Talk of a Department of Justice response to Congress about the Kyl bill has been floating around recently. Well, this Justice Department analysis of the Kyl bill is now seeing the light of day and it makes for a very interesting read.
U.S. Department of Justice
Office of Legislative Affairs
May 26, 1998
The Honorable Patrick Leahy
United States Senate
Washington, D.C. 20510—6275
Dear Senator Leahy:
Thank you for your letter asking the Department of Justice for its views of S. 474, the "Internet Gambling Prohibition Act of 1997." We regret the delay in responding.
As you know, the Department has in the past supported legislation designed to ensure that existing laws keep pace with emerging technologies. Our work together on the National Information Infrastructure (NII) Protection Act, sponsored by you, Senator Grassley, and Senator Kyl, the sponsor of S. 474 provides but one example.
In this case, we recognize that the Internet may have diminished the effectiveness of current gambling statutes, in part because existing laws may relate only to sports betting and not the type of interactive gambling (e.g. poker) that the Internet makes possible. Therefore, we generally support the idea of amending the federal gambling statutes. We be1ieve, however, that there is considerab1e value in waiting until the National Gambling Impact Study Commission has concluded its study of the scope of Internet gambling before passing new legislation that would change the way in which Internet gambling is regulated or prohibited.
That said, we believe that any Legislation addressing criminal misuse of computers or computer systems (including the Internet) should share three important characteristics. First, legislation should, absent some articulable reason, treat physical activity and cyberactivity in the same way. If activity is prohibited in the physical world but not on the Internet, the Internet becomes a safe haven for that criminal activity. On the other hand, it may be equally hard to explain why conduct that is not a federal crime in the physical world suddenly becomes subject to federal criminal sanction when committed in cyberspace.
Second, legislation should be technology-neutral. Legislation tied to a particular technology may quickly become obsolete and require further amendment. As we did in the NII Protection Act, we believe it prudent to identify values we are trying to protect, or conduct we are trying to prohibit, and then protect that value or prohibit that conduct in technology-neutral terms.
Last, it is critical that the law recognize that the Internet is different from prior modes of communication in that it is a multi-faceted communications medium that allows for both point-to-point transmission between two parties (like the telephone) as well as the widespread dissemination of information to a vast audience (like a newspaper). As a result, any prohibitions that are designed to prohibit criminal activity on the Internet must be carefully drafted in way, that accomplish the legislation's objectives without stifling the growth of the Internet or chilling its use as a communications medium. For example, under the existing version of 18 U.S.C. 1084 ("transmission of wagering information; penalties,), it is illegal for someone in the business of betting or wagering to transmit information assisting in the p1acing of bets or wagers. Applied literally to the postings on the World Wide Web, this provision could be construed to criminalize the dissemination of information relating to lawful gamb1inq at land-based casinos.
With those points in mind, we now offer more specific comments regarding S. our first concern is that it would make social betting subject to federal criminal law. More specifically, proposed 18 USC S 1085(b) (1) would generally make it unlawful for a person to use the Internet or any other interactive computer service to place, receive, or otherwise make a bet or wager with any person, or to transmit information assisting in the placing of a bet or wager. Significantly, similar conduct, if committed by telephone, would not violate current federal law which applies only to those individuals or entities who are in the business of betting or wagering. As a result, if this legislation were to be enacted, the federal criminal law would significantly differ in the way it treats two individuals who place identical wagers with the same recipient, depending on what method of transmission the bettors use. In fact, with the expected growth of Internet telephony (the use of the Internet for pure voice communications), this dichotomy will inevitably lead to further confusion.
To resolve this inconsistency, we recommend removing the "mere bettor" provisions from proposed section 1085. In addition, we would not recommend extending the reach of 18 U.S.C. 5 1084 to cover mere bettors. Since 1961, 18 U.S.C. 1084 has targeted only individuals in the "business of betting or wagering" in order to cover professional lay—off bettors, but not end bettors. During hearings on the 1961, bill, then-Attorney General Robert Kennedy acknowledged that the Department had no intention of prosecuting individual bettors, because it would be an almost impossible task for the federal government to do so.1 The same would certainly be true today. In our view, extending federal jurisdiction to cover mere bettors would be both unnecessary and unwise. It is unwise, because federal resources should be spent targeting large gaming operations (and any organized crime involvement or fraud connected with such activities) and other more serious offenses).
Because enforcement against end bettors is not likely to he a priority, it is generally inadvisable to have overly broad legislation on the books. This is especially true where any failure to apply the criminal statute against common social wagering activities --- such as an office NCAA basketball pool) conducted via email, or a wager of local products between mayors of Superbowl or World series-bound teams -- -would raise legitimate questions of inconsistent enforcement.
