By Martin Owens
But They're Hell On That Internet Gambling!
The tale of how the DOJ handled two threats to America
Philadelphia, PA (Sports Network) - You don't know Molly Norris, but
she's become the measure of how badly skewed our government's priorities are
these days. Norris is- or rather was- a cartoonist for the Seattle Spectator.
Last April, when the TV cartoon series SOUTH PARK received threats for
depicting the Prophet Mohammed in its show, Norris chimed in with her
suggestion: If everybody in the world drew a Mohammed cartoon, she suggested,
then even the looniest jihadi would realize you can't murder the whole planet,
and the whole business would blow over.
Not so. Even though she later disavowed the idea and apologized. No good.
No less an Al Qaeda figure than Anwar al Awlaki, linked to the Fort Hood
shootings and the Times Square Bomber, among others, pronounced open season
on her, and the death threats haven't stopped. But then she really screwed
up. She went to the government for help. On or about September 15, 2010,
the FBI- that's right, the same FBI that's supposed to arrest and thwart
terrorists and criminals- advised her to change her name and disappear.
It's the same prescription they give for somebody who's turned state's
evidence against the Mob. Only Norris hasn't broken any laws. She's not a
lifelong criminal trying to swap testimony for a lighter sentence. She
spoke out, as she had every right to do. But when the threatened, she was
told, her only recourse was to lose her name and livelihood.
Other laws, same targets
This governmental shoulder shrug was in response to a genuine danger. If
there's one thing we know for a fact, it's that radical Muslims follow
through on their threats to kill people. But never fear! Against other
threats, your Department of Justice ( the FBI's parent organization) is
still on the job.
For the DOJ is keeping up the fight against that even more sinister
menace, Internet gambling! On that selfsame September 15, the Goldwater
Bank of Arizona reached a "settlement" with DOJ- $13 million to atone for
handling deposits made on behalf of PokerStars by an outfit called Allied
Wallet. The legal theory that underpinned the action was, to say the
least, interesting. The move against Goldwater bank was based on its
acceptance of TARP funds from 2008 ( that is, the absolute last bank
bailout before the one after that and the one after that, not to be
confused with the latest, no-foolin'-absolutely-the-last bailout, now
under consideration in a Congress near you).
Why was TARP called into action? Why didn't the DOJ use the Unlawful
Internet Gambling Enforcement Act? Well... because it can't, actually.
UIGEA has no working definition of what - unlawful Internet Gambling" is,
though it lists one or two things that aren't. And when it came time for
the Treasury Department to write them, it refused. That's right, refused in
writing, because American gambling law is such a tangle of competing
statutes and policies that as a practical matter, it's next to impossible
to tell which Internet gambling is illegal and which isn't. Certainly this
is the case for banks, which are nevertheless supposed to set up
"procedures" to prevent these forbidden transactions from crossing their
thresholds. Again, a virtual impossibility, especially in the area of ACH
check processing, which is what Allied Wallet was up to.
So , even though Goldwater Bank probably couldn't have been convicted of
doing anything wrong under the UIGEA ( which only provides penalties for
the actual gambling operators anyway), the money laundering prevention
section of the TARP Act was brought into play against the crooked fortune
that had been amassed. All $732,000 of it ( When you consider that Internet
gambling worldwide is worth about $30 billion this year, you can understand
what a terrific blow has been struck here).
But just to make sure, the farce took its now-familiar path: the threat of
prosecution was used to squeeze a "settlement" of about $13 million; the
exact formula for deciding this amount, 18 times the value of the alleged
offense, was not disclosed. In addition, Goldwater had to admit wrongdoing
and promise not to do it again, whatever it was. Oh, and set up better
"procedures" As a practical matter it is quite possible that Goldwater
could have gone to court and beaten the rap. But as a cold business
proposition, the only sensible thing to do was pay up and move on.
Through the Looking Glass, Darkly
So boys and girls, what have we learned from these two events, done the
same day and under the same roof?
First, if you're the wise guys running offshore I-gaming sites: relax. So
long as the only Disney parks you visit are the ones in China and France,
you personally are safe. Nor is your business model in any danger: the game
of whack- a- mole always favors the moles. For every payment provider that
DOJ clips, two more will step up to take the business. In an industry worth
$30 billion and climbing ( mobile gambling, that is via cell phones, is
projected to add up to another $12 billion all by itself), somebody will be
found to move the money.
Nor should you worry about competition. The opportunity to legalize and
license I-gaming at both the state and the national level has been
presented annually to the Congress and the state legislatures for about
four years now. Even with powerful and timely help in the form of
opportunity, need and wide popular support, they continue to hang fire
coast to coast, grimly determined, it would seem, not to miss the chance
to miss their chance.
If you are a banker or payment processor, best brush up on those
"Procedures". They are the best protection you can have in a very uncertain
arena. And since the actual Internet gambling operations are out of US
government reach, the money men are the only "trophy heads" left in this
And at all levels of the I-gaming world: remember, Obama or no Obama, the
DOJ is still out there watching. It's their job to protect Americans from
dreadful evils like Internet gambling, that "colossal criminal enterprise"
as the FBI has called it. Whether the threat is real or not. Whether the
citizens want the protection or not. And DOJ takes this responsibility
seriously. If one law doesn't do the job, they won't stop- another law will
be tried, and another and another. This is an important goal, and no effort
will be spared.
But if you are an honest citizen, under genuine threat of death or worse
for exercising your First Amendment rights, it seems the most help you can
expect from Uncle Sam is a bus ticket and a fake mustache. Maybe an
invitation to visit the Ground Zero Mosque someday.
Welcome to post-Constitutional America.
Mr. Owens is a California attorney specializing in the law of Internet and
interactive gaming since 1998. Co-author of INTERNET GAMING LAW with
Professor I. Nelson Rose,( Mary Ann Liebert Publishers , 2nd ed 2009) ;
Editor , Gaming Law Review & Economics; Contributing Editor, TSN. Com
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