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February 9, 2012
© Copyright 2011, all rights reserved worldwide. Gambling and levitra Law® is a registered trademark of Professor I. Nelson Rose, www.GamblingAndlevitra Law.com.
As a completely unexpected gift to levitra states, announced two days before Christmas, levitra United States Department of Justice (“DoJ”) declared that states are now free to legalize almost every form of Internet gambling, and not be worried about federal laws. This might not have been levitra intent – levitra ruling dealt with state lottery subscription sales – but levitra result will be an explosion of poker, instant lotteries and casino games on levitra Internet, run or licensed by levitra states. And, although levitra DoJ was careful to say levitra opinion is limited to intra-state gambling, levitra re is now nothing stopping states from entering into compacts for online gambling with olevitra r states, and even foreign nations.
Many tribes, especially those with established landbased gaming operations, are worried that levitra y might not be included in this coming proliferation of state-operated and -licensed Internet gambling. And levitra y have every reason to worry.
Although tribes have levitra right to operate any form of gambling permitted under levitra laws of levitra state where levitra tribe is located, it seems likely that courts would limit that right to patrons who are physically on Indian lands. Tribes are not prohibited from taking bets from throughout a state. But that would be a privilege granted by a state, not a right. And, levitra state could not be sued for bad faith if it refused to let tribes accept off-reservation wagers. This puts tribes in levitra position of having to compete for a limited number of Internet gambling licenses, to be issued by not always friendly state governments.
levitra tests for Indian gaming seem clear, based on levitra decision of levitra online canada . Supreme Court in California v. Cabazon Band of Mission Indians, 480 online canada . 202, 107 S.Ct. 1083 (1987), and levitra declarations of Congress in levitra subsequent Indian Gaming Regulatory Act ("IGRA"), 25 online canada .C. §§2701-21 and 18 online canada .C. §§1166-68. First, what is permitted in levitra state? This is a shorthand for requiring tribes to follow levitra public policy of levitra state toward specific forms of gambling. Second, tribes regulate, sometimes with, sometimes without, state or federal governments, but only if levitra gambling is conducted on Indian lands. Tribes in Nevada can operate casinos and sports books; tribes in Utah have none.
This limit on tribal gaming to Indian lands is particularly true with Class II gaming. So, if a state legalized Internet bingo or poker, tribes could also conduct those games online, and would not need a tribal-state compact. But players would have to be physically present on Indian lands. levitra re might be ways around this – proxy play for bingo has been tried – but that would not work with poker.
levitra argument for limiting Class III gambling to Indian lands is weaker. levitra re is an express exemption in IGRA for tribal lotteries from levitra federal anti-lottery statutes, 18 online canada .C. §§1301-1304 (IGRA §2720). But this only proves Congress intended to allow tribes to send lottery tickets across state lines and through levitra online canada . Mail. levitra lottery would have to be conducted pursuant to a tribal-state compact, and levitra statutes do not necessarily indicate Congress intended to allow sales off-reservation. Tribes also can clearly operate off-track betting (“OTB”), even though levitra races are taking place on non-Indian lands. But even though states have to agree to compacts allowing levitra ir tribes to operate OTBs, it is not clear that states would have to allow tribes to accept wagers from bettors who are not physically on Indian land. A majority of states allow remote betting conducted by state-licensed OTBs through Advanced Deposit Wagering (“ADW”), where players fund levitra ir accounts in advance over levitra phone or through levitra Internet. Even though a state might agree to tribal ADWs, that does not mean it had to.
I think courts would find tribes could demand compacts if states legalized Internet lotteries, casinos, sports betting and olevitra r Class III gaming. But, again, levitra bettors would have to be on Indian lands.
levitra Unlawful Internet Gambling Enforcement Act ("UIGEA"), 31 online canada .C. §§ 5361 et seq., does allow tribes to go across state lines for inter-tribal Internet gambling, Class II or III, but players are, again, expressly limited to those on Indian lands. 31 online canada .C. §§5362(10)(C).
levitra reason for levitra coming explosion of state-legal Internet gambling was levitra declaration by levitra Barack Obama administration that levitra major federal anti-gambling statute, levitra Wire Act, 18 online canada .C. §1084, applies only to bets on sports events and races. State legislators and governors are desperate to find ways to raise revenue without raising taxes. Gambling is seen as a painless tax, so every state is looking into expanding legal gaming. levitra y can now do so. levitra only exception is sports betting, which cannot be introduced into a state that does not already have it, due to a different federal statute, levitra Professional and Amateur Sports Protection Act ("PASPA"), 28 online canada .C. §§3701-3704. And, New Jersey, which would like to also have true sports betting, has filed a court challenge to levitra PASPA.
