Will Granny Go To Jail?
Charles Carreon
Despite all my skepticism, it happened:
[quote="Frank Ahrens“]
U.S. outlaws Internet gambling
Saturday, October 14, 2006 - 12:00 AM
WASHINGTON — Placing bets over the Internet was effectively criminalized by the federal government Friday, as lawmakers work to eliminate an activity pursued by up to 23 million Americans who wagered an estimated $6 billion last year.
Attached to a port-security bill signed by President Bush on Friday was the Unlawful Internet Gambling Enforcement Act, which prohibits online gamblers from using credit cards, checks and electronic-fund transfers to place and settle bets.
The law leaves enforcement up to banks and other U.S. financial institutions, some of which fought the legislation.
The bill's sponsor, Rep. Robert Goodlatte, R-Va., said he opposes all gambling, citing its ”ill effects on society," but particularly Internet gambling, which led him to draft the legislation. Senate Majority Leader Bill Frist, R-Tenn., attached Goodlatte's bill to the port-security bill to ensure its passage and Bush's signature.
While proponents decried the effects of gambling on society, opponents pointed to the popularity of Internet gambling and compared the new law to the Prohibition amendment of 1919, which led to the rise of illegal speakeasies and organized crime.
The new law is potentially crippling to a worldwide industry whose biggest customer has been the United States. Several online wagering businesses already have pulled out of the United States and some have collapsed, including publicly traded companies in Britain, where online betting is legal and regulated.
In the United States, the Justice Department and federal courts are unable to agree on whether Internet gambling is illegal.
The Justice Department maintains that the 1961 Wire Act, written to prohibit betting transactions via telephone, applies to the Internet.
Courts have disagreed, saying betting on sports teams over the Internet is illegal, but wagering on casino games, such as poker, is not. And though the Justice Department thinks off-track and online wagering on horse races is illegal, it has never prosecuted a case.
Internet gamblers typically set up accounts at offshore businesses, and place and settle bets using credit cards and checks that are converted in electronic currency, much as eBay users buy and sell items using PayPal.
Instead of targeting specific games, the new law seeks to block the financial transactions that fuel them.
The new law is shaking up the worldwide Internet gambling industry, with some comparing it to Congress banning the sale of Toyotas, BMWs and all other foreign vehicles in this country. Britain's Sportingbet, for example, said 62 percent of winning bets on its site came from the United States.
A major offshore e-currency company, FirePay of Britain, said it no longer will accept payments from U.S. customers. Sportingbet sold its U.S. online operations to an Antiguan company Friday for $1, five weeks after former company chairman Peter Dicks was arrested in New York when Customs officials found he was wanted in Louisiana on charges of illegal online gambling.
New York Gov. George Pataki, a Republican, refused to extradite Dicks to Louisiana and a federal judge cleared his return to England.
BetOnSports said Friday it would pull out of the United States and repay balances to customers here.
Copyright © 2006 The Seattle Times Company[/quote]
Here is what I wrote back in 2003 on this topic:
If the DOJ has its way, expanding the scope of the Wire Act to make unlawful every Internet wager originating in a state where gambling itself is unlawful, and expanding its jurisdiction to include the entire world, including established gambling havens, 50% of the world's Internet gambling traffic will become explicitly unlawful. Visa's claim that the technical and legal obstacles to enforcement are too “burdensome” will be heard no more, and obstacles to prosecuting this type of crime will fall, as technical solutions to implement the gambling prohibition are put into place. The DOJ already proposes immunity from prosecution for ISPs, and a “take down procedure” similar to that used in the DMCA that will give lawmen the power to shut down gambling sites just like copyright claimants can shut down sites that use infringing content. ISPs will have to cooperate to assist investigators and shut down sites that serve illegal gambling content in order to keep immunity. As technical problems are resolved, enforcement will slide into place like a greased mechanism.
As a practical matter, once the initial location of a wager can be found by tapping the ISP data, it will be granny-in-chains time. “Make a bet, go to jail” could become a reality, because like I said about online auction fraud — once it is discovered and prosecuted, conviction is highly probable. Suffice it to say that illegal Internet gambling could in fact be stamped out, because the profile for online gamblers is largely that of a group of people who are highly averse to prosecution — older people living in the Southern USA on a little less money than the rest of the Internet audience. When I said “granny-in-chains,” I meant it. Gamblers will not risk jail, ISPs will pull sites, and the whole shootin'-match will be over.
Whether this will be a good thing or a bad thing will depend on several things, mainly how smart the leaders are in each of the 50 states. Only the State of Nevada has explicitly legalized Internet gambling, and then only for Nevada bettors using online gaming companies licensed by the State. But globalizing the effect of the Wire Act to include all unlawful Internet transactions would not necessarily eliminate Internet gambling entirely. It would not prevent Nevada from offering its purely intrastate Internet gambling system. That was never the purpose of the Wire Act, anyway. The Wire Act preserved gambling regulation to the several States, and made most sports betting illegal even for States. Amending the Wire Act would not prevent states from adapting existing government-regulated gambling such as lottery and video poker games to the Internet. In fact, it would give the States the power to corner the market. Only Nevada, that had a gambling regulatory infrastructure in place already, has taken this path to profitability. So for the moment, the U.S. as a whole, and 49 of the 50 states, are leaking a humongous amount of cash that is primarily flowing to tax-free offshore gambling havens such as Antigua and Costa Rica. With government tax revenues at an all time low, vital services in many state governments being cut for lack of funding, we may be ready for regulation.
