Frank To Push For Repeal Of Internet Gambling Ban

from the busted-out dept

Congressman Barney Frank will apparently soon introduce legislation to repeal the US ban on online gambling, as the EU looks like it's preparing to push the WTO to take action against the ban. Along with being ineffective and useless, the ban falls foul of WTO regulations, and could lead to the US being subject to punishments from the organization. It sounds as though the WTO would like to give the US government the chance to sort out the illegal ban on its own before taking action on a complaint about it. Though, even with the changed political climate in the US, it remains to be seen if the repeal could stick. It's also really hard to see how a ban on online gambling, and forcing financial institutions to police it, remains preferable to a well-regulated environment that protects consensual bettors. Hopefully US politicians will agree.

Filed Under: barney frank, gambling, online gambling

Court Says It's Not Online Gambling If You Can Renege On A Bet

from the hello-loophole dept

The US has always had this odd hatred for online gambling -- but no state has been more aggressive about the issue than Washington state -- even to the point of threatening people with arrests for even talking about online gambling. So, you can imagine that the state didn't look too favorably on the launch of a person-to-person "wager" site called Betcha.com which claimed it had found a nice loophole that made it legal: you could renege on your bet. Yes, if you lost a wager, you could click a button saying "I refuse to pay." The catch, of course, was that the site had a rating system, and if you reneged, it was likely to harm your rating, and others might refuse to bet against you. Betcha claimed that the presence of the renege button meant that it wasn't actually gambling, because you never actually had to bet any money.

The state of Washington not only disagreed, it took a month or so until state authorities raided the company, arrested its founders and seized its computers. That seems pretty extreme for what does seem to be a rather open question in the law. And, in fact, a state appeals court found that the Betcha founder is right: the presence of the renege button means that the site is not a gambling site:

"Accordingly, there is nothing risked, which is the essence of both the common law and statutory definition of 'gambling.'"

Of course, that doesn't mean Betcha is coming back into existence. Since its founder (who has a law degree and had carefully researched gambling laws to make sure the loophole was legit) was arrested, thrown in jail, extradited to Louisiana, charged (in Louisiana) with gambling-related felonies finally forcing him to negotiate a plea bargain, dropping the charges if he agreed to certain conditions. With that experience in mind, restarting the site and risking it happening again just doesn't seem that appealing.

So, way to go Washington State -- you tossed a guy in jail for a completely legal web business.

Filed Under: gambling, online gambling, renege, wagering, washington
Companies: betcha

Court Of Appeals Overturns Kentucky Gambling Domain Seizure

from the good-ruling dept

Back in September, the state of Kentucky tried to seize over 100 domain names, claiming they violated a local state law against "gambling devices." None of the domains were run or hosted in the state of Kentucky, which made this quite a stretch in legal terms. While many of the domain names were for gambling websites, some were merely parked domains. The politicians who ordered the seizure were quite open that this was an attempt to "protect" local gambling interests -- but it seems like an incredible legal reach to claim that because of local protectionist laws, the state somehow has the right to seize domain names from around the world. The domain owners complained, but a local Kentucky state court ruled in favor of the government. However, an appeals court quickly told the state to hold off seizing the domains until it could review the case.

That court has now overturned the lower court ruling saying that a domain name is clearly not a gambling device, and is not covered by the law. However, this does potentially leave the door open for Kentucky politicians to change the law to include domain names... at which point we'll need to go through this whole silly legal battle all over again.

