Good article on new gaming law

[Jeff]

published on: Thursday Oct 05, 2006
Legal Landscape of Online Gaming Has Not Changed
Analysis From CardPlayer's Legal Counsel

Misleading news stories abound both online and in print regarding the
passage of the Unlawful Internet Gambling Enforcement Act. The
completely incorrect interpretation states that the new bill
essentially outlaws most forms of Internet gambling. The new bill
absolutely does no such thing.

I have been analyzing legal issues for 25 years. I have gone to court
thousands of times interpreting statutes and I have taught new lawyers
the correct method by which a statute should be analyzed. For over 15
years I was part of a legal hotline where California attorneys would
call me with a legal question. As this is my field of expertise, I am
flabbergasted at the misinformation being perpetuated regarding the new
bill.

The New Bill Does Not Make Online Poker Illegal

The new bill attempts to make it more difficult to get money into a
site by forbidding US financial Institutions from funding the type of
online gambling which the law has previously made illegal. The new bill
does NOT make online gaming illegal where it was not illegal before.
Let me say that again. The new bill does not make online gaming
illegal. The bill merely speaks to the mechanism by which an online
account is funded. I am going to spend some time in this article
explaining the accuracy of my reasoning.

The Bill Constitutes Enforcement Legislation

First and most simplistically, the bill is called the Unlawful Internet
Gambling Enforcement Act. The operative word is enforcement. It is a
bill whose goal is to enforce laws that already exist.

The bill begins in section 5361 by discussing congressional findings.
In that section the bill states that Internet gambling is funded by
credit cards etc. Section 5361(a)(4) states in relevant part:

"New mechanisms for enforcing gambling laws on the Internet are
necessary because traditional ... mechanisms are often inadequate..."

The Bill does not Change Existing Gaming Law

Next, section 5361(b) specifically states that nothing in this new law
shall be construed as "altering, limiting or expanding any Federal or
State law... prohibiting, permitting or regulating gambling within the
US." In other words, the language of the statute confirms that this
new law does not change existing gaming law. It does not SPEAK TO the
legality of online gaming. It only applies to the mechanism of funding
any Internet gaming which has already been deemed to be illegal.

Even Senator Frist said about the bill "Although we can't monitor every
online gambler or regulate offshore gambling, we can police the
financial institutions that disregard our laws."

The Definition of Unlawful Internet Gambling

Of extreme importance in a statute is the definitional section which
sets forth the parameters of a bill. The term "Unlawful Internet
gambling" is given a definition. Section 5362(6) defines unlawful
Internet gambling to mean placing or receiving a bet "where such bet
or wager is unlawful under any applicable Federal or State law." This
raises the question regarding what type of online gambling is already
illegal. That will be discussed below.

First, let's move on to the meat of the bill. This is the section
that states just what is prohibited. Section 5363 begins by saying that
"No person engaged in the business of betting or wagering may
knowingly accept..." electronic transfers, credit cards etc. where a
person is engaged in "unlawful Internet gambling." This new law
applies, if and only if, the gambling is already illegal under current
law.

This brings us directly to the issue of what has been deemed illegal in
the last 10 years since the first online casino opened its virtual
doors. In a nutshell, sports-betting is made illegal by the 1961 Wire
Act, but poker is not.

Remember please, that the Attorney General's Office has not brought
one lawsuit in 10 years against a poker site, even though it takes the
position that online poker is prohibited by the Wire Act.

How the Law Works

In order to explain this discrepancy, I must digress with some
rudimentary background about just how the law works. You probably
remember from your high school civics class that the legislature MAKES
laws which the judiciary CONSTRUES. That means that our representatives
in Congress draft the laws which judges then interpret.

Legislators are not wordsmiths which is why there is a whole body of
law called statutory construction. The first rule of statutory
construction says that if the words of the statute are clear, the court
may rely upon the common language. But if the language is NOT clear,
the court must construe the language using a complicated legal process.

If a law is unclear, a Depuy Attorney General (the prosecutor) will
take one position and often a defense attorney will take an opposing
position. They go to court and a judge makes a determination. So when
the Attorney General makes a public statement about what a law means,
he might or might not be correct. It is ultimately the decision of a
court.

When the Attorney General's office takes the position that the Wire
Act prohibits online poker, the court ultimately decided whether that
opinion is accurate. Senator Frist incorrectly believes that all online
gaming is illegal. He said: "For me as majority leader, the bottom line
is simple: Internet gambling is illegal."

