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A Different Take on the New Internet Gambling Law:
I haven't followed the new Internet gambling legislation closely, but I did have a few thoughts in response to David's post below. I'm not sure if the law is a good idea or a bad idea, but I don't have the same reaction to it as David does. Let me respond to David's points in sequence, with David's points in italics and mine following:

  1. First, it will not work. It is already not that difficult to evade the law's restrictions . . . [and] I guarantee you that it will be a whole lot easier a year or two down the road.

  Isn't the question marginal impact, not absolute impact? Laws may still work even if they are easy to circumvent: partial compliance may make the law a success relative to the world without the law. For example, speeding laws "don't work" in the sense that people still speed, but they "do work" in the sense that people drive more slowly becase such laws exist. The question is whether this law will have the same sort of impact.

  2. [The new law] perpetuates a truly insidious form of State regulation that would be laughable if it were not so nasty. There's a very good reason that Jack Abramoff's client list consisted primarily of people in the gambling business — there are prodigious opportunities for monopoly rent-seeking in the current regulatory scheme.

  I agree that the gambling industry seems pretty nasty, and I think legalizing Internet gambling may indeed be preferable to trying to prohibit it. (Those are my instincts, at least.) At the same time, my understanding is that the real prohibitions here are the traditional state law prohibitions: the federal law harnesses state law, and the latest law tries to help enforce those state laws. So I would think the answer, if you want to gamble, is to lobby your state legislature to make it legal to gamble.

  3. [T]o the extent that there really are people for whom gambling is a real addiction that is destroying their lives, this will insure that they go underground (see point 1) and find ways (which will be readily at hand) to gamble in untraceable ways.

  I'm not sure I follow this argument. If you are gambling online one way or the other, what does it mean to gamble online "undergound"? Is there an "above ground" form of Internet gambling? I agree that the law may push people to use less reliable and traceable services, but I gather that's part of the point: some people will be deterred by having to use underground services that may not be reliable.

  4. It is incomprehensible gibberish. . . . When law becomes incomprehensible to those supposedly subject to it, it ceases to be law anymore, at least in my book.

   I agree that the law is complex, but is it more complex than most federal statutes? And while simple laws are good, what is the source of the principle that law must be comprehensible to a layperson before it can be recognized as law? I find the tax code pretty incomprehensible, but I still have to pay taxes.

  5. It discriminates, in a rather nasty way, against the poor — it doesn't stop anyone from going to Las Vegas to do all the gambling they wish, but if they want to do that without the expense of traveling, no go.

  Under that definition, don't most legal prohibitions discriminate against the poor? Consider speeding laws. If you want to drive 150mph, you need a fast car and either access to a private track or a trip to Germany. Does this mean that speeding laws discriminate against the poor?

  6. It is protectionist (and quite probably a violation of our international obligations under the GATT) — the whole purpose is to disadvantage overseas businesses and advantage domestic providers.

  I'm not so sure about the protectionist point, but the GATS question seems very much worth considering. See Christine Hurt's posts at the Conglomerate here.

  7. It is unconstitutional. . . . [I]t would clearly be an abridgement of my constitutional right to travel for Congress to pass a statute prohibiting me from going to the UK and participating in (legal) gambling while I was there. The Act, in practical effect, does the same thing. I know it's not really "travel" when one "goes" to an offshore website. But the rationale behind the constitutional right, it seems to me, is as applicable here as in the "physical travel" realm.

  I disagree. First, the Supreme Court has stressed that international travel is different from interstate travel. As Court stated in Haig v. Agee, 453 U.S. 280, 306-07 (1981):
[T]his court has often pointed out the crucial difference between the freedom to travel internationally and the right of interstate travel. The constitutional right of interstate travel is virtually unqualified. By contrast the "right" of international travel has been considered to be no more than an aspect of the "liberty" protected by the Due Process Clause of the Fifth Amendment. As such this "right," the Court has held, can be regulated within the bounds of due process.
The constitutional difference between interstate and international travel explains why there are lots of U.S laws that prohibit extraterroritorial conduct that is legal in the country where it occurs.

  Second, I can't think of authority for the view that accessing a server is the functional equivalent of traveling to the physical location of the server. A gambling site is a service, not a place. Think of how this might work at a state level. Imagine state A has a broad gambling ban, which includes a ban on gambling from inside the state using servers in other states. Is this a violation of the constitutional right to travel of the citizens of A on the ground that this blocks them from "virtually traveling" to the other state to place their bets online? Presumably the answer is no, and this is the same idea just on a national scale instead of a state scale.