Filed Under: domain names, gambling, governor, kentucky, online gambling

Isn't There An Easier Way To Tax Online Gambling?

from the roundabout dept

One of the founders of British online gambling site PartyGaming yesterday pleaded guilty to a charge of transmitting bets across state lines -- and agreed to pay the US government $300 million. The exec, Anurag Dikshit, wasn't one of those nabbed by US authorities as they changed planes in the US, but rather he came forward on his own in an attempt to clear the legal air surrounding him and his company. It appears that the US government has rewarded him with leniency: he's free on $15 million bond with some loose travel restrictions ahead of his sentencing -- scheduled for December 2010. This latest news follows the guilty plea of an executive of NETeller, which processed payments for gambling sites, who forfeited $100 million to the government, while the company itself coughed up $136 million. So from these three instances alone, the government has taxed, er, fined, gaming sites and execs over half a billion dollars. If revenue generation is the goal, why not simply legalize online gambling, then regulate and tax it? That way, the government gets its slice, while US citizens can enjoy some protection while betting, instead of being forced into the grey market where they're largely at the whim of site owners.

Filed Under: anurag dikshit, online gambling
Companies: partygaming

Gaming Giants Still Can't Make Up Their Mind On Internet Gambling

from the wanna-bet? dept

The American Gaming Association, the casino industry's biggest trade group, is struggling to reach a consensus on internet betting, as its members take up divergent viewpoints. Some casino companies support federal regulation for it, while others want states to be able to regulate it (though maybe not Kentucky); others, of course, want to see the blanket ban continue, fearful of anything that might let new competitors in to the market. The AGA's latest approach appears to be to support legislation to study whether to legalize online betting -- which, we're pretty sure, sounds about as wishy-washy as could be.

The facts surrounding online gambling in the US are already pretty clear: previous legislative efforts may have reduced online gambling, but they've also driven American bettors to largely unregulated services and forced them to use some other often-shady services to fund their activities -- since US banks are given the responsibility to stop gambling sites' funding. The result is that gamblers keep up the same activity they were doing before, but are now exposed to more danger and risk, while US authorities are missing out on the chance to collect some taxes. This still seems pretty irresponsible, since gaming regulators in mature markets would argue that driving consumers into unregulated territory where they're not protected by laws and rules governing casinos isn't a great idea.

Meanwhile, the AGA's waffling isn't a surprise, since many of its members hate to see new competition in any form. But existing casino operators are, arguably, better placed than anyone to compete in new, highly regulated markets that don't require huge capital outlays on the scale of expensive new properties. Also, it's hard to understand how more competition for gambling dollars could hurt consumers, when competition might actually deliver them a number of significant benefits, particularly over gray-market services of questionable legality.

Filed Under: casinos, gambling, online gambling
Companies: american gaming association

Kentucky Appeals Court Tells Kentucky To Hold Off Seizing Domains

from the wait-just-a-second... dept

While a lower court in Kentucky had agreed to allow the state to seize 141 domain names as being "illegal gambling devices" despite having nothing to do with the state of Kentucky, other than being available on internet connections there (and everywhere else), an appeals court has now issued an injunction to stop the state from seizing the domains until the appeal can be heard. While we still have to wait for the full appeal, at least damage won't be done in the interim.

There's one other interesting note in the article, which is that Kentucky's Attorney General appears to be trying to distance himself from the case. Even though most state actions are normally taken by the AGs office, in this case, the lawsuit was filed by the state's Secretary of Justice and Public Safety (there's some question if it's legal for this person to bring the suit). Either way, the AG's name was on the case, but he's now specifically asked to have his name removed from the case. That seems like quite a statement. When even the Attorney General of the state wants nothing to do with the lawsuit, perhaps it's time for the state to admit it overstepped some legal bounds.

Filed Under: domain names, gambling, governor, kentucky, online gambling

EFF, ACLU Ask Court To Strike Down Kentucky's Domain Name Seizure

from the good-for-them dept

You may recall that a judge recently allowed Kentucky's governor to seize a bunch of domain names that were related to gambling -- even if neither the owners nor the servers were based in Kentucky -- setting a terrible precedent. That's why it's good to see the EFF, the ACLU and the Center for Democracy and Technology (CDT) team up yet again to ask an appeals court to overturn this decision. Hopefully the appeals court recognizes how truly awful the original decision was, and notes how it seems to violate multiple clauses of the Constitution.

