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Best of I. Nelson Rose

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Will Congress Cripple Internet Poker?

26 August 2006

The U.S. House of Representatives has approved a bill, HR 4411, which, if the Senate and President agree, will create the Internet Gambling Prohibition and Enforcement Act. If the bill becomes law, online poker will be changed forever.

The law would not directly make it a crime to be a mere player. And there will always be ways for dedicated poker players to get around the barriers that would be created. But for casual players, registering and sending money to a poker website would simply become too difficult.

For the sites themselves, the blow would be so severe that many would be driven out of business.

The bill attacks Internet poker in many ways. The first is expanding the reach of federal anti-gambling statutes.

Federal prosecutors in the Department of Justice (DOJ) believe that present law, the Wire Act, covers all forms of gambling. Three courts have looked at the issue and disagreed, holding the Wire Act applies only to bets on races and sports events. The new law would clearly make unlawful all forms of gambling that violate any federal, state or tribal law.

Naturally, there are exemptions. The horse race industry and state lotteries have enough political power to keep their cross-border betting alive. So did professional athletes, who won an exemption for fantasy sports leagues. But dog tracks could not.

Nevada casinos made only a half-hearted attempt, because they do not have any existing Internet operations and only sought, unsuccessfully, to keep their options open. Indian gaming is in a similar situation, and won the almost worthless right to operate games online, so long as players are physically present on Indian land.

The bill has real teeth. It would make it a felony, punishable by up to five years in prison, for anyone to operate an illegal gambling website or accept money transferred in any form. Of course, it already is a felony to do sports betting online, and the bill would not make it any easier for the DOJ to arrest foreign operators.

The real change is in the power that would be given law enforcement to cut off access to gaming websites. Any federal, state, tribal or local agent can ask phone companies to cut phone lines. This is a carry over from the present Wire Act. You can't stop the Internet this way.

But you can if you can stop access to domain names. The bill would allow the DOJ or any state attorney general to get a court order requiring an Internet Service Provider to block all links to specified gambling websites.

You can also cripple a gambling business if it becomes too difficult to get money in and out. Federal regulators would be required to come up with ways of identifying and blocking all money transfers for online gambling transactions. This means that the present barriers to using credit cards would be extended to all banking transactions. Players would not even be able to write checks, let alone wire money, to gaming websites.

The bill does not directly mention intermediaries like Neteller and Firepay. But they could easily be brought under the law, if a U.S. attorney or state attorney general wished. At the very least, they would be told that they are aiding and abetting violations of the new law. And all of their assets in the United States would be subject to being seized.

Will the bill pass the Senate? It is a very low priority.

But the very fact that neither the Republicans nor Democrats care about it may allow its strongest supporter, Sen. Jon Kyl of Arizona, an opportunity to sneak it through.

© Copyright 2006. Professor I Nelson Rose is recognized as one of the world's leading experts on gambling law. His latest books, GAMING LAW: CASES AND MATERIALS and INTERNET GAMING LAW, are available through his website, www.GAMBLINGANDTHELAW.com.

2006 - #6 © Copyright 2006, all rights reserved worldwide. GAMBLING AND THE LAW® is a registered trademark of Professor I Nelson Rose, Whittier Law School, Costa Mesa, CA

Recent Articles
Best of I. Nelson Rose
I. Nelson Rose

Professor I. Nelson Rose is an internationally known scholar, public speaker and writer and is recognized as one of the world's leading authorities on gambling law. A 1979 graduate of Harvard Law School, he is a tenured full Professor at Whittier Law School in Costa Mesa, California, where he teaches one of the first law school classes on gaming law.

Professor Rose is the author of more than 300 books, articles, book chapters columns. He is best known for his internationally syndicated column, "Gambling and the Law ®," and his landmark 1986 book by the same name. His most recent book is a collection of columns and analysis, co-authored with Bob Loeb, on Blackjack and the Law.

A consultant to governments and industry, Professor Rose has testified as an expert witness in administrative, civil and criminal cases in the U.S., Australia and New Zealand, and has acted as a consultant to major law firms, international corporations, licensed casinos, players, Indian tribes, and local, state and national governments, including Arizona, California, Florida, Illinois, Michigan, New Jersey, Texas and the federal governments of Canada and the United States.

With the rising interest in gambling throughout the world, Professor Rose has spoken before such diverse groups as the F.B.I., National Conference of State Legislatures, Congress of State Lotteries of Europe, United States Conference of Mayors, and the National Academy of Sciences. He has presented scholarly papers on gambling in Nevada, New Jersey, Puerto Rico, England, Australia, Antigua, Portugal, Italy, Argentina and the Czech Republic.

He is the author of Internet Gaming Law (1st & 2nd editions), Blackjack and the Law and Gaming Law: Cases and Materials.

I. Nelson Rose Websites:

www.gamblingandthelaw.com

Books by I. Nelson Rose:

Compulsive Gambling and the Law

> More Books By I. Nelson Rose

I. Nelson Rose
Professor I. Nelson Rose is an internationally known scholar, public speaker and writer and is recognized as one of the world's leading authorities on gambling law. A 1979 graduate of Harvard Law School, he is a tenured full Professor at Whittier Law School in Costa Mesa, California, where he teaches one of the first law school classes on gaming law.

Professor Rose is the author of more than 300 books, articles, book chapters columns. He is best known for his internationally syndicated column, "Gambling and the Law ®," and his landmark 1986 book by the same name. His most recent book is a collection of columns and analysis, co-authored with Bob Loeb, on Blackjack and the Law.

A consultant to governments and industry, Professor Rose has testified as an expert witness in administrative, civil and criminal cases in the U.S., Australia and New Zealand, and has acted as a consultant to major law firms, international corporations, licensed casinos, players, Indian tribes, and local, state and national governments, including Arizona, California, Florida, Illinois, Michigan, New Jersey, Texas and the federal governments of Canada and the United States.

With the rising interest in gambling throughout the world, Professor Rose has spoken before such diverse groups as the F.B.I., National Conference of State Legislatures, Congress of State Lotteries of Europe, United States Conference of Mayors, and the National Academy of Sciences. He has presented scholarly papers on gambling in Nevada, New Jersey, Puerto Rico, England, Australia, Antigua, Portugal, Italy, Argentina and the Czech Republic.

He is the author of Internet Gaming Law (1st & 2nd editions), Blackjack and the Law and Gaming Law: Cases and Materials.

I. Nelson Rose Websites:

www.gamblingandthelaw.com

Books by I. Nelson Rose:

Gambling and the Law

> More Books By I. Nelson Rose