The Mouthpiece

By Martin Owens
Contributing Editor

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    Martin Owens

    Unfinished Business: Despite some progress, legal issues still affect Internet betting and bettors

    "Many people know how to win, but not many know how to use their victories."
    Polybius, Greek Historian, ca 100 BC

    Philadelphia, PA (Sports Network) - With American state government finally drifting toward the licensing of Internet gambling, it would seem the industry's troubles will be over soon- but that's not the case. There are still hard choices to be made and legal problems to be overcome.

    Still Outside the Box

    Even if American state governments took advantage of their right under the UIGEA to legalize Internet gaming, there would still be many problem areas, both for Internet gaming operators and for the betting public.

    First, the UIGEA specifically states that it does not overrule PASPA ( the Professional and Amateur Sports Protection Act). This law, dating from 1992, forbids state and tribal authorities from authorizing sports wagering, except for four states which had existing programs and were "grand fathered" in. Nobody knows for sure how much Americans bet on sporting events outside of pari-mutuel horse and dog racing, and the Nevada sports books, but estimates run as high as $200 billion per year. Most of that is not licensed. The professional and college sports leagues oppose legalization on the grounds that gambling might exert a corrupting influence. But this is simply sticking their heads in the sand. The "gray" sports betting (often illegal under the Wire Act, but it depends) is already up and running. That means whatever malign influence it might possess over the purity of sports is already being exerted. It is only when betting is legal and supervised that cheats and subterfuge can be reliably spotted and prevented.. And-surprise, surprise,- this is actually easier to do with online gambling, because the data is already computerized and thus far easier to gather and analyze.

    In any case, the difference between land-based and virtual gaming is increasingly arbitrary and even imaginary. Go to a hotel on the Vegas strip- and you find games and races being piped in from all over the country- all over the world. (Only the Olympics is off limits.) In several establishments you can get a hand held electronic device that lets you send in a bet from anywhere on the hotel grounds. So you can bet electronically from a hot tub at the Palms, and be trusted not to destroy yourself or corrupt American youth. But you can't be trusted to do the same, apparently, from your own living room.

    State legislators are beginning to move toward challenging PASPA and its silly, arbitrary discrimination. People who play on the Internet ought to remember they have the power of the vote, too. Stay current with these efforts and get behind them - we have nothing to lose but some very embarrassing laws.

    The Problem of Access and Internet Neutrality

    If gambling is so thoroughly disapproved of by the powers that be, how did it spread so quickly on the Internet? The answer is, that the Internet is open, designed to be a huge public square rather than a controlled hierarchy. It is also an "end-to-end" or "dumb" network - that is all messages are treated the same and sent the same regardless of content. There is no sorting.

    Why is that important to Internet gambling operators and players? Because if the Internet had not been free and open, Internet gambling would probably never have developed at all. To be sure, today I gaming is a multibillion-dollar business. But back when it started it was not the sort of thing that proper people approve of. But they couldn't prevent it. That's because first, the Internet is too big to practice effective suppression: even repressive governments have found it's damn near impossible to block every possible access route for information.

    And second, the federal telecommunications authorities have forbidden access providers to discriminate against messages or transmissions based on their content. This is known as the "essential facilities doctrine", it requires the party controlling a "bottleneck facility or service" (that is where there is no real alternative) to allow access to its competitors at reasonable rates. This is why companies like MCI were able to compete with AT&T, back when they started developing. So, given the chance to fight and survive, I-gambling turned out to be a winner, whether the powers that be approved or not. But that's not the end of the story. If the Internet does not stay free and open, Internet gambling just might disappear, along with a lot of other things that annoy the people in charge.

    Now many of these network providers also own long-distance transport lines or "pipes". There was a considerable overbuild of these fiber optic trunk lines ( now known as "dark fiber" because they go largely unused. The network providers floated a proposition to separate Internet transmissions based on their speed: high-speed transmissions would be put into the equivalent of an "fast lane".

    From the point of view of Internet gaming however, this is a very bad idea. First, this would tend to give extra leverage to large corporate interests, which are already quite powerful enough. All the creativity and innovation that the Internet stands for would be in trouble - and a great deal of that innovation and creativity is focused on gaming applications. Second, selecting between different kinds of messages will inevitably lead to pressure from the government to exclude certain kinds of messages, and gaming transactions will be high on that list.

    Right now the US government has come out solidly in favor of net neutrality - no discrimination between messages. Internet operators, and especially Internet players, need to make it clear to their elected representatives- , that's the way it ought to stay.

    Sticking up for your liberties is the only way to make sure you keep them.

    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 Nelson Rose,( Mary Ann Liebert Publishers , 2nd ed 2009) ; Associate Editor , Gaming Law Review & Economics; Contributing Editor, TSN. Com Comments and inquiries welcome at to

    Copyright 2010

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