|The following article was
originally published in Casino
Executive and is presented in Gaming floor with permission of the author.
Professor Rose can be reached at his web site: www.GamblingAndTheLaw.com
America Boldly Outlaws (And Quietly Legalizes) Internet Gambling
Governments around the world are responding in different ways
examples of how lawmakers can proclaim publicly that they are outlawing
betting on the Internet, while they actually are taking steps to make it
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
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
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.
It's 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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