  UPDATE: I see that David has updated his post with a new one while I was writing mine. Just a quick response: If one state allowed Internet gambling, I think it probably would still be illegal for people in other states to connect to that one state and then to the server abroad. The reason is that gambling laws generally regulate conduct in their home states, even conduct from home states that involve communication with other states. Thus, placing a bet using a server in another state is not placing a bet "in" that other state, where it is legal, but rather is placing a bet from the home state to the other state, which probably is still illegal under state law. See, e.g., United States v. Cohen, 260 F.3d 68 (2d Cir. 2001.)
Kierkegaard (mail):
Re: the update

What about a gambling company located in a particular state taking bets from only residents of the same state? Would that be possible?
10.19.2006 5:49pm
josh:
No comment. Just wanted to say I would love to see more of this: The posters themselves getting more involved in each others' posts.
10.19.2006 6:41pm
Fearmonger (mail):
I'm not sure if the law is a good idea or a bad idea, but I don't have the same reaction to it as David does.

Whether or not you agree with each of David's individual criticisms of the law, surely you must agree that the law is a bad idea, right? Do you hate freedom?
10.19.2006 7:08pm
OrinKerr:
Fearmonger,

I love freedom. Why do you hate America?
10.19.2006 7:21pm
RainerK:
I'm not sure I follow this argument. If you are gambling online one way or the other, what does it mean to gamble online "undergound"?

Orin, I believe David means the following:

Online gambling itself has not been outlawed, but payment processing by US companies has.
People used to gamble online using sites based in countries with well-developed regulations against fraud, for instance the U.K.
Now compulsive users, rather than being deterred, after all, they're hooked, will tend to use entities run out of places like Eastern Europe employing underground payment methods.
If I understand it correctly one rationale of the bill was to protect US citizens from fraud, no?

So I would think the answer, if you want to gamble, is to lobby your state legislature to make it legal to gamble.

Hmm, I'm not a lawyer so perhaps I have got it wrong, but isn't there a principle that restricting citizens by the State is to be kept to a minimum? Now we have to lobby to get permission from our State for something the Feds prohibit?
Why not prohibit just about everything and then grant privileges one-by-one?
10.19.2006 7:39pm
OrinKerr:
RainerK,

The problem is that the gambling is already illegal. The Fed law harnesses state law, so you need to change the state law to change the scope of federal law.
10.19.2006 7:43pm
Fearmonger (mail):
Professor Kerr,

Touche.

To add to Rainerk's first point regarding "underground" gambling: People who are not able to gamble with a well regulated website may be forced to turn to local bookies (not on the internet) operating illegally under state law. These people may or may not be reliable, and bad bets may put unlucky gamblers in physical danger. Pushing gambling "underground" in this way may also lead to an increase in violent crime between competing bookies, in the same way that the illegal drug trade fosters crime.
10.19.2006 7:52pm
RainerK:
Orin,

Thanks, now I'm really confused. There is a reason I'm not a legal mind. :)
Not being a gambler, I leave it at that.
10.19.2006 8:24pm
Public_Defender (mail):
So I would think the answer, if you want to gamble, is to lobby your state legislature to make it legal to gamble.

This is an important point. State legislatures make internet gambling illegal. Those laws may be misguided, but everyone disagrees with at least some of the law.

Professor Post, what other criminal or civil laws are people allowed to violate with impunity? If I think affirmative action is a good idea, is it OK for me to refuse to hire white men as long as I don't get caught? If a dissident Mormon thinks polygamous marriages with 14 year-olds are permitted by God, should he be immune from the law?

Civil disobedience can be admirable, but you should be under no illusion--if you gamble online, you are probably committing a crime, just like the people on my case list. Maybe I should tell the judge that they all disagree with the laws they are accused of breaking. Let's see how far that argument goes.

All that said, I enjoy watching Republicans turn on themselves. Thank you Denny Hastert!
10.19.2006 8:33pm
Joshua:
CardPlayer magazine's Web site recently posted an analysis of how UIGE interacts with state gambling laws. (They also published a legal analysis of UIGE itself, here.) Of particular interest is the section entitled "Problems with Enforcement". Here, the authors (the magazine's own attorneys) point out that while gambling on the Internet may be illegal for the bettors as well as the site operators, it is so hard for prosecutors to gather admissible evidence with respect to an individual bettor that it's usually not worth prosecutors' while to go after bettors.

