The Volokh Conspiracy

I gather that my argument about the unconstitutionality of the Internet Gambling Enforcement Act (which Tom Bell has nicely dubbed the UnInGen-ious Act")is not passing the Volokh Conspiracy hoo-ha test ... Sigh.
But here's another thought. The law, oddly enough, does not make it unlawful to engage in gambling over the Internet. (Of course, it's not really so odd -- if Congress actually passed such a law, and they started fining or throwing in jail individuals who use the Internet to gamble,they'd have a lot of very, very pissed off constituents on their hands.)
Instead, it prohibits anyone "engaged in the business of betting or wagering" from knowingly accepting payment "in connection with the participation of another person in unlawful Internet gambling." (§ 5363). And it requires the Federal Reserve to promulgate regulations requiring banks, credit-card companies, and other financial institutions to "identify and block or otherwise prevent or prohibit restricted transactions," i.e. those involving "unlawful Internet gambling."
But -- and this is the interesting part -- the Act doesn't itself make any Internet gambling "unlawful." It defines "unlawful Internet gambling" as "knowingly transmitting a bet or wager" using the Internet "where such bet or wager is unlawful under any applicable Federal or State law."
In other words, the act of placing the bet has to be unlawful under some other Federal or State law for it to be covered by this Act.
No provision of Federal law, at present, makes it unlawful to place a wager at an Internet gambling site. So what gives this statute teeth are the provisions of State law that do so. NOTICE TO STATE LEGISLATURES: Would you like to have about $20 billion or so directed towards financial institutions in your State? It's easy! Here's what you do: Permit Internet gambling. Say that Vermont passes a law saying that it is legal to gamble over the Internet. I could then open up a bank account in Vermont; when the offshore gambling site gets my inquiry to set up an account, I can transfer money from my Vermont account -- not illegal! -- to the gambling site, and vice versa.

Related Posts (on one page):

More on Internet Gambling:
Hello, I'm David, and I'm an Internet Gambler:

(link)

FantasiaWHT:

Have all States made internet gambling illegal?

I was reading another site (forget which now, sigh) and it said that federal law had outlawed online sports gambling, and the attorney general had said it applied to internet poker, but no court has ever found that.

Is that other peoples' understanding, too?

10.19.2006 3:39pm

Poker Player:

"No provision of Federal law, at present, makes it unlawful to place a wager at an Internet gambling site." As FantasiaWHT pointed out, I think the Wire Act pretty clearly prohibits sports bets. Although the Justice Department argues that it applied to poker, it probably does not.

10.19.2006 3:44pm

Wire Act, that was the name of it, thanks

10.19.2006 3:50pm

logicnazi (mail) (www):

I thought there were organized crime type laws that generally made placing bets across state lines via telecommunications illegal.

10.19.2006 3:55pm

whit:

WA state , in its infinite leftwing nannystate way, passed a law making all internet gambling a C Felony (the same as auto theft and burglary) a few months ago.

This is the first of its kind on the state level as far as I know. Interestingly, you cannot drive a mile in WA state without seeing a casino. It is clearly an attempt to dissuade people from gambling online, while purporting to do it for their "protection."

The state gambling commission has already admitted they don't INTEND to enforce it against individuals, yet the law was written specifically to make it a felony for them to play even a $1 online tournament. Iow, they want to prevent people from gambling ON THE INTERNET, but are perfectly fine with people playing at a casino, where the state gets a hefty tax receipt, and the player (poker) pays a MUCH heftier rake to the house.

It is absurd.

To my knowledge, nobody in WA state has ever been charged pursuant to this law.

10.19.2006 4:16pm

Cold Warrior:

Thanks to David for the link to the statute.

I read it -- the whole thing, and quite carefully -- and my conclusion is this:

It is ridiculous.

I don't think it's unconstitutional. Stupid laws have always been with us.

But look at the exceptions it carves out. There's a long passage (no doubt lobbied for by the CBS Sportsline and ESPN "mainstream" gambling operations) that excludes fantasy leagues. But only if there's a fixed pot; no winnings dependent on the number of players or transactions, etc. So presumably I can't run a baseball fantasy league with 9 buddies spread across the country; the entry fee is 20 bucks; each player transaction is 5 bucks, and there were 50 of them; on October 3 every I wire the winner the whole $450 pot. I'm a felon. CBS Sportsline signs up a million people to play fantasy football, collects a 50 buck entry fee from each, keeps 50 percent, and pays out the rest to the winner. That's fine. Got that? Commercial wagering in which someone makes a big profit = o.k. Private friendly wagering run as a zero-sum game = illegal.

I can form a fantasy team and bet on it all I want. I can't bet on a real team. The law says I can't do it if it's a "real" team. So what if I have a very sophisticated fantasy league in which my club, the NY Yankers, are composed of the 24 best players on the real-world Yankees plus a token Mario Mendoza, and every other team is similarly composed under my rules -- everyone has to select Mario Mendoza. Legal? Illegal? You tell me.

And what is a game of "chance?" Is poker really a game of chance? When I've had my pocket picked by a damn good poker player I could've sworn it was because he's a damn good poker player; in other words, over the long haul winning at poker is a skill, not luck.

So we've got lots and lots of words, paradoxically leading to lots and lots of ambiguity. And we've got Jack Abramoff and that pathetic little troll Ralph Reed rallying Christians against gambling, and using Indian gambling money to pay for their efforts.

This is what the Republican leadership has come to.

