Terms & Conditions

Internet Magazine

Non–US new players
Get five 2+2 books


Order Books
Book Translations
Forum Login
 
 
Expand All   Collapse All

 Two Plus Two 
2+2 Magazine Forum
Special Sklansky Forum
2+2 Pokercast
About the Forums

 General Poker Discussion 
Beginners Questions
Books and Publications
Televised Poker
News, Views, and Gossip
Brick and Mortar
Home Poker
Beats, Brags, and Variance
Poker Theory
Poker Legislation

 Coaching/Training 
StoxPoker
DeucesCracked

 German Forums 
Poker Allgemein
Strategie: Holdem NL cash
Strategie: Sonstige
Internet/Online
BBV
Small Talk
German Poker News

 French Forums 
Forum francophone
Strategie
BBV (French)

 Limit Texas Hold'em 
High Stakes Limit
Medium Stakes Limit
Small Stakes Limit
Micro Stakes Limit
Mid-High Short-handed
Small Stakes Shorthanded
Limit––>NL

 PL/NL Texas Hold'em 
High Stakes
Medium Stakes
Small Stakes
Micro Stakes
Small-High Full Ring
Micro Full Ring

 Tournament Poker 
Small Stakes MTT
High Stakes MTT
MTT Community
STT Strategy
Tournament Circuit

 Other Poker 
Omaha/8
Omaha High
Stud
Heads Up Poker
Other Poker Games

 General Gambling 
Probability
Psychology
Sports Betting
Other Gambling Games
Entertainment Betting

 Internet Gambling 
Internet Gambling
Internet Bonuses
Affiliates/RakeBack
Software

 2+2 Communities 
Other Other Topics
The Lounge: Discussion+Review
El Diablo's General Discussion
BBV4Life

 Other Topics 
Golf
Sporting Events
Politics
Business, Finance, and Investing
Travel
Science, Math, and Philosophy
Health and Fitness
Student Life
Puzzles and Other Games
Video Games
Laughs or Links!
Computer Technical Help
Sponsored Support Forums
RakebackNetwork
RakeReduction.com
Other Links
Books
Authors
Abbreviations
Calendar
Order Books
Books by Others
Favorite Links
Feedback
Advertising Information
Home
Posting Hints
Privacy Notice
Forum Archives

The 2+2 Forums

Before using this Forum, please refer to the Terms and Conditions (Last modified: 2/26/2006)

Be sure to read the   Two Plus Two Internet Magazine

This is an archive. The main forums are here

These forums are read only.


 
UBB.threads™ Groupee, Inc.

General Poker Discussion >> Poker Legislation

Pages: 1 | 2 | 3 | 4 | 5 | 6 | 7 | >> (show all)
oldmcycles
member


Reged: 12/16/05
Posts: 127
The Unlawful Internet Gambling Enforcement Act of 2006 Analyzed
      #7508486 - 10/02/06 10:37 AM

I. NELSON ROSE
PROFESSOR OF LAW, WHITTIER LAW SCHOOL
HOME OFFICE: 17031 ENCINO HILLS DRIVE
ENCINO, CALIFORNIA 91436
(81 788-8509
FAX: (81 788-3104
WEB SITE: www.GAMBLINGANDTHELAW.com
EMAIL: rose@sprintmail.com

Gambling and the Law®:
The Unlawful Internet Gambling Enforcement Act of 2006 Analyzed

© Copyright 2006, all rights reserved worldwide. GAMBLING AND THE LAW® is a registered trademark of Professor I Nelson Rose, www.GAMBLINGANDTHELAW.com.

Note – This paper is copyrighted. You may quote it at length, republish it or distribute it for free only if you include this copyright and trademark information.

The Unlawful Internet Gambling Enforcement Act of 2006 was rammed through Congress by the Republican leadership in the final minutes before the election period recess. According to Sen. Frank R. Lautenberg (D- NJ), no one on the Senate-House Conference Committee had even seen the final language of the bill. The Act is title VIII of a completely unrelated bill, the Safe Port Act, HR 4954, dealing with port security. It can be found on pages 213 -244 of the Conference Report: http://www.saveonlinegaming.com/hr49543.pdf. It is based on the Leach and Goodlatte bills, HR 4411 and HR 4777, but there are some important differences.

The following is a detailed analysis of the Act. The section numbers that follow refer to new sections that have been added to title 31 of the U.S. Code:
§5361 The Act begins with Congress’s findings and purpose. These include a recommendation from the discredited National Gambling Impact Study Commission, whose chair was the right-wing, Republican incompetent, Kay Coles James. Findings include the doubtful assertion that Internet gambling is a growing problem for banks and credit card companies. It correctly states that “new mechanisms for enforcing gambling laws on the Internet are necessary,” especially cross-border betting.

