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Gaming Guru
America Boldly Outlaws (and Quietly Legalizes) Internet Gambling
3 May 2000
By I. Nelson Rose
Governments around the world are responding in different ways to the
explosion of gambling on the Internet:
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Some jurisdictions are setting up strict regulatory systems, complete
with licenses, background checks, controls and, of course, taxes. The
Australian states and territories are setting the standards for the
rest of the world.
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Other countries are not as picky. One publicly held corporation told
the U.S. Securities and Exchange Commission that it bought the right
to issue licenses from the government of Grenada. An official from
Grenada has reportedly denied this.
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Some countries are running the games themselves: Liechtenstein has a
lottery open to almost any adult in the world with a modem. Although
proclaiming this is legal, the small duchy had the political smarts to
close its games to its much more powerful neighbors, Switzerland and
Austria.
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Some jurisdictions are passing new laws explicitly prohibiting
Internet gambling. Or so they say.
The federal and state governments of the United States are the best
examples of how lawmakers can proclaim publicly that they are outlawing
betting on the Internet, while they actually are taking steps to make it
legal.
Nevada was the first state to both outlaw and legalize Internet gaming.
In July 1997 Gov. Bob Miller signed SB 318, creating the misdemeanor of
making or accepting a bet over the Internet from a player located in
Nevada. SB 318 is a significant step toward the regulation of the
Internet, because it is the first statute to explicitly make Internet
gambling a crime in a state, even if the operator is not within that
state's territory.
But SB 318 is also important for the exceptions it carves out of its new
prohibitions. Making and accepting bets on the Internet are legal if the
wagers are accepted in Nevada by Nevada-licensed race and sports books
and casinos.
Nevada companies are gearing up to accept bets by computers. But the
State Gaming Control Board is limiting operators to closed-loop systems:
players can bet from their home personal computers ("PCs"), but their
modems will be connecting the players' PCs directly to the operators'
computers. Bettors cannot use this system to jump to a site on the
Internet.
The Board has not issued regulations allowing true Internet gaming. In
fact, it is requiring that the bettor be in Nevada and that the
closed-loop system be able to confirm that no bets are taken from
outside the state.
Nevada is ready to go, to allow its licensees to take bets on the
Internet, as soon as Congress lifts the federal restrictions on
interstate wagers.
Louisiana and Illinois were the next states to act. Although the
Louisiana law is poorly written, they both appear to prohibit all
gambling on the Internet.
The most recent state to act, Michigan, is following Nevada in a big
way. In December 1999 Gov. John Engler signed SB 562 into law. SB 562
looks like it is merely extending parts of the state's criminal law to
the Internet: Computers cannot be used for stalking, making bomb threats
or gambling.
But a careful reading finds that only forms of gambling that are already
illegal are barred from the Internet. Michigan law now clearly allows
its state lottery, racetracks, casinos and bingo halls to accept bets
online.
The most interesting proposal is the Kyl bill, now working its way
through the political maze in Congress. Three years ago, the "Internet
Gambling Prohibition Act," authored by Sen. Jon Kyl (R.-Az), would have
outlawed everything, including online magazines and casino
advertisements.
Its major weakness, besides violating the First Amendment, was that it
would also have made it a federal crime to merely place a bet. The U.S.
Department of Justice, which does not have fond memories of Prohibition,
made it clear that it did not support a law that would require knocking
on bedroom doors to go after $5 bettors. So the Kyl bill had to be
amended.
As this is being written, a much revised Kyl bill has passed the Senate
and is pending in the House. In its present form, it outlaws all
Internet gambling ... except:
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Securities and commodities, as if day-trading was not gambling;
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Closed-loop systems for placing bets on horse and dog races, including
from a home PC in one state to an Off Track Betting operator in
another.
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Pari-mutuel pooling of bets between tracks.
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State lotteries, including multi-state lotteries, so long as the
betting PC is in a facility open to the general public.
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Some forms of Indian gaming.
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Bets made for a fantasy sports league game or contest.
Politicians may talk Prohibition, but the future clearly is partial
legalization.
This article is provided by the Frank Scoblete Network. Melissa A. Kaplan is the network's managing editor. If you would like to use this article on your website, please contact Casino City Press, the exclusive web syndication outlet for the Frank Scoblete Network. To contact Frank, please e-mail him at fscobe@optonline.net.

Professor I. Nelson Rose is an internationally known scholar, public speaker and writer and is recognized as one of the world's leading authorities on gambling law. A 1979 graduate of Harvard Law School, he is a tenured full Professor at Whittier Law School in Costa Mesa, California, where he teaches one of the first law school classes on gaming law. Professor Rose is the author of more than 300 books, articles, book chapters columns. He is best known for his internationally syndicated column, "Gambling and the Law ®," and his landmark 1986 book by the same name. His most recent book is a collection of columns and analysis, co-authored with Bob Loeb, on Blackjack and the Law. A consultant to governments and industry, Professor Rose has testified as an expert witness in administrative, civil and criminal cases in the U.S., Australia and New Zealand, and has acted as a consultant to major law firms, international corporations, licensed casinos, players, Indian tribes, and local, state and national governments, including Arizona, California, Florida, Illinois, Michigan, New Jersey, Texas and the federal governments of Canada and the United States. With the rising interest in gambling throughout the world, Professor Rose has spoken before such diverse groups as the F.B.I., National Conference of State Legislatures, Congress of State Lotteries of Europe, United States Conference of Mayors, and the National Academy of Sciences. He has presented scholarly papers on gambling in Nevada, New Jersey, Puerto Rico, England, Australia, Antigua, Portugal, Italy, Argentina and the Czech Republic. He is the author of Internet Gaming Law (1st & 2nd editions), Blackjack and the Law and Gaming Law: Cases and Materials.
I. Nelson Rose Websites:
www.gamblingandthelaw.com
Books by I. Nelson Rose:
Compulsive Gambling and the Law
> More Books By I. Nelson Rose
|
Professor I. Nelson Rose is an internationally known scholar, public speaker and writer and is recognized as one of the world's leading authorities on gambling law. A 1979 graduate of Harvard Law School, he is a tenured full Professor at Whittier Law School in Costa Mesa, California, where he teaches one of the first law school classes on gaming law. Professor Rose is the author of more than 300 books, articles, book chapters columns. He is best known for his internationally syndicated column, "Gambling and the Law ®," and his landmark 1986 book by the same name. His most recent book is a collection of columns and analysis, co-authored with Bob Loeb, on Blackjack and the Law. A consultant to governments and industry, Professor Rose has testified as an expert witness in administrative, civil and criminal cases in the U.S., Australia and New Zealand, and has acted as a consultant to major law firms, international corporations, licensed casinos, players, Indian tribes, and local, state and national governments, including Arizona, California, Florida, Illinois, Michigan, New Jersey, Texas and the federal governments of Canada and the United States. With the rising interest in gambling throughout the world, Professor Rose has spoken before such diverse groups as the F.B.I., National Conference of State Legislatures, Congress of State Lotteries of Europe, United States Conference of Mayors, and the National Academy of Sciences. He has presented scholarly papers on gambling in Nevada, New Jersey, Puerto Rico, England, Australia, Antigua, Portugal, Italy, Argentina and the Czech Republic. He is the author of Internet Gaming Law (1st & 2nd editions), Blackjack and the Law and Gaming Law: Cases and Materials.
I. Nelson Rose Websites:
www.gamblingandthelaw.com
Books by I. Nelson Rose:
Compulsive Gambling and the Law
> More Books By I. Nelson Rose
|