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Are You At Risk?

1 April 1998

RGT gets asked the question often by players if they're at risk of being prosecuted if they are patronizing internet gambling sites, particularly those who are US citizens. Well, we've come across a good answer in the new version of the Internet Gambling Report II which recently hit the streets. Thanks to Editor Tony Cabot and contributor, Kevin Doty, both with the Las Vegas law firm of Lionel, Sawyer and Collins, we try to shed some light on the subject for you.

Policing Home Users

While Internet operators are likely to seek safe haven on Caribbean islands, its United States players would have no such luxury. The casual gambler's risk, however, does not come from current federal law and potential amendments to federal law. Section 1084, as currently written, could not be used as a tool to prosecute "casual" gamblers who participate in games over the Internet. The legislative history indicates that the Act was not meant for mere social bettors, but aimed at "persons engaged in the business of betting or wagering."

Given the legislative history of Section 1084, and the economic and evidentiary burdens involved, it is unlikely that federal prosecutors could now successfully prosecute home users that gamble on the Internet. Under the Kyl Bill, however, the home user would lose the exemption. Anyone betting over the Internet would violate federal law.

Even if state or federal law applied to home users, law enforcement officials still would have enforcement problems. The most significant is obtaining proof of the crime. Illegal gambling historically has been a very difficult crime to police. Unlike most crimes, gambling rarely produces a victim. If the law prohibits a home user from gambling, a home user will rarely feel such remorse over his activity that he will confess his crime and surrender to police.

Attempting to gather evidence from third parties is difficult with traditional illegal gambling and even more difficult with Internet gambling. When police learn of a traditional illegal gambling operation, they can conduct covert surveillance of the operation and have operatives gamble there. When they have sufficient evidence, they can physically raid the location.

With Internet gambling, the operators are outside police jurisdiction and operate openly. Unlike traditional illegal casinos, Internet casinos exist in cyberspace. There are no buildings or equipment within the police department's physical jurisdiction. Stakeouts are not possible. There is no way to raid their operations and seize records.

A home user gambles from within the sanctity of his home. While this sanctity is not impermeable, it has substantial constitutional protection, including freedom from unreasonable search and seizure. To gather proof of the home user's crime, law enforcement must principally rely on one of three methods: (1) having a family member or other "insider' report the activity to police and provide proof; (2) setting up a sting operation with a "false" Internet gambling site; or (3) gathering evidence through surreptitious surveillance by tapping the home user's telephone. The first would be a rare occurrence and insufficient to effectively deter Internet gambling. The second might constitute entrapment and create a public opinion backlash.

Surreptitious surveillance through wiretapping also is not a feasible alternative. Wiretaps are authorized by federal law and by state law in 37 states. Law enforcement must follow the procedures set forth by federal law before intercepting a wire communication. The wiretap act was amended in 1986 by the Electronics Communication Privacy Act to include interception of "electronic communications." This requires the government to follow the same procedures to tap electronic communications as a telephone conversation. Under federal mandate, state laws governing wiretaps must be at least as restrictive as the federal requirements, but can be more restrictive. Law enforcement can obtain wiretaps only for "serious" crimes such as murder, kidnapping, gambling, terrorism, bribery, trafficking in drugs or firearms, racketeering and organized crime.

Despite the inclusion of gambling as a "serious crime," wiretaps are not an effective tool to police Internet gambling. In the United States, police cannot randomly access and review electronic transmissions. Therefore, to intercept the home user's transmissions, the police must obtain a court order. Three major reasons inhibit the use of wiretaps to obtain proof of Internet gambling by home users. The first is that only courts may authorize wiretaps upon a showing of probable cause that a crime is being committed. Thus, before law enforcement can obtain a wiretap order, they must have some reliable evidence that the home user is engaging in illegal gambling. This type of evidence of illegal Internet gambling is difficult to obtain except by wiretap.

The second problem is that obtaining wiretap authorization and implementing a wiretap is expense. The average wiretap costs about $70,000. Law enforcement will find it difficult to justify using finite resources to obtain proof of gambling by an Internet player. Casual gambling simply is not a priority crime.

The third problem is that many gambling sites will begin using data encryption. If this occurs, a wiretap will be useless unless law enforcement has the key necessary to decrypt the communication. The federal government perceives both the change from analog to digital telephone systems and the use of encryption techniques as obstacles to its continued use of wiretaps. Whether the former, digital telephone systems, actually inhibits wiretapping capabilities is a matter of debate. None debate, however, that the use of data encryption, without the police having a key, will render wiretaps useless. To counter these technologies, Congress has proposed two bills, one of which was passed and has become law. That law is known as the "Digital Telephony Bill." It provides in relevant part that the telephone provider must be able to provide police court ordered wiretaps with the "real time" interception of a wire transmission pursuant to a court ordered wiretap. This interception must be without detection and must allow the police to conduct the interception from their own monitoring facility. Moreover, when telephone companies switch from analog to digital technology, they must build into their system the ability to isolate and provide access to the transmission that is the subject of the court order.

The second is legislation proposed by the Clinton administration known as the "Clipper Chip." If passed into law, it would establish a program whose objective is to require the use of cryptographic software or equipment that would incorporate a special back door or trap door mechanism that "will permit the federal government to decrypt communications without the consent when it considers this knowledge or consent of the of the communicating parties when it considers this necessary for law enforcement or intelligence purposes. Unless this bill becomes law, the little advantage gained through the availability of wiretaps to fight Internet gambling will be lost.

Editor's Note: While this may explain the current state of affairs, the proposed Internet Gambling Prohibition Act (Kyl bill) will drastically change this situation. It will criminalize casual bettors with both fines and jail time. If you'd like to make your voice known to your Congressional representatives about this, go here.

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