In addition to the problems discussed above, the proposed definition of a gambling business in 1085(a) (2) creates an additional inconsistency between 1085 and existing laws. For purposes of proposed 1085, a "gambling business"' would be defined as: a gambling business that -(A) involves 1 or more persons who conduct, finance, manage, supervise, direct, or own all or part of such business: and (5) has been or remains in substantially continuous operation for a period in excess of 10 days or has a gross revenue of $2,000 or more during any 24-hour period (emphasis supplied).
This definition differs from the definition of an "illegal gambling business" found in 18 U.S.C. 1955 ("prohibition of illegal gambling businesses"), which requires the participation of five or more persons and the operation of the business for 30 days or more (unless the enterprise has gross revenues of at least $2,000 in any single day (emphasis supplied). If Congress believes that the 1085 definition is not sufficiently broad to cover a full range of Internet gambling operations, we suggest the adoption of the broader language, "in the business of betting or wagering," which is used in 18 USC 1084.
Although the term "in the business of betting or wagering" is not defined in 1084, its scope has been determined by judicial opinion. Sec, e.g. United States v. Barbarian, 526 F. Supp. 324, 327 (D.R.I.) (in the "business of betting or wagering requires the sale of a product or service for a fee involvinq third parties (i.e. customers and clients, or the performance of a function which is an integral part of such business")). By using a different standard for purposes of 1085, however, the result may be that the same individual may be deemed to be in the business at betting or wagering under 1084, but not in the "gambling bus mess' under 1085 or vice-versa. Furthermore, because the proposed legislation defines the term "gambling business" as "a gambling business that..." - . it leaves the question of what constitutes a "gambling business" in the first place essentially unresolved.
On a similar point, we believe that because the proposed legislation includes an expansive definition of "bets and wagers, Congress should amend 1084 to delete the existing language requiring that bets or wagers be placed "on any sporting event or contest." The new proposed definition of bets or wagers' ----- which would apply equally to 10084 and 1085 --- would include ‘a contest, sporting event, or game of chance." However, 1084 would still be limited by the language requiring that a bet or wager be placed on a sporting event or contest." Absent an amendment to 1084, the gambling prohibitions still may not encompass the full range of conduct contemplated by the proposed legislation.
The addition, we suggest deleting section 5 of the bill. This provision states that is the "sense of the Congress" that the Executive Branch should commence negotiations with foreign countries in order to conclude international agreements that would strengthen the ability of the United States to enforce the proposed legislation. As you may know, the United States is currently involved in several different international efforts to combat computer-related crime, including hacking and the use of the 1nternet by international organized crime. As part of these efforts, we are considering, inter alia, mechanisms for addressing potential conflicts of jurisdiction that can arise, especially in the computer crime area, where multiple countries can be affected by criminal activities and evidence may be located in several different jurisdictions. In our view, redirecting our effort, even in part, to focus on Internet gaming would be a mistake.
We should also note that, to the extent individuals and organizations, whether here or abroad, violate u.s. law; existing legal mechanisms can be used to enforce it. Although we recognize that there may be times when we cannot obtain foreign assistance, the fact remains that some form of gambling is legal in virtually every state in the United States. This diminishes our ability to persuade a foreign country that gambling must be vigorously combated, absent extenuating circumstance (e.g. organized crime involvement in the gambling enterprise).
If we request that foreign countries investigate, on our behalf, conduct that is legal in the foreign state, we must be prepared to receive and act upon foreign requests for assistance when the conduct complained of is legal, or even constitutionally protected, in the United States. For example, if we ask a foreign country to investigate an activity (e.g. gambling) that is legal in the foreign state, that country may, for example, ask us to investigate constitutionally protected speech originating on computers based in the United States (e.g. that arguably violates that nation's "hate speech" laws). Considering all of the challenges facing law enforcement in the information age, we believe that current efforts should focus on conduct, which either is, or should be universally condemned.
Our next major concern pertains to the manner in "which the proposed legislation defines "information assisting in the placing of a bet or wager." Although the same term (currently undefined) is found in existing section 1084, the proposed definition may take on Unintended meanings when applied to the Internet. As noted earlier, this Department believes that any proposed anti-gambling legislation that would apply to the Internet should be carefully drafted to ensure that it does not criminalize the use of the Internet for the purposes of distributing information per se, but criminalise only the transmission of gambling-related information that is intended by persons in the business of betting and wagering to be used to facilitate an illegal gambling transaction.
The drafters of S. 474 appear to have been sensitive to this concern, as the proposed legislation defines information assisting in the placing of a bet or wager to mean ‘(A). . information that is intended by the sender or recipient to be used by a person in the business of betting or wagering to accept or place a bet or wager." Based on this proposed definition, it is clear that Congress does not intend to criminalize the mere posting of information or advertising on the World Wide Web that might be of interest or use to gamblers, absent the specific intent to facilitate a illegal gambling transaction with someone in the business of betting or wagering.
