONS- The term `unlawful Internet gambling’ does not include placing, receiving, or otherwise transmitting a bet or wager where–

`(i) the bet or wager is initiated and received or otherwise made exclusively within a single State;

`(ii) the bet or wager and the method by which the bet or wager is initiated and received or otherwise made is expressly authorized by and placed in accordance with the laws of such State, and the State law or regulations include–

`(I) age and location verification requirements reasonably designed to block access to minors and persons located out of such State; and

`(II) appropriate data security standards to prevent unauthorized access by any person whose age and current location has not been verified in accordance with such State’s law or regulations; and

`(iii) the bet or wager does not violate any provision of–

`(I) the Interstate Horseracing Act of 1978 (15 U.S.C. 3001 et seq.);

`(II) chapter 178 of title 28 (commonly known as the `Professional and Amateur Sports Protection Act’);

`(III) the Gambling Devices Transportation Act (15 U.S.C. 1171 et seq.); or

`(IV) the Indian Gaming Regulatory Act (25 U.S.C. 2701 et seq.).

`(C) INTRATRIBAL TRANSACTIONS- The term `unlawful Internet gambling’ does not include placing, receiving, or otherwise transmitting a bet or wager where–

`(i) the bet or wager is initiated and received or otherwise made exclusively–

`(I) within the Indian lands of a single Indian tribe (as such terms are defined under the Indian Gaming Regulatory Act); or

`(II) between the Indian lands of 2 or more Indian tribes to the extent that intertribal gaming is authorized by the Indian Gaming Regulatory Act;

`(ii) the bet or wager and the method by which the bet or wager is initiated and received or otherwise made is expressly authorized by and complies with the requirements of–

`(I) the applicable tribal ordinance or resolution approved by the Chairman of the National Indian Gaming Commission; and

`(II) with respect to class III gaming, the applicable Tribal-State Compact;

`(iii) the applicable tribal ordinance or resolution or Tribal-State Compact includes–

`(I) age and location verification requirements reasonably designed to block access to minors and persons located out of the applicable Tribal lands; and

`(II) appropriate data security standards to prevent unauthorized access by any person whose age and current location has not been verified in accordance with the applicable tribal ordinance or resolution or Tribal-State Compact; and

`(iv) the bet or wager does not violate any provision of–

`(I) the Interstate Horseracing Act of 1978 (15 U.S.C. 3001 et seq.);

`(II) chapter 178 of title 28 (commonly known as the `Professional and Amateur Sports Protection Act’);

`(III) the Gambling Devices Transportation Act (15 U.S.C. 1171 et seq.); or

`(IV) the Indian Gaming Regulatory Act (25 U.S.C. 2701 et seq.).

So it is legal to use the Internet to place bets within a single state in which bets are legal: Nevadans, then, should be able to place bets with casino sportsbooks online. It looks to me like THIS LEGALIZES INTERNET GAMBLING WITHIN NEVADA! And it is legal to use the net to send bets from one Indian reservation to another, as long as it doesn’t violate the `Professional and Amateur Sports Protection Act’ (which outlaws sports betting except in Nevada, Delaware, and Oregon)–so poker would be fine, but sports bets aren’t.

I’m puzzled as to why bets can’t be sent from one state where they are legal (i.e., Mississippi) to another (i.e., New Jersey). Is the “intrastate” exception actually a carve-out to guarantee the legality of wireless gambling, which in already on the way in Nevada.

That’s what I think the most important parts of the bill are, at least for Nevada. Nelson Rose also has a commentary up in which he dissects the entire bill: Nelson Rose’s analysis of H.R. 4954.

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WTO deadline

August 19, 2005 11:34 am

There has been a great deal of ambiguity about the WTO decision in the Antigua/US dispute. Both sides have claimed victory, and there is no real roadmap for what is going to happen. I’m chairing a session on this at G2E, which may feature debate between representatives of the US and Antigua, or may not.

Today’s story is that the US has been given an April deadline to comply with the WTO ruling, though I’m not sure exactly what that entails.
Continue Reading →

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Getting Reviewed

January 13, 2005 10:04 am

I always tell my students that history has three components: source documents, without which we would have nothing to write about; historical writing, which puts the raw material of the past into context and makes it relevant; and readers, without whom the whole exercise would be fruitless. You write books because you want people to read them. Any writer who says otherwise is probably in denial.

Want to know what it’s like having your book dissected in a historical journal? Read through to the end of this entry, and learn how the process looks from my perspective.

Continue Reading →

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Wired!

December 21, 2004 10:21 am

For those of you awaiting my second book, today is a good day. I got the manuscript in the mail to University of Nevada Press, and look forward to a quick production process. With any luck, this should be out by Fall 2005.

Continue Reading →

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Anti-gambling to merge with anti-terror?

September 22, 2004 9:42 am

Proponents of the ban on Internet funding, including Rep. Michael Oxley of Ohio, have contended that bank instruments used in online gaming can facilitate money-laundering and terrorism. So, for the second time, they are moving to graft the ban onto the USA PATRIOT act. From Interactive Gaming News:

Oxley, chairman of the House Committee on Financial Services and a longtime advocate of Internet gambling prohibition, plans to add H.R. 2143, the Unlawful Internet Gambling Funding Prohibition Act, to an anti-terrorism bill currently in committee.

A federal law passed in 2002 created a commission to study the intelligence and law enforcement failures that made the U.S. susceptible to the terrorist attacks on Sept. 11, 2001. The commission released its final report in July 2004, and one of the recommendations was to increase the scrutiny of financial transactions originating offshore.

