Lobbyists fight for right of internet gambling to exist

Lobbyists from all sides of the equation have been flocking to Washington in an effort to debate the pros and cons of online gambling.  For the industry itself, a "poker players alliance" has raised the ante through its own lobbying efforts.

The New York Times

"...The odds of a bill's becoming law this year appear long. Beyond that, nearly everyone agrees that online betting may be unstoppable because of the reach of the Internet and the difficulty in regulating its activity.

"...Proponents of Internet gambling argue that the Congressional trend goes against the growing tide of international wagering. As many as 80 countries allow it in some form.

"The most prominent model is Britain, which through revisions of its gambling laws is about to devise a tax-and-regulatory structure that it hopes will entice offshore gambling companies to locate there..."

Gambling opponents are pushing for bills to strengthen enforcement. In the House, proponents of a crackdown merged two bills. Representative John Boehner, the Ohio Republican who is majority leader, said last week that the measure would be voted on this summer as part of what the Republicans call their American Values Agenda.

The odds that a bill will become law this year appear long. Beyond that, nearly everyone agrees that online betting may be unstoppable because of the Internet's reach and the difficulty in regulating its activity.

David Stewart, an analyst and a lawyer who produced a study of online gambling for the American Gaming Association, a client of his firm, said: "Money, like water, will find its way. And I really think that applies to this. The money will find a way to get to the offshore sites."

Proponents of Internet gambling argue that the U.S. congressional trend goes against the growing tide of international wagering. As many as 80 countries allow it in some form.

The most prominent model is Britain. Through revisions of its gambling laws, it is about to devise a tax-and-regulatory structure that it hopes will entice offshore gambling companies to locate there. Britain is sponsoring a fall symposium on instituting such changes.

Other countries are watching rulings of the World Trade Organization, where tiny Antigua, with its offshore casinos, continues to press the trade body to find that the United States is violating trade agreements by trying to block access to online gambling.

"Americans are already gaming in large numbers because it's entertainment," said Mike McComb, a spokesman for Betmaker.com, based in Costa Rica. "It's an extension of entertainment. In England, what they've found is that it's just something that needs to be regulated to protect consumers. And it's a great source of revenue."

In the United States, the fight is set to resume when Congress returns from its Fourth of July recess. The House proposal would make it illegal to use a banking instrument like a check or credit card to settle Internet wagers, and it would penalize institutions that act as intermediaries channeling money between the offshore gambling enterprises and American bettors.

The measure would also update the Wire Act of 1961 to prohibit Internet gambling specifically.

The Poker Players Alliance and others that would be affected by a ban point to big-money interests like horse racing that are not covered under the proposal. The bill, said Michael Bolcerek, an amateur player who is president of the alliance, is "picking winners and losers."

But the real threat to online gambling may not be in Washington DC but rather Washington State, which early last month was not only the first state to outlaw internet gambling, but also made the activity a Class C felony, which carries with it the same punishment handed down to sexual predators and repeat drunk driving offenders.

A report in the Seattle Post Intelligencer questions whether the new law can succeed or not.

"(But) some First Amendment experts say it might be too broad and could leave people who own or operate Web sites risking prosecution for posting links to online casinos or even writing about Internet gambling.

"Critics say the state must have a strong reason and a very specific law to limit free speech -- even in cyberspace."

Quoting Michael Overing, a Los Angeles lawyer who specializes in the First Amendment, providing a hypertext link does not seem to aid and abet gambling as the State proclaims.

"Perhaps the law is overboard in that respect," Overing told the paper.  "The basic rule is that there's no liability for placing a link on a web site.  Traditionally, there is great deference paid toward speech."

In the line of fire is one Todd Boute, perhaps the most prominent Washington State resident running an online gambling portal today.

Boute's Integrity Casino Guide website has become the symbol of everything that is wrong with Washington State's new law.

Rick Day, director of the Washington State Gambling Commission, previously implied harsh penalties against Mr. Boute, which forced the website owner to take down his popular enterprise.  It is not confirmed whether Mr. Boute had been operating as a "casino affiliate", which is defined as receiving a percentage of profit from players losses.  Some argue that can be construed as a "partnership" arrangement.

David Skover, a professor of constitutional law at Seattle University, told the  Seattle Post Intelligencer he thinks the new law is valid because linking to a gambling site can be interpreted as a form of advertising.

"There is neither federal nor state constitutional protection for advertising for an illegal activity," he said.

It is further pointed out that the state's gambling laws don't prohibit newspapers or other news media outlets from reporting on, or even linking to, illegal gambling sites but do prohibit advertising or otherwise promoting it, according to the Attorney General's Office.

That provision puzzles University of Washington law professor Stewart Jay, who questions how ordinary citizens can be prosecuted for transmitting or receiving gambling information, as the law words it, while newspapers and television stations are exempt. "If the P-I puts it on the Internet, it's legal. If Joe Blow puts it on the Internet, it's illegal," he said. "It's a very crude distinction that's being made here. When you discriminate between forms of speech and providers, the government has to provide a compelling reason."

Jay said he thinks that part of the law is "very problematic" and could easily be challenged.

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Gambling911.com News Wire

Originally published July 5, 2006 11:53 pm EDT