Internet gambling article by Attorney Owens..Good Read

[bgeorgia]

California Internet Gaming

[Jeff]

Are You Playing Legally? Internet Gambling and the Law A State- by -State Series

We all know Internet gaming is under attack by State and Federal lawmakers. But what does that mean to you, the guy who bets a few bucks now and then? Does gambling on the Internet make you a criminal? How about running a gambling business? Is there a clear answer ? In this weekly series we examine the mix ( and sometimes the tangle) of State laws that affect the online gaming public and the businesses that serve them.

Part One: California

What’s licensed: State lottery, horse tracks, Indian bingo and casinos, card rooms. There are cruise ships that feature gambling on the high seas, but this is not under direct State control.

Is placing a bet on the Internet specifically illegal ? No, not an Internet bet per se. If you, the bettor and the e-casino server are both in-state, you could be violating existing law. There is also a new bill pending (see below).

Can the existing laws be read to make it illegal? This is possible, but by no means certain. The law against illegal gaming ( California Penal Code Section 330) already makes it a misdemeanor to run “any banking or percentage game played with cards, dice, or any device, for money, checks, credit, or other representative of value”. Or to bet on it. This could easily be read to include Internet gaming, for computers and the Internet itself were devised by humans. Under Section 335a, any such machine if used for illegal gambling may be seized .

However, there are two real-life catches. First, the game has to be in the State to be busted by State authorities. The guys that the authorities really want - the ones taking the action, collecting and paying the bets - are generally located well out of reach. Second, politicians realize that it’s bad policy to go after individual gamblers- after all, they vote.

Is operating an Internet gambling business illegal? Inside the State it surely is. Section 330 makes it illegal to offer and operate unregistered games, as well as to bet on them. But don’t worry: if you are actually harebrained enough to keep the server of your illegal online casino inside the borders of the USA, you can probably get off by pleading insanity when you get nailed.

However, Internet gambling as such has not yet been specifically singled out in California law- until now.

Proposed Legislation:

Just at the moment, California’s rolling blackouts are preventing more e-gaming than any law. If there’s no electricity, no one can get online to gamble! But State Assembly Person Frommer ( D-Burbank) is taking no chances. He has introduced AB 1229, a massive overreaction to a non-problem. This gem of jurisprudence would make the mere act of e-gambling a misdemeanor ( a warning the first time, and $100 fine thereafter). Running an Internet game within the state would also be a misdemeanor ( 90 days and $1000 per violation, even though it’s probably already covered by existing law). And so would operating a game that reaches into California from out of state. How that part is to be enforced, no one has specified.

Much more vague, and much more disturbing to banks and credit card companies, is the provision which also penalizes anyone “ aiding and abetting” the placing of an California Internet bet. This is meant to include any financial institution that allows card or wire transfers to or from a betting site. There is no clear idea how this would be done without making all finance records in California subject to random State inspection, and no indication which State agency would have the task . Then, too we have to ask if advertising a Web page amounts to “ aiding and abetting”. What does this do to advertising on those gambling Web pages? What about the advertisements those pages place elsewhere? All indications are that no one has thought of that yet. It’s the grand tradition of California lawmakers: one headline for me, now, is worth any number of headaches for you, later.

The language of this proposed law pretends to protect ISPs, search engines and servers- but that is window dressing. After all, how do the cops know if someone is gambling online? There is no way to detect this activity other than massive, random phone taps, or by systematically scrutinizing the traffic logs of every Internet server in the State for contacts with “ forbidden” sites. The conclusion, therefore, cannot be avoided. This bill is a standing menace to the right of privacy and of free speech. It is important to realize, also, that in the end this law would be useless in preventing actual gambling: it is ridiculously easy for an e-casino to set up relays and “ mirror” sites which are not on any government blacklist. Even Communist China can’t stop the Internet.

Lastly, the bill is laughably hypocritical. It solemnly states that in the gambling world, Internet gaming alone represents a threat to the health and morals of California ( the State that took the porno industry away from Sweden, and gave us topless bars, legalized pot, and the Unabomber.) Those same games and bets, we are supposed to believe, are harmless and wholesome if made at California’s horse tracks, lottery, Indian casinos and card rooms- that is, the places where the State gets a cut. Even the Rehnquist Supreme Court doesn’t buy that one ( Look up Greater New Orleans Broadcasting vs U.S.). In any case, Internet gambling totals up to about 1% of the $500 billion bet every year in the USA. To pretend that all the evils of gambling are concentrated in only one form of it, the online method, is just plain silly.

Fortunately, the California Legislature has the power crisis on its hands, and is tending to defer other legislation ( apparently until the arrival of the Electricity Fairy). So chances of this turkey becoming law are not good right now. But the California readers should all write their Assembly reps and make their opposition known. The price of freedom is eternal vigilance.

Mr. Owens is an attorney who specializes in the problems of e-commerce, international trade and gaming law. Please address all questions, comments or requests to [email protected]