Barney Frank-Internet gambing is our new hope!

How dos a bill whose primary intent is to establish/promote internet gambling get named a consumer protection bill. I guess the same way the financial modernization act and commodity modernization did..

An industry response to...

UIGEA Analysis

Language

§5363 - Prohibition on Acceptance of Any Financial Instrument for Unlawful Internet Gambling

No person engaged in the business of betting or wagering may knowingly accept, in connection with the participation of another person, in unlawful Internet gambling - [credit, EFTs, checks, drafts, or the proceeds of any other form of financial transaction as set forth in federal regulation].

Prior to the UIGEA, entities or persons that assisted or facilitated online gambling transaction could only be charged with aiding and abetting (substantially assisting an individual in the commission of a criminal offense makes you equally liable as the individual committing the offense) or conspiracy (knowingly and voluntarily participating in an agreement to violate the law).

* With the passage of the UIGEA law enforcement officers no longer need to rely on distorting the existing laws to punish those participating in online gambling transactions (aiding and abetting requires no knowledge and conspiracy requires no crime)

Bet or Wager

the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game subject to chance, upon an agreement or understanding that the person or another person will receive something of value in the event of a certain outcome.

Also included in this definition is a lottery prize awarded by chance, known as a "scheme" under United States Code

28 USC §3702 Scheme

any instructions or information pertaining to the establishment or movement of funds by the bettor or customer in, to, or from, an account with the business of betting or wagering.

This is where the problem in the original language of the statute arises. The "business of betting or wagering is not defined anywhere in the UIGEA. This is how it reads,

§532(2) Business of Betting or Wagering

The term "business of betting or wagering" does not include the activities of a financial transaction provider, or any interactive computer service or telecommunications service.

While the Act tells what the "business of betting or wagering" is not, it avoids defining what it is. It is likely that the term was defined in the provision that expanded the Wire Act, which has been subsequently excluded.

* The result is that by defining what the "business of betting or wagering is not" the Act as created a considerable amount of vagueness surrounding whether it applies to industry it was supposed to be directed at - "financial service providers."

Elements of a Violation of the UIGEA

To establish that an individual or entity is in violation of the UIGEA, it must be proven that,

(1) A "person" was engaged in the business of betting or wagering;
(2) That person knowingly accepted a financial instrument or proceeds thereof; AND
(3) That instrument was accepted (by the person) in connection with the participation
of another person in "unlawful Internet gambling."

* Thus, when a person (individual or company) that is actively involved in the "business of betting or wagering" (as defined by §5362(1) and §532(2)) accepts a financial instrument that they know stems from that business AND it is from another person who is engaged in unlawful Internet gambling, then the UIGEA has been violated.
* The problem thus becomes, what constitutes "unlawful Internet gambling?"

Unlawful Internet Gambling

To place, receive, or otherwise knowingly transmit a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is unlawful under any applicable Federal or State law in the state or tribal lands in which the bet or wager is initiated, received, or otherwise made.

Thus, the UIGEA is simply a focused enforcement of the current Internet gambling laws in existence within specific jurisdictions.

[Top]

Applicable State and Federal Laws

Federal Laws

The applicable federal law criminalizing online gaming is the Wire Wager Act (Wire Act). Although the Wire Act has been used successfully against sports betting businesses, the United States Fifth Circuit Court of Appeal has read the Wire narrowly so that it does not apply to any type of gambling but sports betting.

While some other federal laws such as the Organized Crime Control Act, the Travel Act, and the Wagering Paraphernalia Act have been recognized by state courts as applying to Internet gambling, federal courts have only recognized the Wire Act thus far. In addition, federal statutes on the matter have only addressed sports betting, numbers, bolita, wagering pools, and like games.

State Laws

A large problem arises when evaluating the UIGEA under state law because each of the 50 states may have different legislation on Internet gambling. If we were to provide an analysis of the UIGEA under state law, we would need to evaluate each State's online gambling legislation, judicial interpretation, and keep a constant watch on amendments, repeals, and new legislation on the issue.

Because the act of wagering online is not expressly barred at the federal level, the UIGEA, when read narrowly, might only apply to state online gambling laws.
Aside from the insurmountable problem of analyzing the UIGEA under state specific law, a major Constitutional issue has been created. When state laws seek to regulate interstate, national, or international commerce, that law may be unconstitutional under the "dormant" Commerce Clause of the United States Constitution.

Underlying this Clause is the need for consistent and efficient transactions over state borders. Almost all state Internet regulations have been struck down under the "dormant" Commerce Clause. Although the courts have yet to deal with this issue surrounding online gambling, an extension of the Clause is likely.