10.19.2006 5:02pm

barts185 (mail):

Link to an op-ed piece in the NY Times regarding the passing of the bill.

I'm not sure if registration is required to read it.

The G.O.P.’s Bad Bet By CHARLES MURRAY

10.19.2006 5:44pm

Roger Schlafly (www):

Would you be similarly upset if the feds passed regulations limiting the banks ability to transfer money to Nigerian oil email scammers?Would you complain that people could circumvent the law, or that other scams are still possible, or that maybe you want to send money to scammers?

Link to Murray, no reg reqd.

10.19.2006 5:51pm

Would you be similarly upset if the feds passed regulations limiting the banks ability to transfer money to Nigerian oil email scammers?

Umm, no ... maybe that's because THEY'RE FRICKIN' SCAMMERS.

If an internet gambling site is scamming its willing customers, then by all means bring on the law.

10.19.2006 6:47pm

Joshua:

As an online poker player (and occasional online gambler in other forms) I'm a little disappointed with myself for being late to this whole discussion, but better late than never I guess.

Anyway, CardPlayer magazine's Web site recently posted its own attorneys' take on the UIGE Act. The short version is that they're not very afraid of this law, and neither am I.

First, the only form of gambling definitively covered by the Wire Act was sports betting, and even that is questionable when applied to the Internet, given its wireless components and the fact that the Wire Act was written long before Al Gore or anyone else created the Internet. UIGE apparently does nothing to change this - it only goes after .

Second, as already pointed out in the comments for the first post, this law is far from comprehensive in restricting payment methods. Most notably, checks (both paper and electronic) are not covered. Many online gambling sites already support e-check payments, and it's just a matter of time before the others follow suit. The impact on offshore third-party transaction processors like Neteller is less clear, but since they can be used for plenty of legal purposes other than gambling, if the Feds try to cut them off they may decide to fight it, and have a decent chance of winning.

In the long run I seriously doubt the UIGE will have much impact on Internet gambling in the U.S. At most it will make it harder for people to deposit money to gambling sites in the short term, but that probably won't do much to faze the next generation of would-be online gamblers who have no memory of how much easier it used to be. If they're interested enough in online gambling, they'll still be perfectly able to do it.

Which, of course, means that politicians like Sens. Frist and Kyl will still have the online gambling industry to kick around in the future. UIGE may be rather ineffectual in a practical sense, but politically it's a stroke of genius; it enables such moral crusaders to have their cake and eat it too.

10.19.2006 7:49pm

First, the only form of gambling definitively covered by the Wire Act was sports betting, and even that is questionable when applied to the Internet, given its wireless components and the fact that the Wire Act was written long before Al Gore or anyone else created the Internet. UIGE apparently does nothing to change this - it only goes after .

To finish that thought: UIGE only goes after the most common methods of conducting online gambling transactions.

10.19.2006 7:51pm

Fub:

Whit wrote:

WA state , in its infinite leftwing nannystate way, passed a law making all internet gambling a C Felony (the same as auto theft and burglary) a few months ago.

[...]

To my knowledge, nobody in WA state has ever been charged pursuant to this law.

A few months ago the Seattle Times reported a prosecution:

What a Bellingham man did on his site was write about online gambling. He reviewed Internet casinos. He had links to them, and ran ads by them. He fancied himself a guide to an uncharted frontier, even compiling a list of "rogue casinos" that had bilked gamblers. ...

And for such a noble purpose -- to suppress information that would reduce harm from the banned activity for everyone. Making it more attractive for organized crime to supply the activity makes life more dangerous even for those who do not participate. But prohibitionists can then whine for even more laws and money to suppress the activity. It usually works. Prohibitionists love laws that maximaze harm for everyone.

For the enforcement empire and the criminals, the money. For the rest of us, the danger. Such a deal.

10.20.2006 2:09am

Self Made (www):

The Wire Act doesn't prohibit sportsbetting. It prohibits running a sportsbetting operation. So gambling isn't prohibited under any federal law, and they'll need to refer to state laws to enforce the UIGEA. State laws vary a lot. It isn't illegal to place a bet in New York state for example. In Massachusetts lotteries are illegal, but you can't assume that poker is an illegal lottery.

10.20.2006 5:34am

poster child (mail):

I think someone else made this point on Prof. Bernstein's original thread, but I'll echo it here: the IGEA may be unconstitutionally vague, as indicated by the difficulty of parsing the various vague federal and state statutes that it incorporates by a vague reference thereto.

10.20.2006 1:24pm

Tex:

How about the argument that it was not signed by the President within 10 days and is not law?

Does anyone know a constitutional attorney? I would like to verify this..

The US constitution reads as follows in Article 1 Section 7 Clause 2

Quote:
If any bill shall not be returned by the President within ten days (Sundays excepted) after it shall have been presented to him, the same shall be a law, in like manner as if he had signed it, unless the Congress by their adjournment prevent its return, in which case it shall not be a law.

The bill was passed on Sept 29. It was not signed by the president until October 13. This is 12 days. By the letter of the constitution after the 10th day there is a pocket veto and this is NOT law. Congress adjourned on same day that the bill passes. Anyway you add it up this is not LAW.

I think the bill was passed after midnight making it Sept. 30. This still would only give until Oct. 12 to sign, right? How would this be challenged?

10.22.2006 8:38pm

The question I posted was answered in the thread I linked to. The bill was presented to the President on Oct. 3.

10.23.2006 12:04am

SoDEIMjZUh (mail) (www):

10.29.2006 7:01am

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