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Welcome back! We've been on a bit of an extended vacation since our original launch back in 2006. There have been quite a few developments within the online gambling industry since then and now is as good a time as any for us to pick up where we left off. Stay tuned, we are working as fast as we can to keep you as informed as possible.
by: Martin Owens
As with the rest of its private wars, the Bush administration’s efforts against online gambling are getting uglier and meaner without accomplishing anything effective. The latest arrests of the Neteller founders fit the pattern. It is a “shock and awe strike” that turns out to be misdirected, and will yield no long-term results, because the people in charge have no clear idea as to where they’re headed.
Why have the Neteller founders been arrested but the company itself left alone? For the same reason that the Department of Justice (DOJ) fined the St Louis Sporting News for carrying I-gaming ads, but backed away from Casino City Press’ suit for declarative judgment on the same subject. For the same reason they declare all Internet gaming is against the Wire Act (it isn’t). For the same reason the press releases proclaimed the Unlawful Internet Gambling Enforcement Act had outlawed I-gaming in America (it hasn’t). As with wiretaps and surveillance, the DOJ is no longer enforcing the laws, but imposing a policy. They have appointed themselves protectors of the moral order, and the hell with what the people want or what the statutes actually say.
What DO the laws say? Nothing new. American gambling law remains the same muddle it always has been. To this day, sixteen States have no actual legal definition of what is and is not gambling. Only eight States even mention the Internet in their gambling laws. In the American scheme of things, violation of State gambling laws is the trigger for invoking the Federal ones--including money laundering. But the State laws are next to useless in policing a global market. If gambler X in the USA contacts a sportsbook site in Antigua, does that give his home state jurisdiction over that site? The question remains unanswered. Perhaps that’s another reason Neteller itself is being left alone. The prosecutors are careful not to ask the jurisdiction question in actual court proceedings, because they know what the answer will be.
What do the people want? They want to be left alone to enjoy themselves. A Zogby poll last year showed about 80% of Americans didn’t want online gambling outlawed (and that included major Vegas operations who noticed that online poker helped fill up their tournaments). The fact is that the old hostility to gambling is fading. How could it be otherwise, when 48 of the 50 States permit some form of it--or in the case of State lotteries, actively promote it? Gambling is not merely permitted…it has become normal.
And that, by the way, includes Internet gambling. Gambling is part of the entertainment industry, and has simply gone digital, global and online like the rest. Over seventy countries now permit I-gaming worldwide, and many license it under their sovereign authority. That includes the USA, where a dozen States license Internet services to take horse bets, and where such conservative States as Georgia, Virginia, and North Dakota are moving to accept Internet bets online. This is no bold, pioneering step--the lotteries of Canada, the UK and Europe have been online for years.
But the American powers-that-be will not yield. They take refuge in denial and fantasy. In the DOJ’s alternative universe, gambling is still a shocking evil, to be suppressed by local prosecutors with political ambitions. Internet gaming has not actually grown into a licensed and sanctioned global industry, but is simply a vast plot by the forces of darkness, as when assistant FBI Director Mershon pronounced I-gaming “a colossal criminal enterprise masquerading as legitimate business.” And the Protectors’ tactics are equally desperate. Unable to make a real world case against I-gaming itself, or to make other nations obey, the DOJ is now using administrative measures: “If you ever want to see your Board of Directors again, get out of the US market.” (You or I, behaving thusly, would be dealing in blackmail and hostage taking.) And since (according to the DOJ), the State licensed I-gambling is also illegal, we can only wonder how long it will take before State officials will also be detained for conspiracy and the Wire Act. Here’s hoping that sheer moral fervor won’t lead to the beheading of captives taken by the gambling jihad.
Rumors have been heard that this is all a big business conspiracy--that American interests are preparing their way into the I-gaming market by outlawing the competition. It might be better if that were true--there are ways to communicate with conspiring monopolists, a chance to point out that cooperation is in their interests, too. But regrettably, it ain’t so. There is no guiding intelligence behind the animosity. If there were, they would not try to knock out essential facilities such as Neteller’s. If dominating the market were the goal, there would be avenues of cooperation left open as well as procedures which were forbidden.
This is, in fact, the scariest part of the whole business. It is now clear that this administration is not buying time to accommodate the future--they want to make sure that I-gaming’s future never arrives. It can no longer be doubted that the actual goal, practical or not, is to eliminate American I-gaming altogether, probably followed by a push against the land-based gambling that already exists. Frank Fahrenkopf (American Gaming Association President) said as much at G2E (Global Gaming Expo) this year. It sounded like exaggeration at the time. Not anymore.
Will the neo-prohibition crowd be able to accomplish their aim? Hardly. A $12 billion dollar industry is not going to disappear--in fact it is still on track to top $20 billion by 2010, and mobile-phone gaming is set to expand to a $16 billion market all by itself. But there will be a price: The DOJ’s shortsighted, blunt-force tactics are driving out the respectable, accountable, progressive and responsible parties who wanted to participate in I-gaming. By default then, it will go more and more into the hands of others. The same ones the DOJ swears it is protecting us against.
January 18, 2007
Mr. Owens is a California attorney specializing in the law of Internet and interactive gaming since 1998. Comments and inquiries welcome at: mowens@trade-attorney.com.
