Posts tagged unlawful internet gambling enforcement act

UnSAFE for online gambling

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.