The only time it might be worthwhile is if a prosecutor intends to make an example of a high-profile Internet gambler, which is something of a (political) gamble in itself, especially if the targeted individual is a popular or sympathetic figure.
10.19.2006 10:03pm
tsotha:
I'm not a lawyer, so I can't argue with your take on the constitutionality of the law, but let me make a few points:

In regard to item 1, I think David makes an extremely important point. When I was growing up my parents tried to instill in me a respect for the law. If Congress passes nonsensical laws, and you're unlikely to be punished for breaking them, it seems like a pretty short step to the mentality that one should pick and choose which laws should be followed. If that kind of logic becomes pervasive society can only function under a police state. That's why I've always believed speed limits should be both higher and strictly enforced.

Item 4 is even more important. The following sentence from this article on 18 U.S.C. Section 1001 should trouble anyone interested in living as a citizen and not a subject:

To begin with, you are not qualified to know whether you are innocent of wrongdoing under federal criminal law.

We've already become a society of lawbreakers, where the sheer breadth and complexity of federal law (never mind state law) renders us incapable of knowing whether or not a given activity is legal. Does this really need to get worse? I've read various interpretations of internet gambling laws from bureaucrats law professors, with substantial disagreement on basic issues (like, is it legal?).
10.19.2006 10:24pm
Malcolm Tredinnick (mail) (www):

And while simple laws are good, what is the source of the principle that law must be comprehensible to a layperson before it can be recognized as law?


Tsotha's point is a slightly scary one (I'm not a US citizen or resident, so I hadn't realised it extended that far). I would like to approach this from a more natural perspective:

I think there was a somewhat lazy choice of phrase by David Post and you (Orin) have decided to take it literally. It makes a lot of common sense (there's a principle for you) that, since laws are written as part of the governing process, those who are being governed should have a reasonable expectation of understanding the restrictions and privileges they are required to operate under.

A person has no choice about whether or not laws apply to them. At the very least, then, they should be able to understand the rules of the game without having to invest a small six figure sum in obtaining a high quality legal education. Some well-defined jargon is always going to creep into any sufficiently technical field as a short hand for difficult concepts -- in the legal field, this manifests itself as a number of Latin phrases. However, tortured sentence construction, endless synonyms and general incomprehensibility are not clearly necessary requirements.

If legislation need not be comprehensible, let's go the whole way: write warning labels in Japanese and information signs at tourist sites in Ancient Greek. It will help motivate people to learn foreign languages, for a start. And since informational signs and warning labels are only advisory (as opposed to compulsory laws), it is surely reasonable (in this analogy) to not require them to be understood, either. Unfortunately this breaks, because somewhere there is an incomprehensible (to the reasonably educated layman) piece of legislation that says warning labels must be clear, although "clear" requires a judgement and I say if you must have a legal education to understand legislation, then Ancient Greek and Japanese are not a bad requirement for informative notices.
10.19.2006 11:50pm
OrinKerr:
Malcolm:

Two thoughts. First, this law regulates banks and credit card companies, not individuals. Second, I absolutely agree 100% that law should be clear and certain so people can arrange their affairs without fear of government overreaching.
10.19.2006 11:56pm
jvarisco (www):
I think that David's real objection is to gambling laws in the first place; if you support laws prohibiting gambling, it is not a stretch to support one prohibiting an easy method of breaking that law - the problem is not that people gamble in person, but that they gamble period. Money is wasted whether it is online or in person. It's illegal to access child pornography, regardless of where it is from - even if it's legal somewhere else. Pictures of little kids in Thailand are just as illegal as ones in the US. Legislation like this only prevents the internet from allowing people to evade laws that already exist.