Filed Under: domain names, gambling, governor, kentucky, online gambling
Companies: aclu, cdt, eff

White House Gives Banks One Year To Stop Online Gambling Transactions, Despite Protests

from the pushing-through-bad-rules dept

Despite significant questions from other elected officials about the plan, the White House has, in fact, approved new regulations requiring banks to stop any financial transactions dealing with online gambling. They've given banks one year to figure out a way to deal with it -- which hopefully gives Congress enough time to change the law.

The regulations make little sense for a variety of reasons:

1. It's still not clear why online gambling should be made totally illegal, rather than simply regulated, like in many countries.
2. It makes no sense to put the burden and liability on financial institutions to figure out what transactions involve online gambling.
3. It makes even less sense to dump this on banks right now, especially as many are struggling merely to survive in this financial climate. Adding an extra burden of making them figure out if every transaction involves online gambling seems unnecessary (and perhaps unusual).
4. Congress had asked the White House for more time to explore the impact of these regulations, but the White House used a lobbyist to aggressively push for these regulations to be put in place as quickly as possible.

Congress and the new administration will hopefully take up this issue next year, and remove this unnecessary burden from banks before it was set to go into effect.

Filed Under: enforcement, online gambling

Whitehouse Accused Of Trying To Push Through Anti-Gambling Regulation No One Wants

from the hurry-up-and-regulate dept

Even as some of our elected representatives are trying to re-legalize poker, the White House appears to be trying to shove through the regulations put in place a couple years ago to stop online gambling. The Unlawful Internet Gambling Enforcement Act of 2006 put the responsibility on financial institutions to stop any financial transactions used in online gambling. As we see all too often, it's a situation where the government is putting the liability on a third party to stop an undesirable activity, rather than on those actually involved in the activity. Not surprisingly, financial institutions have been protesting any regulations enforcing this law -- and with the current financial collapse going on, they're pushing back hard on any effort to enforce the law. So, what happens? Apparently, the White House has assigned a former NFL lobbyist working for the White House to try to force the regulations through, apparently putting tremendous pressure to get things moving. Congress is now asking the White House to explain why they're trying to rush this through, just as financial institutions are having so much trouble. It certainly does raise questions. Considering the push to reverse the law in the first place, combined with the protests from financial institutions that it shouldn't be their problem to stop online gambling, why is the White House putting excess pressure to try to make it happen?

Filed Under: gambling, laws, online gambling, regulations, white house

Judge Allows Kentucky To Seize Domain Names

from the bad,-bad-news dept

Last month, we wrote about a judge allowing Kentucky's governor to seize 141 domain names that were somehow associated with gambling sites under a bizarre interpretation of Kentucky law. Pretty much everyone involved admits that this is just Kentucky's governor protecting local gambling establishments who supported him in the election. No one is even hiding the fact that this is purely about protecting the governor's political supporters from any sort of competition.

However, what's scary is in how the seizure is incredibly broad and far-reaching. None of the sites are based in Kentucky. Many of the sites are nothing more than holding pages, rather than actual online casinos. And, the law itself interprets these sites as "illegal gambling devices" which seems like a big stretch. There was some pushback, as people explained to the judge what an incredibly bad precedent this ruling would set -- as it would effectively allow any local law to be used to take possession of any website.

Apparently, the judge doesn't care. Late last week, the judge upheld the original ruling, giving one small out to the various sites. If they implement filters that block access to any IP address in Kentucky, they can keep their domain names. That's backwards. It shouldn't be the responsibility of a website that is just online to use geocoding techniques to comply with every single local law. If that were the case, the internet would ground to a halt, as any website would face so many different liabilities from so many different jurisdictions to make it impossible to comply -- and in each lack of compliance, face a potential seizure of the domain name. This is a bad ruling by any stretch of the imagination, made even more bizarre by the judge's unilateral ruling before a hearing was even held. The whole thing sounds quite questionable, and hopefully will be dumped on appeal.

Filed Under: domain names, gambling, governor, kentucky, online gambling