The Mouthpiece

By Martin Owens
Contributing Editor

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    Martin Owens

    State or National Internet Gambling- which is best for you?

    "Life is full of choices, if you have the guts to go for it."
    Henry Rollins

    Philadelphia, PA (Sports Network) - Government licensed Internet gambling is already established in the United States for horse betting (29 states) and state lotteries (five and counting). It's entirely clear that I-gaming is going to expand in this country, into other states and into other games and formats, especially poker. But there is a very important choice yet to be made, one that will deeply affect the individual bettors and players. As citizens and voters, they can, and should, participate in making that decision.

    The essential question is whether or not Internet gambling should be licensed on a national basis, or state-by-state (Indian tribes with gambling and US territories would also participate as state level authorities). Each option has advantages and drawbacks.

    The state option is already upon us. The Unlawful Internet Gambling Enforcement Act of 2006 ( UIGEA) has been rightly condemned as vague and confusing. In fact it is a contradictory law in many respects. For our purposes, the important thing is that this law, which was touted as the measure to kill Internet gambling in the USA, actually nailed open the door to licensing it officially. For all its vagueness, it says one thing very clearly: the individual Americans state governments have the right to license Internet gambling within their respective borders. There are conditions; it must be properly supervised, and special measures taken to keep out "problem gamblers" and the under-aged, but it can be done if the state wants to do it. This is in keeping with the status quo, constitutionally speaking. Because gambling was considered a social nuisance at the time the country was founded, it came within the scope of criminal law, and it is the state governments, not the federal, who have plenary police power under the Constitution. The decision to authorize gambling or not rests with them. A number of states are seriously considering a licensing program for Internet gambling-poker being the favorite. Conventional wisdom may say that gambling is a social evil, but conventional wisdom doesn't write checks, and state governments continue to need revenue in a very bad economy.

    The Federal option, set forth in a series of bills by Congressman Barney Frank (D-MA) and associates, would allow not just poker, but all Internet gambling that is not forbidden by other laws. What about anti-gambling states such as Utah and Hawaii? Under the Frank scheme, state governments would have 90 days to "opt out" of the Federal program. But - here's where it gets interesting - so would the Indian gaming tribes AND the major sports leagues such as the NFL and NBA. That last part would seem to be unnecessary, inasmuch as the Professional and Amateur Sports Protection Act (PASPA) already prevents state and tribal authorities from licensing any sports betting that wasn't already on deck in 1992, when the law was passed. And no one has explained what might happen if a particular state government should choose opt out of Internet gambling, but the gaming tribes located in that state want to opt in.

    Nevertheless, the large Internet gambling operators such as Party Gaming would like to have Internet gambling put under one set of laws. America's state gambling laws are a mess, and many have not been updated in decades. But no reform was attempted, state or federal. What we saw instead was a parade of prosecutorial showboating, drive-by administrative muggings in such matters as the Carruthers arrest, the confiscation and blocking attempts by state officials in Minnesota and Kentucky, and the "settlements" strong-armed out of companies such as Neteller and Google. The big operators operate in a global context. For many of them, the risk of being hurt by some politically ambitious interpretation of a hundred year old statute doesn't justify America's potential profit. If they can't get a clear statement of the law, they'd at least like a safe conduct pass

    Of course the state governments generally don't like the Federal licensing scheme. As things stand right now, they can license all the Internet gambling they like, and not have to share the tax revenue with Washington. And there is a practical problem as well. State legislatures tend to be small bodies. California has a grand total of 120, Assembly and Senate together. Smaller bodies tend to be more responsive to the will of the people. The U.S. Congress, by comparison has 435 Representatives and 100 Senators. A majority is much harder to assemble, and much easier to block. Conservative districts applaud when their lawmakers condemn Wicked Gambling. But there is no counterbalancing pro-gambling voter bloc on the other side.

    In plain English, this could take a while.

    The quickest path to spreading Internet gambling in the United States is to do it at the state level, and then allow the states to authorize it between themselves, as they have already done with Simulcast race horse betting, and with state lottery programs like Powerball and Mega-millions. They already have the power to do so, under both the UIGEA and the notorious Wire Wager Act. But in order for that to happen, one thing has to change. The people who want Internet gambling have to make their voices heard. Tell your state lawmakers what you want. Remind them that a) this is an untapped source of revenue, and b) the money is already flowing. The UIGEA did very little to shut down Internet gambling, and any operator who wants to can access the American market practically it will, even today. But more important than that - ask them what business they have supervising the way you spend your time and money? By the look of things, it's our public servants who could use more supervision.

    Mr. Owens is a California attorney specializing in the law of Internet and interactive gaming and related issues, serving clients worldwide since 1998. He co-authored INTERNET GAMING LAW with Professor Nelson Rose, America's senior authority on gambling law (Mary Ann Liebert Publishers 2005, second edition just out, 2009), as well numerous other articles. He is an Associate Editor for "Gaming Law Review and Economics" magazine. Comments and inquiries welcome at to

    Copyright 2009

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