Internet Gambling

A Solution That Will Reconcile Internet Gambling With The Colorado Limited Gaming Act

Each one of the solutions presented in Part II — industry self-regulation, litigation, and the proposed federal legislation — has various flaws that make it undesirable by itself. However, this article argues that, although each solution is imperfect, a combination of these solutions will provide states with the most effective means currently available for controlling Internet gambling in a manner that is consistent with the states’ policy goals. [100] The following is a description of a plan that this comment argues will best serve the states in any effort to regulate Internet gambling in a manner consistent with the policy goals expressed by their gambling laws.

  1. Step One: Litigate, Litigate, Litigate

Before they do anything else, the states must first be willing to go to court against any and all of the currently unregulated Internet casinos. To this end, the states’ Attorney Generals should follow the lead of Minnesota and use the litigation technique developed by Minnesota in the State ex rel Humphrey case.  As mentioned earlier, the principal drawback to filing these cases is doubt that courts will exercise personal jurisdiction over the defendants as well as the great likelihood that any judgment obtained will be largely unenforceable.

Despite these drawbacks, however, the cases should still be filed. Cases against Internet casinos will serve several useful functions. First, the public will be put on notice that the State does not consider Internet casinos, in their current form, to be legal. If Internet gambling turns out to be an issue that large numbers of citizens care about, the cases will help to crystallize public opinion on the issue. Second, such cases will encourage Internet casinos to think twice before allowing citizens in litigious states to gamble via their web-sites. Finally, consistent and successful litigation against Internet casinos will encourage both the casinos, and the authorities of the jurisdictions where they are located, to push for solutions (such as the one proposed here) that are beneficial to all parties involved.

  1. Step Two: Encourage National Legislation

The second, and somewhat simultaneous, step that the states should take is to lobby Congress for a response to Internet gambling on the national level. No matter what else is done, federal law needs to be clarified so that the United States’ gambling laws cover Internet gambling, and yet retain the policy flexibility currently enjoyed by states.Neither of the proposed versions of the federal IGPA discussed previously properly meets this goal. The Senate version explicitly covers Internet gambling, but appears to pre-empt any state flexibility in dealing with Internet gambling. The House version retains the flexibility necessary for each state to craft its own Internet gambling policies but is itself of uncertain enforceability. The best legislation would then combine the flexibility provided by the House version with the explicit language of the Senate version.

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A more explicitly worded federal Internet gambling statute would still bring with it all of the enforcement problems discussed earlier. [105] Nevertheless, the enactment of such a statute is still advisable so that any cases brought by the states’ Attorney Generals have a stronger statutory basis.

Giving states solid statutory authority for bringing cases against Internet casinos increases the incentive for casinos to negotiate regulatory provisions to which the states can hold the casinos accountable.

  1. Step Three: Press for International Agreements

In one way or another, the United States will have to rely on international agreements as a means to bind foreign Internet casinos. [106] However, the United States must not rely on foreign states’ sense of altruism to regulate a potentially huge source of revenue. Thus, to bind Internet casinos, any international agreements negotiated by the United States need to be ones that also appeal to the various foreign jurisdictions that Internet casinos call home.

What kind of an international agreement would preserve the interests of the Internet casinos, state regulatory flexibility, and the interests of the relevant foreign jurisdictions? For the most part it would be similar to the IGC Code of Conduct discussed earlier. The principal problem with the Code was not necessarily the content of its ten points, but that it could not be formally enforced.

Most important to states’ interests, an internationally binding version of the Code would permit states such as Colorado or Minnesota legitimately to apply the policy goals underlying the Limited Gaming Act to Internet casinos. The Code provides that “all members shall use best efforts to obtain any binding legislative or judicial determinations which prohibit or limit operation in another jurisdiction and shall abide by those limitations to the greatest extent technically feasible.” This language, therefore, would require members to abide by the policy objectives of the gamblers ‘ home jurisdictions.

In order to overcome the enforcement problems with the Code as it now exists, the following two provisions would go a long way in making an international agreement a viable solution: first, a provision that signatory nations require any Internet casino operating within its jurisdiction to abide by the agreement based on Code as a condition for the casino’s license;  second, the establishment of an international board to administer the agreement.