The Act contains a standard clause that it does not change any other law or Indian compact. It repeats this many times, to make sure that no one can use the Act as a defense to another crime, or to expand existing gambling.

Most importantly, the Department of Justice is arguing before the World Trade Organization, in the dispute between the U.S. and Antigua, that all interstate gambling is illegal under the Wire Act. The DOJ insisted that any Internet prohibition passed by Congress not expressly authorize Internet betting on Horseracing. The DOJ believes this will allow it to continue to argue that the Interstate HorseRacing Act does not do exactly what it says it does, legalize interstate horseracing.
§5362 Definitions.

Bet or wager includes risking something of value on the outcome of a contest, sports event “or a game subject to chance.” The Act otherwise allows contestants to risk money on themselves. The “game subject to chance” restriction is designed to eliminate Internet poker.

The Act then confuses the issue of skill by stating that betting includes purchasing an “opportunity” to win a lottery, which must be predominantly subject to chance. Someone will figure out a way to create an opportunity to win, where the opportunity is subject to some chance. But the Act expressly prohibits lotteries based on sports events.

Betting includes instructions or information. This eliminates the argument overseas operators used that the money was already in a foreign country, so no bet took place in the U.S.

The Act exempts activities that we all know are gambling, but are, by statute, declared not to be gambling. These include securities and commodities, including futures, that are traded on U.S. exchanges. Boilerrooms and bucketshops, selling foreign securities are gambling. Insurance is not.

Free games are not gambling. But there is a special provision that allows sites to offer points or credits to players only if these are redeemable only for more games. Operators of free games, where players can win valuable prizes, will have to stop giving points for wins that can be redeemed for cash. Free bingo, on the other hand, can still give small cash prizes paid out of the advertising budget.

Fantasy leagues are legal, but subject to detailed restrictions. A fantasy team cannot be “based on the current membership of an actual team.” What they actually mean is a fantasy team cannot be composed merely of the players of a real team. There is no limit on the cost of entering, but prizes must be announced in advance, and not based on the fees paid by participants. Statistics must be derived from more than one play, more than one player, and more than one real-world event.

Being in the “business of betting or wagering” still does not include mere players. It also expressly does not include financial institutions involved in money transfers.

“Designated payment system” is a new term. It could have been labeled simply “target,” as in “you are the target of a criminal investigation.” It covers any system used by anyone involved in money transfers, that the federal government determines could be used by illegal gambling. The procedure will be that the Secretary of the Treasury, Board of Governors of the Federal Reserve System and Attorney General will meet and create regulations and orders targeting certain money transfer systems.

“Financial transaction provider” is a very broad definition covering everyone who participates in transferring money for illegal Internet gambling. This expressly includes an “operator of a terminal at which an electronic fund transfer may be initiated,” and international payment networks. This covers third party providers, like Neteller.

“Interactive computer service” includes Internet service providers.

“Restricted transaction” means any transmittal of money involved with unlawful Internet gambling.

“Unlawful Internet gambling” is defined as betting, receiving or transmitting a bet that is illegal under federal, state or tribal law. The Act says to ignore the intermediary computers and look to the place where the bet is made or received.

This does not completely solve the problem of Internet poker, or even Internet casinos. The Act does not expand the reach of the Wire Act, the main federal statute the DOJ uses against Internet gambling. Although the DOJ has taken the position that the Wire Act covers all forms of gambling, courts have ruled that it is limited to bets on sports events and races. State anti-gambling statutes have similar weaknesses, including the presumption that they do not apply if part of the activity takes place overseas. This new statute requires that the Internet gambling be “unlawful.” But it would often be difficult to find a federal, state or tribal law that clearly made a specific Internet bet illegal.

Nevada and other states are expressly permitted to authorize 100% intrastate gambling systems. Congress required that state law and regulations include blocking access to minors and persons outside the state.

Tribes were given the same rights, with the same restrictions. Two tribes can set up an Internet gaming system, if it is authorized by the Indian Gaming Regulatory Act. This means that tribes can operate bingo games linking bingo halls on reservations. They can also link progressive slot machines, if their tribal-state compacts allow. But they cannot operate Internet lotteries and other games open to the general public.

It is interesting that Congress decreed that states can decide for themselves if they want to have at-home betting on horseracing, but not on dogracing. Congress also decreed that tribes can operate games that link reservations, even across state lines, but not the states themselves: state lotteries are not exempt.