Malcolm) There would only be a problem if people were not aware of what effect the law actually had. This one is simple: don't gamble, online or anywhere else. Avoid that, and there is no problem.
10.20.2006 12:18am
Malcolm Tredinnick (mail) (www):
Orin:

From my perspective as a reasonably well-educated layman, the difference between legislation that affects banks and legislations that directly affect people seems a little arbitary. The flow-on effect is obvious: it affects the way people can use their credit cards. If a law was passed preventing supermarkets and greengrocers from selling fruit beginning with the letter "A", my inability to buy apples would seem to be a direct consequence of that law. I'm not arguing that there isn't a solid "legal system" or theoretical foundation for you finding that distinction important. Just finding it interesting to think about why we are, in effect, choosing a system that doesn't seem to work intuitively (although I am reminded of a quote Eben Moglen makes all the time, "IT people expect the law to be purely logical; it isn't" -- guilty as charged. :-)

Jvarisco:

You have described a behaviour that might well stay clear of this law. However, is that the real boundary of the law's effect, or is there some other behaviour that would involve gambling that does not violate the law (there is a tighter boundary, since going to Las Vegas appears to still be legal from what I have read)? Necessarily overly broad boundaries like this are one of the consequences of unclear legislation. The extents of any law are presumably put there for a reason (yes, everybody is screaming "the reason is lobbying", but let's pretend the system works); it is reasonable to be able to know where those boundaries really lie.
10.20.2006 12:33am
Brendan (mail):
Now no one will gamble online, just like there are no illegal drugs being consumed, or guns being used illegally by criminals, or illegal aliens sneaking in. Thank god our goverment can manage to prevent those black markets.
10.20.2006 2:05am
jinnmabe (mail):
I don't disagree with your overall point but this

Under that definition, don't most legal prohibitions discriminate against the poor? Consider speeding laws. If you want to drive 150mph, you need a fast car and either access to a private track or a trip to Germany. Does this mean that speeding laws discriminate against the poor?

is a bad analogy. The law doesn't just prohibit 150mph, it also prohibits 76 mph, which is well within the reach of the poor. If the law prohibited people driving between 30 and 150 mph, then it's more apt, because only the rich are not affected (like the rich who can travel to Vegas).
10.20.2006 3:03am
logicnazi (mail) (www):
Orin,

I mostly agree with your response to David's points but I think you miss the worst effect of the gambling law.

Yes, we have plenty of laws against things like speeding that are routinely broken but creating an 'ineffective' law against speeding does not encourage people to partake in an illicit/unregulated economy nor does it make speeding a gateway crime.

The real danger with this anti online gambling law is that by making something so many people regard as harmless illegal it encourages a large number of people to create accounts in unregulated offshore cash equivalents. Without such a law these cash equivalents would stay little used. Encouraging people to use these unregulatable cash equivalents has two big problems. First it cloaks serious illegal cash transactions used for things like terrorism. Secondly it seriously reduces the barrier to other illegal activity.

Consider the current position of someone who is thinking of purchasing a subscription to an illegal (under 18) porn site. Since such a site does not take visa they would have to go register for some underground cash equivalent and then pay the site in this fashion. This both serves as a cooling off period and a clear marker that you are doing something wrong. Once people already have these unregulated cash equivalents and are used to engaging in the illegal but widely accepted behavior of online gambling this barrier will be significantly lowered.

The same analysis applies for buying illegal products online (prescription drugs from india), buying cheap pirated copies of IP and any other sort of digital misconduct that you can imagine.

--

In reply to your number 2 I should point out that from a practical perspective it hardly matters that the states had already regulated gambling. In effect the federal government is outlawing it and they could certainly partially step in and apply these penalties only against gambling sites that failed to comply with regulations.
10.20.2006 3:18am
Public_Defender (mail):
On reflection, a better example than the ones I used above are drug laws. Would would you think of a law professor who announces on the Internet: "My decision to use herione hurts no one, and I resent the government's attempt to regulate this private behavior." Would you hire such a professor?

I agree that the "wisdom" behind gambling laws is questionable. But that's what you should expect from a party that is little more than a corrupt church.
10.20.2006 6:05am
Joshua:
logicnazi wrote:
Encouraging people to use these unregulatable cash equivalents has two big problems. First it cloaks serious illegal cash transactions used for things like terrorism. Secondly it seriously reduces the barrier to other illegal activity.
I strongly suspect that the politicians behind UIGE regard this as a feature, not a bug. Politicians, after all, need criminals and other perceived evildoers as whipping boys for their campaigns, and lowering the barrier to criminal activity means more whipping boys.

