From gambling in the city of lights to gambling on the internet in your PJs at home, Americans love to wager their hard earned dollars on a variety of games. Despite this fact, the U.S. Congress decided to place a ban on online gambling. [1] As a result, the United States went in front of the World Trade Organization (WTO) after Antigua complained of unfair commerce practices when it was prevented from engaging in transactions with U.S. consumers.[2] The WTO sided with Antigua, finding that the U.S. did in fact violate its trade obligations to the world community, and the U.S. may now be face billions of dollars in damages.[3] Even in light of this finding, the U.S. has passed the Unlawful Internet Gambling Act of 2006, which effectively criminalizes funding online gambling accounts. [4] In the face of strong opposition, will the U.S. back down on its ban and should they?
Antigua and Barbuda filed a complaint with the WTO in 2003 and effectively argued that three U.S. laws are keeping their companies from reaching American online gamblers: The Wire Act, the Travel Act and the Illegal Gaming Business Act. [5] The main complaint is that the U.S. has violated its treaty obligations by discriminating – it has excluded Antiguan online operators while allowing domestic casinos to continue to operate. [6] While one might expect the Bush administration to stop in its tracks and just allow foreign online gambling operators to reach U.S. consumers, instead the U.S. simply “withdrew the sizeable gambling industry form its free trade commitments.” [7] The WTO was not pleased, and may now seek compensation for this decision in the form of almost $100 Billion dollars. [8]
Despite the problems its facing with the Wire Act, Travel Act and Illegal Gaming Business Act, the U.S. has passed yet another law aimed at eliminating online gambling but this one appears to aim at both domestic and foreign entities: The Unlawful Online Gambling Act of 2006. [9] The Act was justified by Congress through this statement of purpose: “Internet gambling is a growing cause of debt collection problems for insured depository institutions and the consumer credit industry.” [10] It appears as though Congress has not targeted the consumer (that is, the online gambler) in this Act.[11] Instead, it declares that “[n]o person engaged in the business of betting or wagering may knowing accept, in connection with the participation of another person in unlawful Internet gambling—(1) credit…(2) an electronic fund transfer…(3) any check, draft, or similar instrument…” and so on, covering the bases of every form of currency with which someone might fund their online gambling account. [12] The language of this statute is targeted at credit and lending institutions, but it also effectively cutoff the pipeline of funds which ultimately affects online gamblers.[13] There is a debate over whether the act of gambling online is a crime for the consumer [14], though intent is fairly clear – powers in the U.S. government desire an end to online gambling. [15] Unfortunately there do not appear to be any cases to date interpreting the Unlawful Online Gambling Act of 2006, which would assist in the deciphering its true meaning.
Assuming that online gambling is illegal for players, or that it will be made illegal in the future, it is important to look at the policy behind that decision and decide whether it is actually a wise move on the part of Congress. As stated above, one of the major reasons Congress gave for the Unlawful Internet Gambling Act of 2006 is that it harms the economy.[16] However, not all agree that online gambling is the root of all evil in this respect. An opponent to online gambling writes that “[o]nline gambling is being seen as pushing up consumer debts and that’s not good for the economy. Figures from the government have revealed that the amount of money spent on gambling shows a perturbing sharp increase.” [17] In response to this article, it has been noted that the logic in these statements is flawed.[18] A poker blog took this argument head on: “Nice way to take two unrelated facts and come to a completely unrelated conclusion. Consumer debt is not good for the economy. True. The money wagered on gambling is sharply increasing with both the rise of online sites as well as B&M casinos sprouting up all over the place. True. Online gambling has caused an increase in consumer debt. False.” [19] It is not altogether clear that online poker really does have a detrimental affect on the economy, making this argument seemingly weak until compelling evidence is given…but Congress has not yet made such evidence public.
When faced with legislation such as the Unlawful Internet Gambling Act of 2006, an Act that was tacked on to another unrelated bill (The Safe Port Act) and was seemingly snuck through in the eleventh hour [20], one must wonder what the true motivations behind the Act are. While Congress attempts to convince the American public that it was for the greater good – that online gambling debt is a source of debt collection problems and the like – one has to think a deeper force may be at play. Was it the desire to legislate morality and destroy something that (in its view) tears at the fabric of society? Perhaps. In this author’s opinion, this kind of legislation is inappropriate and misguided – do not attack entertainment. Assuming the possibility of addiction played into Congress’s decision there will always be those who get addicted, no matter what the activity is. Instead of criminalizing these actions, treat this addiction as a medical problem and help people in that way. In short, this should not be a legal issue, but it has been made into one by legislators at Capital Hill…and now the world is fighting back. Chock it up to a learning experience, Congress, and withdraw from this fight – you're wagering $100 Billion American tax dollars on it.
Sources
[1] Associated Press (AP), World Trade Organization to Review U.S. Internet Gambling Bans, Jul. 20, 2006, available at http://www.foxnews.com/story/0,2933,204613,00.html (last visited Oct. 18, 2007)
[2] Bloomberg News, WTO backs Angigua, rules U.S. Online Gaming Ban is Illegal, Nov. 10, 2004,available at http://www.lasvegassun.com/sunbin/stories/text/2004/nov/10/517802938.html.
[3] AP, supra note 1.
[4] 31 U.S.C. §§ 5361-5367 (2007).
[5] AP, supra note 1.
[6] Clement James, US Faces US$100 Billion Fine for Web Gaming Ban, Oct. 12, 2007,http://www.itnews.com.au/News/62937,us-faces-us100-billion-fine-for-web-gaming-ban.aspx (last visited Oct. 18, 2007).
[7] Id.
[8] Id.
[9] 31 U.S.C. §§ 5361-5367 (2007).
[10] Id.
[11] See id.
[12] Id.
[13] See id.
[14] Steve Badger, Is Online Poker Legal? Online Poker and United States Law,http://www.playwinningpoker.com/online/poker/legal/ (last visited Oct. 15, 2007).
[15] Jennifer W. Chiang, Don't Bet on It: How Complying with Federal Internet Gambling Law is not Enough, 4 SHIDLER J.L. COM. & TECH. 2 (2007) (discussing how the U.S. Department of Justice has made clear that it considers Internet gambling to be a violation of federal law).
[16] 31 U.S.C. §§ 5361 (2007).
[17] International Association of Professional Debt Arbitrators, Online Gambling Causing Credit Card Debt, Feb. 23, 2006, http://www.iapda.org/articles/2006_02_23_archive.html#114071743703814594(last visited Oct. 18, 2007).
[18] Bill's Poker Blog, Online Gambling Causing Credit Card Debt, Feb. 28, 2006,http://www.billrini.com/2006/02/28/online-gambling-causing-credit-card-debt/ (last visited Oct. 18, 2007).
[19] Id.
[20] I. Nelson Rose, Safe Port Act – Unlawful Internet Gambling Enforcement Act Analysis,http://www.playwinningpoker.com/online/poker/legal/internet/ (last visited Oct. 18, 2007).