Therefore, if the courts should find state laws on Internet gambling unconstitutional, the UIGEA would only be applicable under federal law where online gambling is not specifically illegal.

[Top]

Website Blocking Provisions

Under the provisions surrounding Internet Computer Services (ICS's), the Attorney General of the United States has nearly unlimited power to remove websites he or she believes are violating the UIGEA.

Although the ICS has the right of advance notice and opportunity to appear, it is ambiguous on where exactly they can "appear" and there is no mention in the Act of the procedural safeguards afforded to the website operator, who's company is about to be extinguished without the Due Process guaranteed by law.

If this were not bad enough, under the UIGEA, the US government is allowed to violate Free Speech rights through mandatory censorship. The US government can make ICS's shutdown a website without notice to the owner, thus denying their right to object.

The potential for abuse of authority under the UIGEA is overwhelming. The Attorney General can shut down a website for reason he or she desires, even on a whim.

Given that the Internet has been called "the most participatory form of mass speech yet developed" by the Supreme Court of United States, it appears that Congress has decided to ignore Free Speech rights by denying notice and right to be heard, even as the Court has afforded it so much protection.

[Top]

Foreign Jurisdictions

Because online gambling operates outside the jurisdiction of the United States, and companies frequently obtain offshore licenses, it will be difficult for the US government to enforce the UIGEA against international entities.

For this reason, the UIGEA devotes a section to this matter,

Internet Gambling in or Through Foreign Jurisdictions

* Rather than creating new regulations, this section focuses on attempts pigeonholing online gambling into already existing international crimes such as money laundering, corruption, etc.
* Advance policies which promote cooperation with foreign governments
* Information exchanges aimed at enforcing the UIGEA
* Annual report by the Secretary of the Treasury of a detailed summary of the communications between the US and other countries about online gambling

Although these policies are an excellent expression of the aspiration of the US government, the reality of their success is unlikely in all but the most serious of cases. In most circumstances, cooperation should only be expected when an actual violation of law occurs.

http://www.opensecrets.org/industries/summary.php?ind=N07&cycle=All&recipdetail=H&mem=Y

But a brilliant move by Barney and others to diversify campaign money in case AIG can't afford to contribute as much this year?

Now here's an idea which would help NYC. Legalize hotel gambling in Manhattan. If you want to bring visitors to NYC and bring money here. This is the way...

anyone think this bill will pass COngress? I'm taking bets if anyone wants to try their luck...

Legalize hotel gambling in Manhattan?
Why? We already have the biggest casino in the world. It's located on Wallstreet.

The shinacock indians will get the rights to a casino out on south hampton eventually, which will not only screw up traffic even more but our ability to collect taxes on any of the revenues .

The state should make the deal now to trade them a piece of coney island so that a taxable asset could be built around it, creating jobs instead of passing an internet gambling bill which will keep people locked in their home spending money on games programed in india.

New York needs to seriously think about replacing lost Wall Street revenue. Opening up Manhattan to casino gambling is the quickest best solution. Casinos could be taxed and visitors to NYC would spend money at restaurants, and Department stores , etc. Of course this would obliterate Atlantic City.

Riversider - you speak like you have knowledge of gaming. Can you explain your expertise?

you speak like you have knowledge of gaming

Wish I did, I wouldn't have to work....

Where exactly is somebody going to build a casino in NYC???? You need a large space and these things takes years to put up. Who would provide the financing? Indian tribe lobbyists would block it anway.

what about the SPURA land? or just know down the projects along the east river in the LES they need to be rebuilt anyhow.

There is plenty of space for a casino in Manhattan.

Let's put gaming on Governors Island. We can also put prostitution and drug use on the island as well. We rename it NIMBY island and stimulate the economy in this town with real sustainable shovel (or mattress) ready projects. Why should we let our gaming dollars leave town. We got indians. Our island is an indian word!!! We already have drugs and prostiution, we just don't regulate and tax them.
It is the end of our town being a preminent city. I knew once they cleaned up the red light district and closed the grass roots titty bars this town would suffer.
So here we are all cleaned up...and for what?

As a long time poker player, I can tell you that a good deal of the anti-online gaming laws came from MASSIVE lobbying dollars spent by Las Vegas (public and private). Well, shock of shocks: Las Vegas doesn't have the money to spend on those lobbyists anymore and guess what happens?

Also, Spitzer was one of the biggest anti gaming AG's and he ain't gonna be doing that no mo.

bring back Ace Point!! proud member of the PPA.