However, in order for Internet poker to be illegal, there must be a
specific statute that forbids such activity. For years I have posed the
question: What statute prohibits online poker? And if it is illegal,
why has there not been one lawsuit filed by the government against an
owner of an online poker site?

Online Poker is not Illegal

Even though the Attorney General's Office has publicly taken the
position that the 1961 Wire Act forbids online poker, in 10 years, they
have not put their money where their mouth is. Why? The judiciary (i.e.
the interpreting body) has already held that the 1961 Wire Act
doesn't speak to poker. It only applies to sports-betting.

The case on point to which I refer is "In Re Mastercard International",
decided by District Court Judge Stanwood R. Duvall, Jr. in 2001. Among
other issues, Judge Duval was faced with the question of whether the
Wire Act applied to online gambling. The posture of the case was
interesting because many deadbeat gamblers attempted to avoid online
gambling debts they had incurred by alleging that the money they owed
their credit card companies amounted to illegal gambling debts in
violation of the Wire Act. As a matter of fact, there were so many
similar suits filed by so many gamblers who did not want to pay their
losses, that the lower court consolidated 33 such similar charges.

Judge Duvall ruled that the Wire Act only prohibited wagering on SPORTS
EVENTS and he dismissed all 33 cases, noting that "Comparing the face
of the Wire Act and the history surrounding its enactment with the
recently proposed legislation, it becomes more certain that the Wire
Act's prohibition of gambling activities is restricted to the types of
events enumerated in the statute, sporting events or contests." In
other words, online poker was NOT within the reach of the Wire Act's
prohibition. The District Court of Appeal agreed with Duvall's ruling
that the 1961 Wire Act does not apply to online poker.

I must mention one caveat. District courts are permitted to disagree
with one another until the Supreme Court steps in. However, in this
case Judge Duvall's reasoning is so sound, it is close to
irrefutable. There is a well established body of law regarding
statutory construction and Judge Duvall followed the procedure to a
tee.

Even Representative Goodlatte, who authored one of the online gaming
bills in the House, acknowledges the limitations of the Wire Act. "We
need to modernize the Wire Act, which is 45 years old, and does not
apply to all forms of gambling," says Goodlatte, adding, "It clearly
applies to sports betting."

Hysteria is Completely Unfounded

Since this new law does not change what is legal or illegal, the
current hysteria is completely unfounded. This legislation attempts to
make it more difficult to get money into a site. Besides a few wrinkles
which will be the topic of another article, that's about it.

The statute is primarily no big deal since poker players stopped using
credit cards a few years ago and found other ways to get their money
into their favorite gaming site.

I am not saying there won't be lawsuits construing the meaning of the
statute, but ultimately, the statute will only be deemed to affect the
method by which online sites are funded.

Correct Analysis

There are a few very insightful people out there correctly analyzing
this new legislation. For example, the president of the American Gaming
Association, Frank Fahrenkopf is one such person. "This bill did not
make anything legal or illegal," says Fahrenkopf. "What it did was
affect the mechanism by which Internet gambling takes place...and there
is some question as to whether or not that will be effective."

Bloomberg correctly reports that "Congress passed legislation that
curbs financial payments from banks to offshore Internet casinos that
are illegal under U.S. law."

Consumer Affairs seems to have gotten it right as they report that:
"The legislation does not criminalize the placing of bets by
consumers. Rather than outlawing online gambling, the bill prohibits
banks and credit card companies from making payments to online gaming
websites... However, it's unclear just what is covered by the bill.
Internet sports-betting is plainly outlawed but what about online poker
and other popular games?"

I urge our readers to use care in accepting the opinions that one site
gets from another site where no legal opinion is being presented.
Please, read the statute yourselves. Read the words carefully and think
about my analysis. The statute can be found by clicking here. The
Unlawful Internet Gambling Enforcement section starts on page 213.

Jurisdiction

Another area I have written about extensively is the area of
jurisdiction. Libraries of books have been written on the varied and
complex meaning of jurisdiction. One of the simplest meanings of
"jurisdiction" is legal power.

For example, a New York court doesn't generally have jurisdiction
(legal power) over a problem in Texas. A federal court doesn't have
jurisdiction over a violation of most state laws. A municipal judge
doesn't have jurisdiction over a felony trial.

Our government doesn't have jurisdiction to make rules for a company
that resides offshore. Our rules do not apply in other countries as
they have their own set of rules.

This bill prohibits a gaming company from accepting payment that
violates US gaming law. Besides the fact that no law makes online poker
illegal,

all the gaming sites are offshore and not subject to US laws.

