Daily Archives: January 23, 2012

Obama Administration Ruling Allows Online Gambling

Casino Watch Focus reported that several states have been attempting to legalize online gambling in their own jurisdiction.  Even though many states were attempting to legalize such intrastate gambling, it was generally understood that a long legal battle would develop.  The current online gambling landscape is largely governed by the Unlawful Internet Gambling Enforcement Act (UGEIA).  It regulates interstate and intrastate gambling at the financial level.  Given the almost impossible nature of regulating the internet, UGEIA looked to enforce the issue by going after the financial institutions where the gambling money would trade hands.

The basis for UGEIA is the 1961 Wire Act, which prohibits gambling over telecommunications systems.  This act effectively prohibited almost all online gambling, on both an inter and intrastate level.  Now, The Christian Science Monitor is explaining that a common Justice Department ruling on the Wire Act has been reversed by the Obama Administration, allowing for at least intrastate gambling and possibly even gambling between states:

Until now, the Justice Department had held that the Wire Act makes even intrastate online gambling illegal. Its new interpretation, written by Justice Department attorneys in response to requests for clarification from New York and Illinois, concluded that the law instead specifically outlaws such wagering on sports, not nonsports gambling within states or even across state borders.

“The ordinary meaning of the phrase ‘sporting event or contest’ does not encompass lotteries,” wrote Assistant Attorney General Virginia Seitz. “Accordingly, we conclude that the proposed lotteries are not within the prohibitions of the Wire Act.”

“The United States Department of Justice has given the online gaming community a big, big present,” writes I. Nelson Rose, a Whittier Law School professor who blogs at gamblingandthelaw.com. “My bet is that … Congress will continue to do nothing, while Internet gambling explodes across the nation, made legal under state laws.”

While the Justice Department ruling does not specifically address interstate gambling, legal experts say it’s likely to be allowed, at least between states that specifically regulate online gambling.

There are a multitude of concerns with the actions of the Obama Administration’s new ruling.  In an Op-Ed piece by the Christian Science Monitor, they argue that such actions amount to a tax on the poor and that the regulation issues will be too severe to offer anything other than potential harms to children and families:

[B]ig doubts remain over whether states can indeed restrain such digital games of chance to residents while also keeping children from playing them. State lotteries, for examples, have a poor record of preventing retailers from selling tickets to minors.

And even if states can outsmart tech-savvy teens or out-of-state gamblers, once enough states jump into Internet gambling they will likely be able to work together and create a national scheme for such activity. That would violate the spirit if not the letter of a 2006 federal law banning such interstate activity.

Most of all, bringing Internet gambling to America would hurt the poor, who are most affected when people lose money in government-approved games of chance such as state lotteries or casinos – not to mention the way it would reinforce a belief that one’s future depends on “luck” instead of individual merit.

In effect, President Obama and his appointed Justice officials have bowed to political pressure from states that seek a new source of revenue in Internet gambling rather than taking the difficult decisions to raise taxes or cut spending.

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