Gambling and the Law®
A Surge In The War (Of Intimidation)
2007 - #1 © Copyright 2007, all rights reserved worldwide. GAMBLING AND
THE LAW® is a registered trademark of Professor I Nelson Rose, www.GAMBLIINGANDTHELAW.com
The latest news in the United States Department of Justice's war against
Internet gambling is not good news for online poker players.
Up until 2006, most of the attacks by law enforcement were against sports
betting sites. The DOJ has publicly taken the position that the Wire Act,
the main federal anti-gambling law that might apply to the Internet, outlaws
all forms of gambling. However, a couple of courts have ruled the Wire
Act is limited to bets on sports events and races. The DOJ does not want
to lose its power of intimidation by losing a case, so it has not brought
any charges against pure poker sites.
But in April 2006, the House of Representative's Judiciary Committee
and later the full House approved a bill to amend the Wire Act to cover
all gambling, including poker.
At least it was limited to operators not players.
But in June 2006, the state of Washington passed a law to clearly make
it a crime, even a felony, to merely play poker online.
Then there were the dramatic arrests. The CEO of BetOnSports, flying
from England to Costa Rica, was nabbed while changing planes in Dallas
and charged with violating the Wire Act. Then the CEO of SportingBet was
arrested at JFK for violating a Louisiana state law, which seemed broad
enough to cover poker.
In the last days of the Republican-controlled Congress, then-Senate-majority
leader Bill Frist rammed through the Unlawful Internet Gambling Enforcement
Act, designed to stop any "game subject to chance."
The sites of the largest publicly traded operators, like PartyGaming's
PartyPoker, immediately announced that they would no longer accept players
from the U.S. Online poker players were forced to switch to one of the
many privately-owned sites which continued to take bets from Americans.
Getting the money to the operator became more of a problem with payment
processors like FirePay also cuting off the U.S. Fortunately, Neteller,
the largest e-wallet, announced it would wait to see what the eventual
regulations looked like.
Now Neteller is gone. Its founders, who no longer had active roles in
the business, were arrested in the U.S. The company announced that, "Due
to recent U.S. legislative changes and events, effective immediately,
U.S. members are no longer able to transfer funds to or from any online
gambling sites." This left the company's 640,701Amercian account holders
supposedly able to get their money back from Neteller, but unable to get
their money back to Neteller from the gambling sites.
Neteller claimed this sudden change was due more to the timing and content
uncertainty of future regulations. But a few days later it was also disclosed
that the financial banks, attorneys and accountants responsible for companies
like Neteller going public had received subpoenas from the DOJ. Even Google
was told to stop taking paid ads from Internet gambling sites (Yahoo had
quit three years ago). Another payment processor, Citadel, read the writing
on the wall and also cut off Americans.
The most recent skirmish is timed to coincide with the SuperBowl, by
far the largest betting event of the year. And it is working: Pinnacle,
the leading sports betting site, also pulled out of the U.S. market. American
bettors have to struggle to find a site, and then figure out how to get
the money there.
The only good news is that prosecutors will never go after mere players.
And in the long run, the government's war against Internet gambling will
be merely a blip. The first Prohibition did not stop people from drinking.
Prohibition 2.0 will not stop players from betting.
© Copyright 2007. Professor I Nelson Rose is recognized as one of the
world's leading experts on gambling law. His latest books, GAMING LAW:
CASES AND MATERIALS and INTERNET GAMING LAW, are available through his