A law that tries to control an offshore company is considered a law
with no teeth, because it cannot be enforced. In the US, when a law is
broken, a person is arrested. The government subpoenas records and a
case moves forward. What it means not to have jurisdiction is that US
laws do not apply offshore, nor can the US arrest a person in another
country nor does our government have subpoena power to command an
offshore company to turn over records. NEteller, an online money
transfer service, is also an offshore company, not subject to US laws.

The Future

First of all, nothing is going to happen for 270 days. The Secretary
and the Board of Governors of the Federal Reserve System have 270 days
(after the bill is signed by the president) to come up with enforcement
policies and procedures. Those procedures are directed to the behavior
of banks and credit card companies. The procedures will be a nightmare.

Representatives of the financial services industry worry about a heavy
regulatory burden being placed on banks. "The bill sets up banks to
police a social issue," said Laura Fisher, spokeswoman for the American
Bankers Association. "It's not something we want to encourage."

The bill passed by Congress could allow regulators to exempt checks and
money transfers because they are more difficult to track. "Analyzing
40 billion checks a year would be a largely manual process", Fisher
said.

If checks are not exempt, this would break our banks as it would be too
costly to enforce. If checks ARE exempt, players could simply send a
check to an online site. If checks are not within the purview of the
law, what about e-checks?

The rules won't even be figured out for nine months during which
time, all the clever sites will have legally circumvented this new law
by other legal procedures to fund the sites.

Some Online Sites are Overreacting

I am surprised to see some online sites overreacting and posturing as
if they will pull out of the market. Any company that just pulls out of
the market deserves to lose a lot of money because they are receiving
bad legal advice.

Offshore companies are not bound by US anti-gaming laws. But the most
persuasive reason why offshore companies shouldn't pull out is
because the laws of online gaming have not changed. A few years ago
when the government was beginning to subpoena news networks, offshore
sites didn't pull out because the movement by the government
couldn't affect them. Similarly, a law that directs itself to the
mechanism used to enforce current laws, does not change the legal
landscape.

[Uncle Sammy Says]

Lots of people in a panic along the lines of Chicken Little and the sky is falling.......



But when you look at this new bill/law, it's important to read the part pertaining to online gambling several times over to let it really sink in.



The article posted above sums it up fairly well.



The bill changes nothing on the books pertaining to the act of placing a wager. Nothing new there. Whatever the law says in your location now, as to the legality of placing a bet over the internet, will still be the same when the prez puts his John Hancock on it.



It specifically addresses the acceptance of funds via bankwire, credit cards, and even checks.



However an exemtion has been put in there pertaining to checks because it would be impossible for the banking industry to police.



The soon to be law, is aimed at those receiving funds via these methods, the sportsbooks.



It isn't clearly defined though, so the law could be assumed to also apply to the individual players accepting funds via these methods from a sportsbook.



The Law was put forth to put a crimp in the money transfer pipeline.



Since they admit it would be virtually impossible to go after every online gambler, they created a law going after the source of the bets.......the money.



So basically, the law doesn't say it's illegal to place a bet online, (unless you felt it's been illegal all along). It says it's illegal to accept funds via the methods mentioned from the proceeds of gambling.



I would seriously doubt anyone betting on the Super Bowl this year is going to be looking at hard time in the clink. That is not the intention of this.



Since checks are exempt from this, you'll be able to take payouts from sportsbooks via checks until you are bluein the face.



It would be a million to one shot of that ever coming back to haunt you.



They would have to



1) Become suspicious that a check you are depositing is from an online gambling company. Impossible in the first place since these places have bank accounts at many financial institutions.



2) They would then have to start an investigation into the source of the check.



3) Once they determined that the check was from an online gaming company, they would then have to prove that it was being sent to you as the result of you placing online wagers. Afterall, there are other legitimate reasons why an online gaming company would be sending you a check.



4) So, to prove #4, they would have to apply for a search warrant, confiscate your computers, and dig into your hard drive to find where you actually did in fact place wagers.



5) They would then have to put together a case against you and proceed to trial.



Do you realize how much all of the above would cost?



It won't happen. Not unless you are some major money mover betting millions of dollars per year and moving millions of dolalrs around.



If you bet $500 on the Super Bowl and then get paid via check and deposit that check, you have virtually nothing to worry about.



The law also makes no mention of sending funds. Just accepting. So, apparantly, you can send money to sportsbooks all day long with no implications.

[TheBlackCat]

Its not about panicing. Its about being pissed off that these guys are passing dumbass bill after dumbass bill, snuck through the back door in the middle of the night.