Congress had a little problem with the term “financial institution.” To force casinos to report large cash transaction, federal law was changed to define “financial institution” as including large gambling businesses. Congress had to undo that definition, so that in this Act casinos go back to being casinos.

The other definitions are standard or are described above.
§5363 “No person engaged in the business of betting or wagering may knowingly accept” any money transfers in any way from a person participating in unlawful Internet gambling. This includes credit cards, electronic fund transfers, and even paper checks. But it is limited to Internet gambling businesses, not mere players. It also would not cover payment processors, except under a theory of aiding and abetting.
§5364 Federal regulators have 270 days from the date this bill is signed into law to come up with regulations to identify and block money transactions to gambling sites. At this writing, President Bush had not yet signed this bill, but he will. So the regs will go into effect by the beginning of July 2007.

The regs will require everyone connected with a “designated payment system” to i.d. and block all restricted transactions. So all payment processors are suppose to have systems in place to prevent money from going to operators of illegal Internet gambling. The first step will undoubtedly be to take the credit card merchant code 7995 and expand it to all money transfers. Visa created the 7995 classification in 2001 to avoid having its credit cards used for online gambling. The federal government will order banks and all others involved with electronic money transfers to cease sending funds to any Internet operator who has a 7995 credit card merchant code. Any financial institution that follows the regs cannot be sued, even if it wrongfully blocks a legitimate transaction.

The Act allows the federal regulators to exempt transactions where it would be impractical to require identifying and blocking. This obviously applies to paper checks. Banks have no way now of reading who the payee is on paper checks and cannot be expected to go into that business. Banks tried to defeat this bill, not because they cared about patrons’ privacy, but because they knew that it would cost them billions of dollars to set up systems to read paper checks.

The great unknown is how far into the Internet commerce stream federal regulators are willing to go. The Act requires institutions like the Bank of America and Neteller to i.d. and block transactions to unlawful gambling sites, whatever they are. But, while the Bank of America will comply, Neteller might not, because it is not subject to U.S. regulations. Will federal regulators then prohibit U.S. banks from sending funds to Neteller? And would they then prohibit U.S. banks from sending funds to an overseas bank, which forwards the money to Neteller?

For financial institutions within the U.S, the Act provides that exclusive regulatory enforcement rests with their federal regulators, like the Federal Reserve Board. The Federal Trade Commission is supposed to enforce regulations on everyone else. It is extremely doubtful whether the F.T.C. will ever try to do anything about the Netellers of the world, who are beyond regular U.S. regulatory control.
§5365 Since there is no way to regulate overseas payment processors, the Act allows the U.S. and state attorneys general to bring civil actions in federal court. The courts have the power to issue temporary restraining orders, preliminary and permanent injunctions, to prevent restricted transactions. The only problem with this enormous power is that it is, again, practically useless against payment processors who are entirely overseas.

It is difficult to serve a company with the papers necessary to start a lawsuit, a summons and complaint or petition, if the company has no offices, or officers, in the U.S. Even if the papers for such a lawsuit can be served, there is normally no requirement that foreign countries enforce these types of orders. Other countries are particularly reluctant to enforce a T.R.O., which does not even require that the defendant be present. Preliminary injunctions are also often ignored, because they are issued without a full trial and can be modified at anytime by the trial judge. Neteller operates out of the Isle of Man. I do not know of any treaty or other law which would require the Isle of Man to enforce even a permanent injunction against one of its licensed operators.

The Act provides for limited civil remedies against “interactive computer services.” An Internet service provider can be ordered to remove sites and block hyperlinks to sites that are transmitting money to unlawful gambling sites. ISPs are under no obligation to monitor whether its patrons are sending funds to payment processors or even directly to gambling sites. But once it receives notice from an U.S. Attorney or state Attorney General, the ISP can be forced to appear at a hearing to be ordered to sever its links.

But the statute has an interesting requirement: The site must “reside on a computer server that such service controls or operates.” This would limit the reach of this statute to payment processors, affiliates and search engines that are housed on that particular ISP. The same problem of going after foreign operators and payment processors affects this section. Foreign ISPs are difficult to serve and not necessarily subject to federal court injunctions.

The greatest danger here would seem to be with affiliates. Any American operator can be easily grabbed. This includes sites that don’t directly take bets, but do refer visitors to gaming sites. If the affiliate is paid for those referrals by receiving a share of the money wagered or lost, it would not be difficult to charge the affiliate with violating this law, under the theory of aiding and abetting. Being a knowing accomplice and sharing in the proceeds of a crime make the aider and abettor guilty of the crime itself. The federal government could also charge the affiliate with conspiracy to violate this new Act.