Despite all my skepticism, it happened:
[quote="Frank Ahrens“]
U.S. outlaws Internet gambling
Saturday, October 14, 2006 - 12:00 AM
WASHINGTON — Placing bets over the Internet was effectively criminalized by the federal government Friday, as lawmakers work to eliminate an activity pursued by up to 23 million Americans who wagered an estimated $6 billion last year.
Attached to a port-security bill signed by President Bush on Friday was the Unlawful Internet Gambling Enforcement Act, which prohibits online gamblers from using credit cards, checks and electronic-fund transfers to place and settle bets.
The law leaves enforcement up to banks and other U.S. financial institutions, some of which fought the legislation.
The bill's sponsor, Rep. Robert Goodlatte, R-Va., said he opposes all gambling, citing its ”ill effects on society," but particularly Internet gambling, which led him to draft the legislation. Senate Majority Leader Bill Frist, R-Tenn., attached Goodlatte's bill to the port-security bill to ensure its passage and Bush's signature.
While proponents decried the effects of gambling on society, opponents pointed to the popularity of Internet gambling and compared the new law to the Prohibition amendment of 1919, which led to the rise of illegal speakeasies and organized crime.
The new law is potentially crippling to a worldwide industry whose biggest customer has been the United States. Several online wagering businesses already have pulled out of the United States and some have collapsed, including publicly traded companies in Britain, where online betting is legal and regulated.
In the United States, the Justice Department and federal courts are unable to agree on whether Internet gambling is illegal.
The Justice Department maintains that the 1961 Wire Act, written to prohibit betting transactions via telephone, applies to the Internet.
Courts have disagreed, saying betting on sports teams over the Internet is illegal, but wagering on casino games, such as poker, is not. And though the Justice Department thinks off-track and online wagering on horse races is illegal, it has never prosecuted a case.
Internet gamblers typically set up accounts at offshore businesses, and place and settle bets using credit cards and checks that are converted in electronic currency, much as eBay users buy and sell items using PayPal.
Instead of targeting specific games, the new law seeks to block the financial transactions that fuel them.
The new law is shaking up the worldwide Internet gambling industry, with some comparing it to Congress banning the sale of Toyotas, BMWs and all other foreign vehicles in this country. Britain's Sportingbet, for example, said 62 percent of winning bets on its site came from the United States.
A major offshore e-currency company, FirePay of Britain, said it no longer will accept payments from U.S. customers. Sportingbet sold its U.S. online operations to an Antiguan company Friday for $1, five weeks after former company chairman Peter Dicks was arrested in New York when Customs officials found he was wanted in Louisiana on charges of illegal online gambling.
New York Gov. George Pataki, a Republican, refused to extradite Dicks to Louisiana and a federal judge cleared his return to England.
BetOnSports said Friday it would pull out of the United States and repay balances to customers here.
Copyright © 2006 The Seattle Times Company[/quote]
Here is what I wrote back in 2003 on this topic:
If the DOJ has its way, expanding the scope of the Wire Act to make unlawful every Internet wager originating in a state where gambling itself is unlawful, and expanding its jurisdiction to include the entire world, including established gambling havens, 50% of the world's Internet gambling traffic will become explicitly unlawful. Visa's claim that the technical and legal obstacles to enforcement are too “burdensome” will be heard no more, and obstacles to prosecuting this type of crime will fall, as technical solutions to implement the gambling prohibition are put into place. The DOJ already proposes immunity from prosecution for ISPs, and a “take down procedure” similar to that used in the DMCA that will give lawmen the power to shut down gambling sites just like copyright claimants can shut down sites that use infringing content. ISPs will have to cooperate to assist investigators and shut down sites that serve illegal gambling content in order to keep immunity. As technical problems are resolved, enforcement will slide into place like a greased mechanism.
As a practical matter, once the initial location of a wager can be found by tapping the ISP data, it will be granny-in-chains time. “Make a bet, go to jail” could become a reality, because like I said about online auction fraud — once it is discovered and prosecuted, conviction is highly probable. Suffice it to say that illegal Internet gambling could in fact be stamped out, because the profile for online gamblers is largely that of a group of people who are highly averse to prosecution — older people living in the Southern USA on a little less money than the rest of the Internet audience. When I said “granny-in-chains,” I meant it. Gamblers will not risk jail, ISPs will pull sites, and the whole shootin'-match will be over.
Whether this will be a good thing or a bad thing will depend on several things, mainly how smart the leaders are in each of the 50 states. Only the State of Nevada has explicitly legalized Internet gambling, and then only for Nevada bettors using online gaming companies licensed by the State. But globalizing the effect of the Wire Act to include all unlawful Internet transactions would not necessarily eliminate Internet gambling entirely. It would not prevent Nevada from offering its purely intrastate Internet gambling system. That was never the purpose of the Wire Act, anyway. The Wire Act preserved gambling regulation to the several States, and made most sports betting illegal even for States. Amending the Wire Act would not prevent states from adapting existing government-regulated gambling such as lottery and video poker games to the Internet. In fact, it would give the States the power to corner the market. Only Nevada, that had a gambling regulatory infrastructure in place already, has taken this path to profitability. So for the moment, the U.S. as a whole, and 49 of the 50 states, are leaking a humongous amount of cash that is primarily flowing to tax-free offshore gambling havens such as Antigua and Costa Rica. With government tax revenues at an all time low, vital services in many state governments being cut for lack of funding, we may be ready for regulation.