We all KNOW they aren't going to stop it. That's not the point. The point is that they are TRYING to stop it, and I say we just stop the games and simply kick them out of office for trying. I'm tired of people taking the approach of, "Well, it doesn't matter because of blah blah blah." I don't care how watered down it is, it matters!! I'm not going to have them stand up their with their network of "tubes" and dictate what they think is moral and immoral, what they think is illegal and legal, especially when their decisions are so arbitrary and defenseless and against the public will, and only supported by an act passed in the fucking 1960s!

[Jeff]

I agree with the Black Cat.

We put these morons in office with our votes. Time to vote them out.

The ourtage should also be in that they attached it to something like the Port Security Bill. How is one related to the other?

The Port security Bill, which is important, of course was going to pass and be signed into law. They could have snuck any number of additional things on there that also would have passed simply because it's attached to the Port Security bill.

Do you think the president will even realize there's anything pertaining to online gambling on this Bill??

I would think any halfway intelligent individual would see that and say huh??? What the hell does this have to do with anything??






.

[kid]

Totally agree with Blackcat and Jeff.

The immediate thing we can all do is VOTE FOR EVERY DEMOCRAT ON THE BALLOT NOV. 7TH. I will never support a Republican candidate again in my lifetime once Bush signs that bill into law. Personally, I voted for Bush twice and have never voted for a Democrat in any election in my lifetime. I am 36 years old.

I noticed in an earlier post someone listing how people voted on this bill. That means nothing. No one will vote against this bill because it opens them up to criticism that they are weak on national security. I seriously wonder if Pres. Bush is even aware the Port Security Bill contains a ban on Internet Gambling. The bottom line is Kyl and Frist knew they could never get this passed so they snuck it through. They initailly attempted to sneak this through on a Military Spending Bill which is even more reprehensible. That's the way things have been done in Washington forever. It's also why we need line item vetos. All they are doing here is pursuing their secret agenda that has no mandate from the people whatsoever not keeping this country safe.

Next thing you know they will marcing people into ovens.

VOTE DEMOCRATIC ON NOV. 7TH

MAKE NOV. 8TH A GREAT DAY FOR AMERICA

[kid]

Just wanted to add I heard Pres. Bush is expected to sign this bill into law Oct. 13th. Some people tend to think the 270-day period to draft regulations means everything will operate normally until then. My opinion is that is NOT the case. The law takes effect when it is signed. 270 days is the maximum amt. of time it will take for banks to comply from when it gets signed and it is not outside the realm of possibility we could see a more immediate impact as far as people being able to withdraw money from their accounts with ease. I guess what I'm saying is if you have big money tied up in offshore accounts you might want to think about getting some of it refunded before the 13th because anything could happen once that bill gets signed. Better to be safe than sorry. I'm not an attorney so I'm not disputing the analysis Jeff posted as much as I am saying it paints perhaps the rosiest scenario I have read thus far and form your own opinions rather than believing everythnig you read.

[TheBlackCat]

Don't kid yourself:

1. Yes, Bush knows.

2. He'd cut his finger and sign it in blood if he could. He loves this kind of shit!

[jpehl]

Im glad others came to argue my side from the previous post i made. I do agree voting is the only resolution now. Like i said earlier i think that we have some very big hitters stepping up to the plate. We do have a chance but sitting on our hands gives us no chance at all. If you look at other gambling forums you will see that there is alot of people upset over this. Sure this might not be a big deal to some but if they take this away, you have to ask your self whats next. May be your passion next on the chopping block. Keep flooding the emails and remember to vote. Thats the most we can do for now.
jpehl

[kid]

Thought I submit the response I got from Republican candidate running for Rep. in my district for what it's worth:

Thank you. I had no idea that internet gambling had a constituency that
would be offended were it cut off. I hope I'm still blessed to go to
Washington and given the opportunity to share your disgust with Frist and
Kyl, despite having lost the votes of you and your friends.
I am concerned that the addictive power of gambling can ruin people's lives
and therefore I can understand moves to make gambling less convenient, but I
understand your disdain of the practice of attaching proposed laws to
totally unrelated legislation. Any substantive issue should be separately
voted, if only to clearly record each legislator's stand.

Brian Gibson

[xbigpappa]

if i did NOT have to worry about goin to jail, id kick Bush's Azz!!!!

[Bookoffshore]

From the Online Players Union

Following the link are a couple of great informative videos about the subject!
http://www.youtube.com/watch?v=rW8mdnqM8WM