The other danger lies with search engines. Although California-based Google does not take paid ads, punching in “sports bet” brings ups many links to real-money sites. This new Act expressly allows a federal court to order the removal of “a hypertext link to an online site” that is violating the prohibition on money transfers. But what prosecutor would want to be ridiculed internationally for trying to prevent Google from showing links?

The Act gives ISPs a little more security by declaring that they cannot be convicted of violating the Wire Act, unless, of course, the ISP is operating its own illegal gambling site.

This section of the Act ends with a limitation, that, frankly, makes no sense. It says that, after all the talk of getting court orders to prevent restricted transactions, “no provision of this subchapter shall be construed as authorizing” anyone “to institute proceedings to prevent or restrain a restricted transaction against any financial transaction provider, to the extent that the person is acting as a financial transaction provider.” This could be a typo, since the bill was rushed through without an opportunity to even be read. Or perhaps it means that banks can be ordered to not transfer money to gambling sites, but only if they know about it. It is indecipherable.
§5366 Criminal penalties: Up to five years in prison, and a fine. And barred from being involved in gambling.
§5367 The Act naturally makes ISPs and financial institutions liable if they actually operate illegal gambling sites themselves.

Lastly, the Act requests, but does not require, the executive branch to try and get other countries to help enforce this new law and “encourage cooperation by foreign governments” in identifying whether Internet gambling is being used for crime. The Secretary of the Treasury is told to issue a report to Congress each year “on any deliberations between the United States and other countries on issues relating to Internet gambling.” That report will go unread.

END
© Copyright 2006. Professor I Nelson Rose, Whittier Law School, Costa Mesa, CA 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

Professor I. Nelson Rose is recognized as one of the world's leading experts on gambling law. A tenured full Professor at Whittier Law School in Costa Mesa, California, Prof. Rose is also an internationally known scholar, author and public speaker.

Professor Rose is best known for his internationally syndicated column, "Gambling and the Law®" and his landmark 1986 book with the same name. The author of more than 1,000 published works, including GAMBLING AND THE LAW and BLACKJACK AND THE LAW. He wrote the chapter on Internet gambling for the first casebook on gaming law, GAMING LAW: CASES AND MATERIALS, and in 2005 co-authored INTERNET GAMING LAW (available at www.liebertpub.com/igl).

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 in the U.S., Australia and New Zealand, including the first NAFTA tribunal on gaming issues, and has acted as a consultant to major law firms, international corporations, racetracks, licensed casinos, players, Indian tribes, and local, state and national governments, including Arizona, California, Florida, Illinois, Michigan, New Jersey, Texas, the province of Ontario, and the federal governments of Canada, Mexico and the United States.

With the rising interest in gambling throughout the world, Prof. Rose has addressed such diverse groups as the National Conference of State Legislatures, Congress of State Lotteries of Europe and the National Academy of Sciences. He has taught classes on gaming law to the F.B.I., at the University of Ljubljana in Slovenia, Sun Yat-sen University in China and the Universidad de Cantabria in Spain, and as a Visiting Scholar for the University of Nevada-Reno's Institute for the Study of Gambling and Commercial Gaming. Prof. Rose has presented scholarly papers on gambling in Nevada, New Jersey, Puerto Rico, England, Australia, Antigua, Portugal, Italy, Argentina and the Czech Republic.


Post Extras: Print Post   Remind Me!   Notify Moderator  
Sarge85
Carpal \'Tunnel


Reged: 05/08/03
Posts: 3121
Loc: 2+2 Archives
Re: The Unlawful Internet Gambling Enforcement Act of 2006 Analyzed [Re: oldmcycles]
      #7508497 - 10/02/06 10:39 AM

uhhh.....

I got nothing - looks pretty techy

Sarge


Post Extras: Print Post   Remind Me!   Notify Moderator  
sdfsdf
veteran


Reged: 02/06/06
Posts: 1431
Loc: charlottesville
Re: The Unlawful Internet Gambling Enforcement Act of 2006 Analyzed [Re: Sarge85]
      #7508509 - 10/02/06 10:40 AM

summary??

Post Extras: Print Post   Remind Me!   Notify Moderator  
Sarge85
Carpal \'Tunnel


Reged: 05/08/03
Posts: 3121
Loc: 2+2 Archives
Re: The Unlawful Internet Gambling Enforcement Act of 2006 Analyzed [Re: sdfsdf]
      #7508534 - 10/02/06 10:43 AM

Quote:

summary??




