Technology is Ahead of the Law
Interactive Gaming News has gathered the latest is what's happening on the US legal front as it relates to interactive wagering. At a recent Kagan Seminar in New York City, several presenters gave updates on the latest Congressional proposals about the subject.
As many who have been following the debate in IGN know, the federal government has been utilizing the Interstate Wire Act (18 U.S.C. 1084) as the prime law for addressing what they consider offenders in internet gambling. In Senate bill (S. 1495), Senators Kyl (R-Arizona) info@kyl.senate.gov
and Hatch (R-Nevada) have introduced a bill designed to tighten up this regulation to include these gaming issues.
John Crigler, a communications attorney with the law firm of Haley, Bader & Potts, has been tracking these provisions. He said that the newest legislation includes language that broadens this law to apply to "electronic" transmission of interstate or foreign commerce of bets or wagers. This presumably now includes cable or satellite gaming in addition to internet gaming.
The new bill also is broadened from sports betting to any bets or wagers which will likely now include casino gaming, parimutuel and lotteries.
Yet another provision changes the law to include not only operators of such wagering services but also those who assist in the placing of a bet, which brings the vulnerability of carrying links to such sites into question.
Lastly, it does also include culpability for those who wager...the consumer. The sanctions for being caught gambling electronically under this law is $5,000, one year in prison and confiscation of the person's electronic equipment.
While the American Gaming Association's President and CEO Frank Fahrenkopf expressed concern about the Gaming Commission legislation pending before the Senate right now, he also talked about the internet gaming provisions emerging in S. 1495. He said that they were designed to close deficiencies and make the laws consistent with state laws.
When pressed, he said that the AGA's current stand was against internet gaming. "It's our opinion that there is a lack of technology to provide the necessary regulatory controls," said Fahrenkopf. "There's no mechanism to guarantee the integrity of the games at this point." He also predicted that S. 1495 would die for this session with more important issues left to be dealt with before adjourning for the fall campaign season.
The conventional wisdom is that internet gaming will not actually get off the ground until a well-established operator decides to go for it. And that's not likely to happen since they'd be risking their licenses for the traditional gaming establishments.
Fahrenkopf noted, however, that he knew of several of his members (casino operators) engaging in research & development on the issue. This was validated and expanded by a later panelist, a financial analyst who covers gaming issues, who said that he was aware of at least 10 AGA members in R & D on internet gaming.
In reality, as attorney John Crigler pointed out, the more practical problem is one of enforcement of such a law...particularly if it applies to consumers as well as operators. He said, "Who's the cop in this situation? While Congress points to the Federal Communications Commission in the proposed language, the FCC has clearly shown a resistance to dealing with these issues so far as has the Department of Justice." The federal government has left it to the states (particularly Minnesota, backed by the states' Attorneys General) to lead on the issue.
In discussions with a Senate aid familiar with the bill, he said the bill is designed to "fill the glaring gaps" in the Interstate Wire Act and to get the existing laws up to date with modern technology. He stressed the fact that this was for "interstate" commerce, pointing out that if gaming is legal in a state, this law would not apply to someone gambling within that state's borders.
Pioneers in the field have taken various approaches to the issue. For example, Lawrence Elliott Hirsch is counsel for Interactive Gaming & Communications Corporation, better known to internet aficionados as Sports International. At the Interactive Wagering seminar, he pointed out that they have been waiting for a "comfort" letter from Justice for quite a while to no avail. He wouldn't be surprised if they become a test case on the issue.
To be proactive, however, this publicly traded company has now put a "Notice to Americans" as well as a prohibition on its homepage that you must be 18 years old to play.
Hirsch also added that this "uncertainty" hurts investment opportunities in this emerging medium. Indeed, most fledgling interactive wagering operators seem to be more successful with venture capitalists than with more risk-averse traditional investors....a situation which will last as long as the uncertainty does.
But Hirsch was also quick to point out that the whole concept of "off shore" was meant as a pejorative term in this situation. "Do we really have a right to regulate a global solution for a moral issue like this? he queried.