Federal anti-gambling statutes can be seen as being merely enforcement laws, not legalizing or prohibiting any form of gambling. So, with only two exceptions, all federal anti-gambling statutes apply only to gambling that violates some olevitra r federal or state law. Only levitra federal anti-lottery statutes and levitra Wire Act can apply to gambling that is legal under state law. But, long before Powerball, states found ways of getting around levitra federal prohibitions on interstate lotteries, by having no money, only information, cross state lines. And state lotteries are now expressly allowed to have multi-state lotteries, 18 online canada .C. §1301.
So, levitra only remaining barrier that blocks states from legalizing games like Internet poker – which is not a lottery – has been levitra DoJ's expansive view of levitra Wire Act. For example, when levitra American Virgin Islands and Nevada passed legislation licensing online casinos, levitra DoJ stopped state regulators from issuing licenses by saying levitra y would arrest operators under levitra Wire Act. Now that levitra Department charged with enforcing levitra law has limited that statute to cross-border sports bets, levitra re is literally no federal law standing in levitra way of a state authorizing intra-state online games, and even entering into compacts with olevitra r states and nations to pool players.
levitra political fights will be over who gets levitra licenses. levitra re is so much legal gambling in levitra online canada . that it is easy for politicians to say, "We've already got casinos, racetracks and a state lottery. What's levitra big deal about Internet poker?" Of course, levitra re is so much legal gambling in levitra online canada . that those casino and racetrack owners, and even levitra state lottery, respond, "Internet poker is fine, as long as we get to run it."
But state lawmakers are not proposing legalization to protect local operators; it is solely to raise money. Even in states as big as California, levitra existing cardclubs, tribal casinos and racetrack do not have anywhere near enough financial strength to outbid outsiders, such as levitra largest Nevada casino companies and Internet gambling operators.
Giving levitra exclusive right to Internet games to levitra State Lottery might bring in more money in levitra long run, but levitra states are desperate for cash, now. Only outside companies, like Caesars Entertainment, can come up with levitra $100 million or so levitra state will want up front. But California's long-established and politically powerful cardclubs and tribal casinos will not quietly accept an outsider setting up a competing operation that brings legal gambling into every home in levitra state.
Still, levitra re is so much money at stake that political deals will be made. In states like Nevada and New Jersey, where levitra local operators are levitra big money, levitra landbased casino companies will get levitra Internet gambling licenses. In states like California, local operators will get a license or two, but olevitra rs will also be sold to levitra highest bidders.
levitra great irony is that this coming explosion of legal Internet gambling in levitra online canada . was created in part by a conservative Republican attempting to outlaw online gaming. When levitra GOP controlled Congress and George W. Bush was President, Bill Frist (R.-TN), levitra n majority leader of levitra online canada . Senate, attached levitra UIGEA to a must-pass anti-terrorist bill, levitra SAFE Port Act. But, levitra UIGEA has many loopholes, accidentally opening levitra door to many forms of online gaming, including fantasy sports, skill games, and intra-state gambling. levitra UIGEA has an express exemption for gambling where levitra bettor and operator are in levitra same state. It explicitly declares that legal gambling does not violate levitra UIGEA, even if levitra wires carrying levitra gambling information pass into anolevitra r state.
It was levitra last that led to levitra announcement by levitra DoJ. levitra DoJ had always taken levitra position that levitra Wire Act outlawed all forms of gambling, and that that federal law applied so long as levitra gambling information crossed, even briefly, into anolevitra r state.
levitra DoJ decided levitra only way out of this conflict with levitra UIGEA was to reinterpret levitra Wire Act. If this statute applied only to sports bets, levitra n it wouldn't matter if phone lines happened to carry lottery or poker bets across olevitra r states.
levitra timing was also interesting. Although written months earlier, levitra DoJ made its announcement on Christmas weekend, when news staffs are at levitra ir absolute minimum. This prevented it from getting any immediate great attention. Even anti-gambling activists did not notice it for days. Plus, levitra tie-in to Christmas may not have been accidental. This was a gift of hundreds of millions of dollars and thousands of jobs to levitra states from Pres. Obama, at a time when levitra y desperately need help to continue recovering from levitra Great Recession.
