ITH Poker Forum

[SlfMade]

Allyn Jaffrey Shulman of CardPlayer posted another analysis article:

[url=http://www.cardplayer.com/poker_news/news_story/1471?class=PokerNews]State Law and the Unlawful Online Gambling Act
Card Player's Legal Expert Examines the Issue of State Rights[/url]

I don't think it's as useful as her last article. An excerpt:

Only in the case where a state makes it a crime to play poker online, the new statute (if signed into law, of course) also makes it a crime for the “person engaged in the business of betting or wagering” to “knowingly accept” funds. As I have stated before, this rule does not apply to the online gambler, but rather, to the online sites.

In other words, where Washington makes it a crime to play poker online, the federal statute makes the operator of a site liable for accepting payment. However, since all gaming sites are offshore and not subject to our laws, this is a law with no teeth.

The article doesn't cover the enforceability of the enforcement sections of the law (e.g. the regs prohibiting financial institutions from sending money to gaming sites).

[SlfMade]

Chuck Humphrey of Gambling-law-us.com has posted a new, more thorough analysis of the law.

He believes regulations could prohibit transfers to companies like Neteller. The law does state, however, that the regs must insure that no transfers not covered by this law are blocked (not all of Neteller's business is with gambling sites).

I do disagree with Humphrey on a few points:
- He states that ISPs can be ordered to remove access to websites that link to gambling sites. It's clear from the wording of the bill that they can only be forced to remove hyperlinks to gambling sites, or entire gambling (e.g. online poker room) sites.
- He believes gambling violates the law of every state. Let's take the two states I'm most familiar with:

- Massachusetts: Lotteries are illegal. It can't be assumed that all types of gambling are lotteries.
- New York: Most people, including those in law enforcement, believe it's not illegal to place a bet in New York.

- He also generally assumes that poker isn't a game of skill under states' laws. I think it varies from state to state.

Humphrey's analysis makes it clear that he has a much more negative attitude towards online gambling than Rose, Cabot, and Shulman.

[SlfMade]

Larry Walters, a well-known online gaming lawyer, posted a 17-page analysis.

The first five pages are background.

On page six he seems to argue that people engaged in transmitting funds may be engaging in a crime. But the S5363 prohibition clearly only applies to people "engaged in the business of betting or wagering."

The State Laws section starting on page 10 is well worth reading. He correctly analyzes one of the less-understood sections of the law:

... this means that some financial transactions related to certain types of gambling are illegal if they were initiated in a state that restricts such activity, while identical gaming transactions emanating from a different state, which has failed to specifically address the activity at issue, remain perfectly legal.

Some states have passed specific prohibitions on the act of Internet betting, itself, while others prohibit the operation of various types of an Internet gambling business. Still other states have passed laws which are broad enough to potentially include Internet gambling, but which do not make specific mention of such prohibitions.

Read in its narrowest sense, the UIGEA may only apply to gambling transactions that are prohibited by a specific state's law. The act of placing a bet online is not specifically prohibited by federal law.

Then he goes into an argument on why this is unconstitutional (p. 11-12):

... the application of state law to Internet commerce may result in insurmountable constitutional problems for the government. All state laws that seek to regulate global commerce such as Internet gambling may be unconstitutional under the "dormant" Commerce Clause of the United States Constitution. Under this argument, state laws which regulate national (or international) commerce are unconstitutional, since such commercial activity should only be regulated at the federal level.... Thus far, the courts have not hesitated in applying dormant Commerce Clause principles to attempted state-level regulation of Internet commerce. Virtually all state-level restrictions on Internet commerce have been struck down on this basis.... the courts should be expected to use a similar analysis to that which has invalided state laws attempting to restrict commercial adult websites.

Therefore, assuming that state law prohibitions on Internet commerce are unconstitutional under the Commerce Clause, the UIGEA would only apply to gambling activity prohibited under federal law.

As stated previously, no gambling is prohibited under federal law (the Wire Act is about running a gambling business, not gambling).

On page 13 he argues that the section of the UIGEA about removing links and sites is unconstitutional, as a due process and free speech violation. Walters misleadingly suggests broad powers assigned to attorney generals to remove sites: it's clear from the bill that only sites in violation of the prohibition on acceptance, or links to them, can be removed; and even then only when they reside "on a computer server that such service controls or operates." I'm not convinced by his due process argument: I assume people would have the opportunity to appear before the judge issuing the restraining order or injunction, which sounds like due process to me.

He briefly argues that "the courts have provided Internet communications with a high level of First Amendment protection, and have not hesitated to strike down laws restricting the content of online communications."

Finally, he briefly comments on the difficulty of trying to apply US law to foreign entities.

[chrisjp]

Thanks for the information. It is appreciated.

Chris