However, the definition of "information assisting in the placing of a bet or wager also contains subsection (B) which "includes any information that invites the information described in subparagraph (A) to be transmitted. This Language is vague and might raise constitutional concerns to the extent that it may be construed to apply to persons who do not have the intent to participate in or assist illegal gambling transactions. Similarly, the legislation should also be read to prohibit Internet advertising of land-based casinos that are extremely legal or to prohibit the lawful dissemination of gambling-related information. This appears to be an unintended result and one that might raise serious constitutional issues. As a consequence, the Department suggest deleting subsection (B) altogether, and inserting the phrase "in violation of state or federal law" at the end of subsection (A). The addition of this latter phrase would ensure that transmission of information assisting in the placing of bets or wagers would not be criminalize by this legislation.
As a further amendment to this definition, we strongly suggest amending the definition in subsection (a) to read "intended by a person engaged in the business of betting or wagering to enable any person to accept or place a wager in violation of state or federal law." This additional amendment would serve two purposes . First, it would remove an ambiguity in the proposed definition which would allow a person in the gambling business to argue that the transmission or information assisting the placing of bets or wagers is not criminally prescribed unless both the sender and person using the information are in the business of betting or wagering. This does not appear to be the unintended result. Second, if Congress does not amend the statute to exempt end bettors from the reach of proposed section 1085, as the Department strongly suggests, this change would at least ensure that individuals who are not in the business of betting or wagering, and who themselves do not place bets or wagers, cannot be liable merely under the transmission of information provisions of the proposed legislation.
With regard to the various exceptions to the definition of "information assisting in the placing of a bet or wager,' we note only that the numerous exemptions for parimutuel wagering would expand the scope of permissible parimutuel activities beyond what is currently permitted by existing law. In light of the study currently underway by the National Gambling Impact Study Commission, we question whether expanding opportunities for Interactive gaming is appropriate at this time.
Next, we have several concerns about the civil provisions of the legislation. The ‘Civil Remedies section provides that ‘upon application of the United States, the district court may enter a temporary restraining order or an injunction against any person to prevent a "violation of section 1085 of title 18, United States Code, as added by this Act, if the court determines...that there is a substantial probability that such vio1ation has occurred or will occur. Upon any filing of an indictment or information by the United States, the district court shall enter a preliminary injunction to prevent the violation of Section 1085 of title 18, United States Code, as added by this Act, alleged in the indictment or information.
It is unclear why the language "has occurred" is included as an alternative basis for the issuance of injunctive relief. That is to say, this section would seemingly require a court to issue injunctive relief based purely on past conduct, even absent "a substantial probability that such violation...will occur" in the future.
Similarly, if the United States already has filed an indictment or information ‘-- presumably alleging past violations of 1085 --- this provision requires that the district court enter a preliminary injunction regardless of whether the United States has requested such relief, and regardless of whether the court finds that the traditional equitable factors justifying the issuance of injunctive relief have been satisfied. Attempting to override, the judgment of federal courts on these issues is unwise, and may result in the issuance of injunctive relief in circumstances that would not be appropriate.
As to the subjects of the proposed injunctions, the bill appears to allow injunctive relief to be directed at any party in order to prevent violations of proposed section 1085. Although arguably designed to provide the same types of injunctions that are presently available against common carriers under existing 1084, such relief may not be technically feasible or appropriate with regard to Internet transmissions. A1though it would not be particularly difficult or burdensome for an Internet Service Provider ( ISP) to cease providing Internet access to a gambling business with whom it has contracted, other types of injunctive relief would be more problematic.
For example, although communications to and from illegal gambling sites may be carried by one or many Internet backbone providers, such providers may not be able to differentiate gambling-related transmissions that are being sent by a specific user of particular computer system from other transmissions sent by other users of that system. As a result, seeking an injunction against a backbone provider would lead either to overbroad or ineffective relief. Furthermore, even if user-specific gambling-related transmissions could be identified, this would likely require the backbone provider to filter messages by
examining the content of traffic flowing across its net work in a way that may have serious economic and societal consequences for Internet usage generally.
Although some of these issues would be considered and determined on a case-by-case basis by federal courts when applying the statute, the enormous breadth of the injunctive relief provisions, which may be invoked both by states and the federal government, is likely to promote a spate of litigation over what solutions are feasible. At a minimum, however, the legislation should require that any injunction directed at an ISP be both technically feasible and economically reasonable.
Finally, as to the reporting requirements for the Attorney General, the amount of activity and money being used gamble on the Internet is being studied by the National Gambling Impact Study Commission; a further study of the same subject by the Justice Department would seem duplicative. Similarly, the Justice Department is not in the best position to make recommendation regarding the use of the resources of the Federal Communications Commission to enforce Section 1085.
Thank you for the opportunity to comment on this legislation. Please do not hesitate to call on us to provide additional technical assistance in implementing any of the specific changes discussed in this letter or for any other reason. The Office of Management and Budget has advised that there is no objection from the standpoint of the Administration's program to the presentation of this report.
Sincerely,
L. Anthony Sutin
Acting Assistant Attorney General