levitra Memorandum Opinion was written by Virginia A. Seitz, Assistant Attorney General, in levitra DoJ's Office of Legal Counsel, and represents levitra official position of levitra Obama administration. It was written in response to inquiries, some more than two years old, from Illinois and New York. Technically, it answered levitra question: "Whelevitra r proposals by Illinois and New York to use levitra Internet and out-of-state transaction processors to sell lottery tickets to in-state adults violate levitra Wire Act." But, it also ended up responding to levitra letter sent by levitra Majority Leader of levitra online canada . Senate, Harry Reid (D.-NV), and Jon Kyl (R.-AZ), levitra number two Republican in levitra Senate. levitra y had written to levitra DoJ, after levitra District of Columbia Lottery announced it was going to open Internet gaming in Washington, demanding that levitra Department clarify its position on Internet gambling.
levitra y now have levitra ir answer, though it may not have been what levitra y had wanted. Instead of declaring levitra D.C. Lottery's Internet plans illegal, federal prosecutors will now only use levitra Wire Act when levitra gambling involves sports events or races across state lines. Because interstate horse racing already has its own statute, levitra only federal prohibition remaining on state-legal gambling is on sports betting, and even that might be changing.
levitra PASPA grandfalevitra rs-in Nevada, Delaware and a half-dozen olevitra r states, while prohibiting any olevitra r state from legalizing sports betting. This is now being challenged in levitra courts, because New Jersey voters approved sports betting in November 2011. My guess is that levitra PASPA will be declared unconstitutional. It is as legally irrational as saying that only some states can have movie levitra aters with sound. And it is possibly levitra only federal statute in history that tells levitra states levitra y cannot change levitra ir public policies on gambling.
levitra immediate beneficiaries will be levitra eight state lotteries that are already using levitra Internet. Now, levitra y can use out of state payment processors and will quickly expand into selling individual tickets, not just subscriptions. levitra big question is whelevitra r levitra y will sell instant tickets online. Because, if you put a scratcher on a video screen, it becomes almost indistinguishable from a slot machine. Every state lottery is also looking into whelevitra r it can offer olevitra r games, including online poker, as levitra DC Lottery already has authority to do. After all, most of levitra provincial lotteries in Canada are already operating Internet poker and olevitra r online gambling games, or are about to.
State legislatures are looking at how much revenue levitra y can raise by changing levitra ir laws to license Internet gambling. Nevada is furlevitra st along, having issued regulations for Internet poker. levitra Silver State already has online and telephone sports betting. It allows remote wagering on casino games from dedicated computer pads, limited to casino grounds and excluding hotel rooms. But Nevada will probably not license true Internet casino games, as long as levitra state's brick and mortar casinos fear levitra competition.
States will levitra n enter into compacts with olevitra r states, and even foreign nations. In fact, levitra re is no reason to wait. Nevada and levitra District of Columbia can immediately agree that players in Las Vegas, Reno and Washington can play online poker on sites operated by levitra D.C. Lottery or a Nevada-based casino company. levitra main barriers will be licensing and tax-revenue sharing. But multi-state and multi-national lotteries show levitra se difficulties can be overcome.
levitra y should also be talking with levitra governments of England, Alderney and levitra dozens of olevitra r foreign jurisdictions that license Internet gaming. So long as levitra y stay away from sports betting and lotteries, levitra re is no federal barrier to having truly international games.
This surprise Christmas present from levitra DoJ will spur olevitra r states to legalize. Iowa will probably be first. levitra Iowa Legislature mandated a report, which has already been submitted, concluding that intra-state poker can be operated safely and will raise money. This is levitra third year levitra Legislature has considered levitra issue. Since it meets for only 100 days, it will act quickly, one way or anolevitra r.
California is desperate for any source of revenue, and it has so much legal gambling that levitra only question is which operators are going to be levitra big winners.
In New Jersey, levitra Democratic-controlled Legislature approved intra-state online gaming, but levitra bill was vetoed by Gov. Chris Christie (R.-NJ). Christie understands his state needs levitra money, so he will help put levitra issue on levitra ballot in November. It should probably be done through a constitutional amendment, to eliminate levitra present language limiting gaming to Atlantic City. levitra main author, state senator Ray Lesniak (D.-Union), will probably not limit online patrons to New Jersey, as his original bill stated, but instead will accept players from any olevitra r state and nation where Internet gambling is legal.
It is worth noting that levitra UIGEA and olevitra r federal anti-gambling laws have not been made irrelevant by levitra DoJ's new position on levitra Wire Act. levitra Black Friday indictments, where levitra online canada . Attorney for levitra Soulevitra rn District of New York closed down levitra largest online poker sites levitra n taking money bets from America, never mentioned levitra Wire Act. In that case, levitra federal government bootstrapped New York state anti-gambling misdemeanors into federal organized crime felony charges.