Well it could be just spam for apparently a book he wrote, but i dont know enough legalnesse to know if he's on to something or not

Sarge


Post Extras: Print Post   Remind Me!   Notify Moderator  
NajdorfDefense
Arbing for Dollars


Reged: 02/10/03
Posts: 8227
Loc: Manhattan
Re: The Unlawful Internet Gambling Enforcement Act of 2006 Analyzed [Re: oldmcycles]
      #7508618 - 10/02/06 10:54 AM

Quote:


The Act exempts activities that we all know are gambling, but are, by statute, declared not to be gambling. These include securities and commodities, ...that are traded on U.S. exchanges.




This guy is an idiot if he really thinks this.


Post Extras: Print Post   Remind Me!   Notify Moderator  
blue_water
journeyman


Reged: 12/12/05
Posts: 64
Re: The Unlawful Internet Gambling Enforcement Act of 2006 Analyzed [Re: oldmcycles]
      #7508677 - 10/02/06 10:59 AM

You done wrote alot of words in one post.

How am I supposed to read all that.

Can you summarize it in a sentence or two, so I can understand what you're saying?


Post Extras: Print Post   Remind Me!   Notify Moderator  
Shank
journeyman


Reged: 10/06/03
Posts: 55
Re: The Unlawful Internet Gambling Enforcement Act of 2006 Analyzed [Re: NajdorfDefense]
      #7508753 - 10/02/06 11:08 AM

Quote:

Quote:


The Act exempts activities that we all know are gambling, but are, by statute, declared not to be gambling. These include securities and commodities, ...that are traded on U.S. exchanges.




This guy is an idiot if he really thinks this.




He's clearly indulging in hyperbole, but there's some truth in what he says. Certainly most of the amateur investors that I know who trade the stock market (many of them successful and wealthy businessman) might as well be playing blackjack with the money ... at best the trading costs eat them up over time, at worst they ride some pretty wild swings up and down, and it's only the long-term upward trend in the markets that save them. Proof that they're gambling is evidenced by the fact that they would generally be much better off with a long-term more passive investment strategy.

FWIW, my favorite quote from his analysis is this bit of dry wit:

Quote:


§5366 Criminal penalties: Up to five years in prison, and a fine. And barred from being involved in gambling.





For the first few posters who didn't read what he wrote, do yourself a favour and take the time to do so - he does a good job of picking apart the absurdities of this piece of legislation. Ulimately it might not make any difference to the practical implications of this law, but you'll feel a little bit better about knowing just how stoopid it is.


Post Extras: Print Post   Remind Me!   Notify Moderator  
gila
Pooh-Bah


Reged: 09/26/04
Posts: 1740
Loc: IN
Re: The Unlawful Internet Gambling Enforcement Act of 2006 Analyzed [Re: Shank]
      #7508798 - 10/02/06 11:12 AM

I wouldn't blow this guy off so quick. I have heard his name for years as far as gambling and law goes.

Post Extras: Print Post   Remind Me!   Notify Moderator  
Shank
journeyman


Reged: 10/06/03
Posts: 55
Re: The Unlawful Internet Gambling Enforcement Act of 2006 Analyzed [Re: gila]
      #7508841 - 10/02/06 11:17 AM

Quote:

I wouldn't blow this guy off so quick. I have heard his name for years as far as gambling and law goes.




He's very well respected by the industry (B&M included) - you can take what he says at face value (after adjusting for his obvious distaste for a badly conceived and difficult to enforce law)


Post Extras: Print Post   Remind Me!   Notify Moderator  
Wynton
Carpal \'Tunnel


Reged: 09/25/03
Posts: 5123
Loc: coping with the apokerlypse
Re: The Unlawful Internet Gambling Enforcement Act of 2006 Analyzed [Re: Shank]
      #7508902 - 10/02/06 11:22 AM

This guy is arguably THE leading authority on internet gambling law. And, after a quick read, I agree with everything he wrote.

Post Extras: Print Post   Remind Me!   Notify Moderator  
Pages: 1 | 2 | 3 | 4 | 5 | 6 | 7 | >> (show all)



Extra information
0 registered and 2 anonymous users are browsing this forum.

Moderator:  Berge20, Performify, 4_2_it, Mike Haven 

Print Topic

Forum Permissions
      You cannot start new topics
      You cannot reply to topics
      HTML is disabled
      UBBCode is enabled

Rating:
Topic views: 20195

Rate this topic

Jump to

contact us 2+2 Publishing

Powered by UBB.threads™ 6.5.5


Message Boards and Forums Directory

Pages provided by ConJelCo