Based on this finding, Oxley wants to attach H.R. 2143 to a working bill aimed at putting some of the commission’s recommendations into law.

Introduced by Rep. Spencer Bachus, R-Ala. and passed in the House as a standalone bill in 2003, H.R. 2143 would ban the use of credit cards, wire transfers, e-cash and other forms of payment for funding Internet gambling activities.

The 9/11 bill is scheduled for its second hearing in the Financial Services Committee on Wednesday, and CongressDaily reported Monday that Oxley will seek to a add the funding prohibition measure.

As chairman of the committee , Oxley is in a good position to do so, but that’s not to say the strategy wouldn’t be met with resistance.

“The leadership wants the 9/11 bill focused,” one Washington insider told IGN. “If they add this provision (H.R. 2143) onto it, then anyone can add anything they want down the road, and they don’t want to open up that box.”

The gaming provision will likely see some daylight, he added, “but I doubt it will win.”

Oxley to Piggyback Funding Prohibition Bill on Anti-Terrorism Legislation

It just goes to show that politics is politics. Even legislation like the USA PATRIOT act, which is a flashpoint of concerns about homeland security and civil liberties, is a creature of politics, which means that every congressperson has the chance to get their two cents in. Oxley tried this during the passage of the original USA PATRIOT act, but his amendment was left out of the final bill.

The more I study gambling, the more I’m convinced it is connected to everything. I just got finished reading Michael Barkun’s A Culture of Conspiracy, which talks about how people create bricolages of different conspiracy ideas: masons, bankers, aliens, and black helicopters all combined into a “New World Order” conspiracy casserole.

Perhaps after ROLL THE BONES I’ll attempt to reconstruct a shadow history of the world that incorporates gambling into the conspiracy, kind of like the editors in Eco’s Foucault’s Pendulum. Hopefully it wouldn’t overtake me. There are certainly many similarities between the obsessive gambler (or collector) and the conspiracy zealot: the search for hidden truths and the placement of patterns and logic onto random events.

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Notice for online regulation campaign

September 17, 2004 8:21 am

It looks like the mainstream media is picking up a story reported on the Internet last week about BetOnSports’ David Carruthers’s campaign to bring online gaming regulation before the public. From the LVRJ:

But unless Congress abandons efforts to prohibit Internet gambling. Carruthers said, the United States stands to lose billions of dollars in potential tax revenue to the United Kingdom and other countries that allow online wagering but regulate it.

BetonSports.com is headquartered in San Jose, Costa Rica. Carruthers came to the company after working 24 years for Ladbrokes Racing in the United Kingdom.

“We want to be the standard-bearer of Internet gambling regulation in the United States because a majority of our customers come from the U.S.,” Carruthers said.

Internet gambling is projected to reach $7 billion in revenue this year after producing $5.7 billion last year on more than 1,800 offshore wagering Web sites. By 2010, the Internet gambling market is expected to produce $18.4 billion.

As part of his company’s campaign for regulation, Carruthers is conducting summit meetings in New York, Washington, Chicago and Los Angeles.

The summits include discussions among Internet gambling officials, attorneys and educators about how to develop federal regulations for online wagering.

Findings will be published in a white paper that will be released shortly after the Nov. 2 election.

Exec pushing Internet gaming

This is certainly a developing story. I will be attending the Los Angeles event, so expect a full report about the meeting here, maybe in real time if I can get net access. Isn’t technology great?

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New debate on online betting

September 9, 2004 11:55 am

The parent company of BetonSports.com, a big Internet wagering site, has announced that it will launch an initiative called “Proposition 1: To Regulate or Prohibit Online Gambling?” which will bring the question of the legality of online gambling before the United States public. From yahoo, who just ran the press release:


The initiative will be anchored by a national summit tour during September in New York, Washington, D.C., Chicago and Los Angeles. Summit meetings will bring together experts in law, academia, industry and government to stimulate the discussion and debate needed to address issues critical to the development of federal regulation that will both recognize the growth and popularity of online gambling and provide key consumer protections. This begins with a focus on the merits of existing proposed legislation in Congress, but also looks at efforts by the Department of Justice to prohibit advertising by online gambling companies. Moreover, the initiative will address what the online and traditional “land-based” segments of the gambling industry should be doing together to demonstrate leadership in providing Congress valuable input and in protecting consumers.

To assist lawmakers with the process of developing the right legislation for consumers, BETonSPORTS will capture the key findings from the initiative in a white paper which it will publish just after the November 2 election.

“As an emerging form of entertainment, online gambling is growing exponentially and is here to stay in the U.S. Efforts in Congress to develop legislation have stalled and are otherwise polarizing people. The Department of Justice’s approach is also counterproductive. There’s a public policy vacuum on the issues and it’s in the best interests of consumers for industry to step in and help focus on what’s most important to consider and accomplish in creating legislation,” said David Carruthers, CEO of BETonSPORTS.

Also part of the initiative is a series of college campus debates and an advertising campaign.

‘Proposition 1: To Regulate or Prohibit Online Gambling?’, a National Public Policy Initiative

I’m chairing a session at the Global Gaming Expo on this very topic. So far, the panelists are Bob Blumenfeld, an attorney who assisted Antigua’s WTO challenge of United States gaming prohibitions, and Jay Cohen, the only man who has spent time in an American prison for violating the Wire Act by running an online operation. I’d love to have a representative of this initiative be part of it.

If you want to get involved in the debates (or suggest the inclusion of a certain academic expert who has just finished a book on the Wire Act and gaming prohibition), you can contact Kajal Jhaveri, Ruder Finn, at 212-593-5864 or jhaverik@ruderfinn.com.

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