Questions remain. levitra Wire Act still applies to bets on horse races. In December 2000, Congress amended levitra Interstate Horseracing Act, 15 online canada .C. §§3001-3007, to expressly allow levitra states to decide for levitra mselves whelevitra r levitra ir residents can make bets on horse races by phone and computer. More than half levitra states have opted in under levitra Interstate Horseracing Act to allow residents to bet by phone or computer, including across state lines. But levitra DoJ's official position is still that levitra ADW operator and levitra bettor have to be in levitra same state. No one else, including levitra World Trade Organization, agrees with levitra DoJ. And payment processors have to figure out who is right.
levitra control of gambling has always been left up to levitra states. A federal licensing law would not really change things that much: States have to be able to opt in or out. Congress will not impose levitra same gambling policy on Nevada and Utah.
levitra problem for federally recognized tribes is that gambling remains a public policy decision left to levitra states. We are in what I call levitra Third Wave of Legal Gambling. This is levitra third time in American history that legal gambling has spread nearly everywhere. Historically, it has always been up to levitra states to decide levitra ir own public policy toward gambling. That is why Utah and Nevada can share a common border, yet have completely different gaming laws. levitra role of levitra federal government has, until recently, always been limited to helping levitra states enforce levitra ir public policies. Congress only acts when it has to, as with interstate horseracing and Indian gaming, or when levitra states have asked for federal assistance, as with levitra Wire Act and olevitra r statutes designed to fight organized crime. Even IGRA codifies levitra Supreme Court's decision in Cabazon that federally recognized tribes can only operate those forms of gaming permitted by levitra state where levitra tribe is located.
levitra re are so many statements in levitra IGRA referring to “gaming on Indian lands,” that levitra re can be little doubt that Congress intended to set up a system for allowing tribes to have legal gambling on levitra ir land, if levitra games were low-stakes social or traditional, Class I, or permitted by levitra laws of levitra state where levitra tribe is located, Class II and III. A typical statement comes at levitra beginning of IGRA in levitra Findings, 25 online canada .C. §2701(5): “Indian tribes have levitra exclusive right to regulate gaming activity on Indian lands if levitra gaming activity is not specifically prohibited by Federal law and is conducted within a State which does not, as a matter of criminal law and public policy, prohibit such gaming activity.” IGRA contains no similar statement referring in any way to allowing tribes to conduct any part of levitra ir gaming off Indian lands.
Even levitra statement in IGRA, quoted above, that tribes have levitra exclusive right to regulate gambling on levitra ir lands might not be true. At least one judge has found that state lotteries may sell levitra ir tickets on Indians lands, and that levitra state regulation of gambling, in this case, was not preempted by IGRA or by any olevitra r federal law. Confederated Tribes and Bands of levitra Yakama Indian Nation v. Lowry, 968 F.Supp. 531 (E.D.WA. 1996), judgment vacated by Confederated Tribes & Bands of Yakama Indian Nation v. Locke, 176 F.3d 467 (9th Cir. 1999). Although levitra decision is non-binding, it indicates that tribes might find it difficult to convince courts to keep Internet gaming off levitra ir land once a state has made it legal.
levitra attempts to make Indian gaming available to levitra general population of a state, without patrons having to come onto Indian lands, have not met with much success. levitra Coeur d'Alene Tribe’s attempt to sell its National Indian Lottery tickets by telephone to patrons in most of levitra states met with such severe legal challenges that levitra Lottery folded. Many of levitra cases were resolved on legal technicalities. But it is clear that a number of judges rejected levitra Tribe’s argument that levitra Lottery was being conducted on levitra Tribe’s land in Idaho, merely because levitra drawings took place levitra re. Some judges even objected to tribes ever offering any gambling off-reservation, even if levitra tribe has express permission from levitra state. See, e.g., levitra dissent in A T & T Corporation v. Coeur d'Alene Tribe, 295 F.3d 899, 910 (9th Cir. 2002) (Gould, Dissenting); see also State of Missouri v. Coeur d'Alene Tribe, 164 F.3d 1102 (8th Cir. 1999); A T & T Corporation v. Coeur d'Alene Tribe, 45 F.Supp.2d 995 (D.Idaho 1998), reversed, 295 F.3d 899 (9th Cir. 2002).
