Will Congress Cripple Internet Poker?

written by I. Nelson Rose
2006 – #6 © Copyright 2006, all rights reserved worldwide. Gambling and the Law® is a registered trademark of Professor I Nelson Rose, Whittier Law School, Costa Mesa, CA

The U.S. House of Representatives has just approved a bill, HR 4411, which, if the Senate and President agree, will create the Internet Gambling Prohibition and Enforcement Act. If the bill becomes law, online poker will be changed forever.
The law would not directly make it a crime to be a mere player. And there will always be ways for dedicated poker players to get around the barriers that would be created.
But for casual players, registering and sending money to a poker website would simply become too difficult.
For the sites themselves, the blow would be so severe that many would be driven out of business.
The bill attacks Internet poker in many ways. The first is expanding the reach of federal anti-gambling statutes.
Federal prosecutors in the Department of Justice (DOJ) believe that present law, the Wire Act, covers all forms of gambling. Three courts have looked at the issue and disagreed, holding the Wire Act applies only to bets on races and sports events. The new law would clearly make unlawful all forms of gambling that violate any federal, state or tribal law.

Naturally, there are exemptions. The horserace industry and state lotteries have enough political power to keep their cross-border betting alive. So did professional athletes, who won an exemption for fantasy sports leagues. But dog tracks could not.
Nevada casinos made only a half-hearted attempt, because they do not have any existing Internet operations and only sought, unsuccessfully, to keep their options open. Indian gaming is in a similar situation, and won the almost worthless right to operate games online, so long as players are physically present on Indian land.
The bill has real teeth. It would make it a felony, punishable by up to five years in prison, for anyone to operate an illegal gambling website or accept money transferred in any form. Of course, it already is a felony to do sports betting online, and the bill would not make it any easier for the DOJ to arrest foreign operators.
The real change is in the power that would be given law enforcement to cut off access to gaming websites. Any federal, state, tribal or local agent can ask phone companies to cut phone lines. This is a carry over from the present Wire Act. You can’t stop the Internet this way.
But you can if you can stop access to domain names. The bill would allow the DOJ or any state attorney general to get a court order requiring an Internet Service Provider to block all links to specified gambling websites.
You can also cripple a gambling business if it becomes too difficult to get money in and out. Federal regulators would be required to come up with ways of identifying and blocking all money transfers for online gambling transactions. This means that the present barriers to using credit cards would be extended to all banking transactions. Players would not even be able to write checks, let alone wire money, to gaming websites.
The bill does not directly mention intermediaries like Neteller and Firepay. But they could easily be brought under the law, if a U.S. attorney or state attorney general wished. At the very least, they would be told that they are aiding and abetting violations of the new law. And all of their assets in the United States would be subject to being seized.
Will the bill pass the Senate? It is a very low priority.
But the very fact that neither the Republicans nor Democrats care about it may allow its strongest supporter, Sen. Jon Kyl of Arizona, an opportunity to sneak it through.
© Copyright 2006. 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 website, www.GamblingAndTheLaw.com.

I. Nelson Rose

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