Anyway, as I pointed out in another thread, UIGE actually exempts a form of payment that's already supported by many online gambling sites, and is quite legal, quite common and quite regulatable if lawmakers chose to do so: e-checks. I can't find the link to where I learned this, but my understanding is that the banking lobby was adamant that checking be left out of the bill, because banks don't want to have to scour through millions of U.S. checking transactions a day looking for online gambling deposits. (Wire transfers don't have nearly as great a daily volume as checks, and thus their coverage under UIGE didn't meet the same objection from the banking industry.) This would mean not only that online gamblers can still deposit and gamble away, but that unless the banking industry has a change of heart, this loophole is unlikely to be closed in the foreseeable future. Of course, it also means that the congresscreatures behind UIGE still have their online-gambling whipping boy, so it probably suits them just fine.
10.20.2006 10:45am
Charles Humphrey (mail) (www):
I have now posted my analysis of the full Unlawful Internet Gambling Enforcement Act. See:
Full Analysis

That new article should be read in conjunction with the two previous pieces on the subject, which are available at:

First comments

and

An Insider's first take

Chuck Humphrey
www.Gambling-Law-US.com
10.20.2006 12:30pm
Charles Humphrey (mail) (www):
I have now posted my analysis of the full Unlawful Internet Gambling Enforcement Act. See:
Full Analysis

That new article should be read in conjunction with the two previous pieces on the subject, which are available at:

First comments

and

An Insider's first take

Chuck Humphrey
www.Gambling-Law-US.com
10.20.2006 12:32pm
Charles Humphrey (mail) (www):
I have now posted my analysis of the full Unlawful Internet Gambling Enforcement Act. See:
Full Analysis

That new article should be read in conjunction with the two previous pieces on the subject, which are available at:

First comments

and

An Insider's first take

Chuck Humphrey
www.Gambling-Law-US.com
10.20.2006 12:43pm
W. Atpoi:
Zincro-

A good post on this topic...
http://www.pbs.org/cringely/pulpit/pulpit20061006.html

Good post, by the way.
10.20.2006 12:44pm
logicnazi (mail) (www):
Joshua,

Aren't e-checks drawn from US banks and thus aren't they covered by this bill?
10.20.2006 12:52pm
Erick:
On reflection, a better example than the ones I used above are drug laws. Would would you think of a law professor who announces on the Internet: "My decision to use herione hurts no one, and I resent the government's attempt to regulate this private behavior." Would you hire such a professor?


This is not a good example. Everyone agrees heroin is bad, gambling is not. Even the writers of this bill have implicitly said that lots of gambling is perfectly fine; indian gaming, AC and Vegas, lotteries, racetracks, and more (all of which, btw, take much bigger cuts of the bets than online gaming sites and are, therefore, more objectively harmful than online gaming).

A better example would be a professor who (pre-Granholm v. Heald) says "my decision to drink wine I ordered from an out of state winery hurts no one and I resent the government's attempts to regulate this behavior."

Both are perfectly acceptable activities that were only made illegal because they're not making enough money for the people writing the laws.
10.20.2006 2:59pm
barts185 (mail):
As expected by most, Antigua and Barbuda are enlisting other WTO members to take up their cause.

http://cardplayer.com/poker_law/article/1513

meanwhile, the US is trying to blackmail negotiate with Betonsports PLC. into paying 4.5 billion to settle their case.

caribbean net news

Of course the quote from James Montana commenting on the new law is ridiculous (but I expected such self-serving idiocy).

"It is now virtually impossible for such businesses to conduct business with US clients"

If he really believes that, I'd like to wager with him that such business is still happeneing. Only if I could legally make such a wager of course.
10.20.2006 3:28pm
M. Simon (mail) (www):
Name me one state that does not promote gambling in the form of State lotteries or horse racing.

These laws should struck down on the basis of restraint of trade.
10.22.2006 10:41am
M. Simon (mail) (www):
tsotha,

You are right. However, I think it is a good thing.

In a citizen Republic, the power of the legilature is limited by the laws that people will obey.
10.22.2006 10:45am
M. Simon (mail) (www):
Another example of Republican Socialism. Price supports for criminals.

BTW not every one agrees that Heroin is bad. It seems very useful in extreme cases of PTSD.

Heroin.
10.22.2006 10:56am
W. Atpoi:
Zincro-

Another read...

link
10.24.2006 1:25pm
Aethelred unraed:
Dr. Kerr -

I find it a wonderfully subtle point that you wrote "there are lots of U.S laws that prohibit extraterroritorial conduct that is legal in the country where it occurs", and that your spellchecker has the word in the dictionary. I wish I could come up with coinages like that.

Excellent thread, by the way. Thanks.
10.25.2006 2:31pm
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10.29.2006 8:02am