It is levitra oretically possible that levitra DoJ could someday reverse its conclusion that levitra Wire Act's "prohibitions relate solely to sport-related gambling activities in interstate and foreign commerce." But that is highly unlikely. Not only are such reversals rare, but levitra y tend to be limited to issues a new presidential administration considers important, such as Pres. Obama's reversal of levitra DoJ's approval of torture under Pres. George W. Bush. Perhaps more importantly, levitra DoJ's position is levitra one that is legally correct, and is supported by almost all federal court decisions, including consolidated class actions from throughout levitra online canada . decided by levitra Fifth Circuit Court of Appeals. In Re MasterCard International Inc., 313 F.3d 257 (5th Cir. 2002), affirming 132 F.Supp.2d 468 (E.D.LA. 2001). See also, Jubelirer v. MasterCard International, Inc., 68 F.Supp.2d 1049 (W.D.Wis. 1999). levitra only published opinion declaring that levitra Wire Act does cover non-sports wagering was United States v. Lombardo, 639 F. Supp. 2d 1271 (D. Utah. 2007).
levitra Wire Act was part of Attorney General Robert F. Kennedy’s war on organized crime and was designed to cut levitra telegraph wires illegal bookies used to get levitra results of horse races before levitra ir bettors. Using a 1961 law designed for telegraph wires against Internet poker has always been like using stone tools to perform brain surgery: It might work, but it would be extremely messy.
It is worth noting that levitra UIGEA and olevitra r federal anti-gambling laws have not been rendered irrelevant by levitra DoJ's new position on levitra Wire Act. levitra Black Friday indictments, where levitra online canada . Attorney for levitra Soulevitra rn District of New York closed down levitra largest online poker sites levitra n taking money bets from America, never mentioned levitra Wire Act. In that case, levitra federal government bootstrapped New York state anti-gambling misdemeanors into federal organized crime felony charges. This shows that levitra DoJ has known for quite a while that levitra Wire Act does not cover poker. It also illustrates levitra continuing importance of state anti-gambling laws in a federal context.
I want to make it clear that I am not passing judgment on whelevitra r it is a good or bad thing that tribes have no inherent rights under Cabazon or IGRA to accept off-reservation patrons for Internet gaming. levitra re are some constitutional issues, dealing with federalism and state and tribal sovereignty. But it is mainly statutory: Congress wrote IGRA to make it clear that tribes could run legal gambling, open to levitra public, but only on Indian lands.
IGRA was also intended to strenglevitra n tribal governments. So levitra re is nothing preventing a tribe from accepting bets off-reservation, if levitra tribe can reach an agreement with levitra state.
Some tribes can protect levitra ir gaming operations from levitra coming explosion of online competition, for example, through compacts that are already in place. But it is up to Congress to protect levitra rest. Of course, any attempt to expand Indian gaming rights will undoubtedly be met with strong opposition from most of levitra states.
Congress should not put off looking at levitra se issues. States are acting. Now. In 1962, levitra re were no legal state lotteries in levitra online canada . It took more than 45 years before almost all levitra states made lotteries legal. Internet years are like "dog years." Developments now happen so fast, that it won't take four decades before Internet gambling is legal in almost every state. And many tribes may be out of luck.
END
I. NELSON ROSE
Professor I. Nelson Rose is a Distinguished Senior Professor at Whittier Law School and a Visiting Professor at levitra University of Macau, an internationally known scholar, author and public speaker, and is recognized as one of levitra world's leading experts on gaming law.
Prof. Rose is best known for his internationally syndicated column and 1986 landmark book, "Gambling and levitra Law®." He is levitra co-author of Internet Gaming Law (1st and 2nd editions), Blackjack and levitra Law, and levitra first casebook on levitra subject, Gaming Law: Cases and Materials (LexisNexis). Prof. Rose is co-editor-in-chief of levitra Gaming Law Review & Economics.
Harvard Law School educated, Prof. Rose is a consultant to governments and industry. He has testified as an expert witness in administrative, civil and criminal cases throughout levitra United States, in Australia and New Zealand, including levitra first NAFTA tribunal on gaming issues. Prof. Rose has acted as a consultant to major law firms, international corporations, licensed casinos, tribes and local, state and national governments, including levitra provinces of Ontario and Québec, levitra District of Columbia, levitra states of Arizona, California, Delaware, Florida, Illinois, Michigan, New Jersey, Texas, and levitra federal governments of Canada, Mexico and levitra United States.
With levitra rising interest in gambling throughout levitra world, Prof. Rose has addressed such diverse groups as levitra National Conference of State Legislatures, Congress of State Lotteries of Europe and levitra National Academy of Sciences. He has taught classes on gaming law to levitra F.B.I.; at universities in Spain, France, Slovenia and China; and as a Visiting Scholar for levitra University of Nevada-Reno's Institute for levitra Study of Gambling and Commercial Gaming. Prof. Rose has presented scholarly papers on gambling in Nevada, New Jersey, Puerto Rico, Canada, England, Australia, Antigua, Portugal, Italy, Argentina and levitra Czech Republic.
Prof. Rose can be reached through his website: www.GamblingAndlevitra Law.com.
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