National Level

Proposed Legislative Solutions on the National Level

As discussed above, 18 U.S.C. § 1084, the federal law that Minnesota’s lawsuit was based on, is ambiguous in its application to foreign Internet casinos. [80] In an effort to deal with these ambiguities and to update the law for application to the Internet specifically, both the United States House of Representatives and Senate have introduced differing versions of a bill entitled the Internet Gambling Prohibition Act of 1997 (“IGPA”). [81] Neither statute passed in the 105 th Congress, but it is anticipated that the bills will be reintroduced for further debate in the 106 th Congress. [82] This sub-section will review these two proposed statutes and evaluate their strengths and weaknesses.

  1. The House Version of the IGPA

The House version of the IGPA, if passed, will amend §§ 1081 and 1084 of Title 18 of the United States Code. [83] These proposed changes will enhance states’ abilities to shut down Internet casinos in three ways. First, the definitional portions of these two sections will be updated to include the transmission of bets or wagers via the Internet. Second, a new subsection will be added that specifically states that Congress intends for the law to apply extraterritorially. [84] Third, the House version of the IGPA would give state and local law enforcement agencies the authority to apply for, and to receive, civil injunctions against Internet casinos. [85]

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Although the changes proposed by the House version of the IGPA seem to address the theoretical weaknesses of Minnesota’s argument, [86] the practical problems of enforcement will still remain. The House IGPA provides three means of enforcement — punishment of the interactive gaming provider, punishment of the individual user, and civil injunctions against common carriers and interactive computer service providers. Each one of these enforcement mechanisms has potential flaws serious enough to threaten any real attempts at regulation of interactive gaming.

Amended § 1084 would give the government the authority to punish interactive gaming providers whether or not they are located within the United States. However, prescriptive jurisdiction (the ability to regulate conduct) is wholly separate from enforcement jurisdiction (the ability to punish violations of the regulation). The United States, or one of its political subdivisions acting pursuant to a grant of authority, will be unable to obtain a remedy for a violation of law unless jurisdiction over the violator or some of the violator’s assets is obtained. Simply put, if an interactive gaming provider maintains its entire operation, including all assets, overseas, and the owners themselves remain outside of the reach of the United States, there is very little that can be done to punish violations of amended § 18 U.S.C. 1084. [87]

Perhaps the only remaining possibility in a situation such as that outlined above would be to extradite the owners to face charges in the United States. Under customary international law, a state is not required to extradite someone found within its borders. [88] Thus, extradition is almost always governed by treaty. To further complicate matters, a common provision in extradition treaties is the dual criminality exception. Under this exception, an extradition request will be honored only where the alleged activity is a crime in both the requesting nation and the nation where the defendant is located. [89] Thus, in order for the United States to extradite an individual for violating 18 U.S.C. 1084, the requested nation must have a similar crime on its books. Because of the sums of money potentially involved in the interactive gaming industry, the United States may have a difficult time persuading other nations to ban interactive gaming. [90]

Instead of pursuing the interactive gaming providers, the United States could instead focus its efforts on the individual Internet gamblers. If amended, § 1084 would also provides for the imposition of a fine and/or imprisonment for these individuals. However, today’s technology permits gamblers to disguise their identity and activity in multiple ways. [91] The various ways in which data encryption is used in financial transactions via the Internet will make it difficult, costly, and time consuming for law enforcement agencies to track down individual gamblers. [92]

The third and final avenue of enforcement through amended § 1084 is a civil injunction against either a common carrier or an interactive computer services provider. In this way, law enforcement can prevent an individual from gaining access to interactive gaming by taking away the individual’s ability to access the interactive gaming providers web-site. However, amended §1084 only gives jurisdiction over common carriers and interactive computer service providers that are subject to jurisdiction by the Federal Communications Commission (“FCC”). It is unclear whether or not interactive computer service providers (commonly known as “Internet Service Providers” or “ISPs”) are subject to the FCC’s jurisdiction. The FCC has ruled that it will not assert jurisdiction over what it calls enhanced service providers. There is some indication that ISPs are “enhanced service providers” under the FCC’s regulatory scheme and are therefore not subject to FCC jurisdiction. If that is the case, amended §1084’s purported extension to interactive computer service providers is a nullity, and law enforcement is, in the end, left without a practical remedy.

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  1. The Senate Version of the IGPA

The Senate version of the IGPA also provides a potential means of prohibiting Internet gambling, but does so in a fundamentally different way than the House version. There are three major differences between these two sets of proposed legislation, one a difference in form, and the other two differences in substance.

The first difference in the Senate’s IGPA is one of form, rather than substance. The Senate IGPA, rather than amending § 1084 of Title 18, adds a new section to this title, § 1085. This new section also prohibits Internet gambling, but does so in more explicit terms than its House counterpart. [93]

Of more importance than the formal changes proposed in the Senate’s IGPA are the two substantive changes being proposed. The first of these changes is the retreat from the House’s position regarding extraterritoriality. [94] The Senate version does not declare it to be the “sense” of the Senate that the House version does. [95] It is therefore unclear how the Senate expects IGPA to apply to those casinos that are located overseas.

The second substantive change that the Senate’s proposed IGPA would make is the apparent preemption of state law. Section 1084 currently states that “[n]othing contained in this section shall create immunity from criminal prosecution under any laws of any State.” [96] However, the Senate IGPA does not place any language similar to this in what would be Section 1085. Therefore, one possible reading of the resulting statutory scheme is that, although traditional gambling is still subject to state law under § 1084, Internet gambling is now solely a federal concern over which states do not have regulatory authority. If this is a correct construction of § 1085, then the Senate IGPA will change the long-recognized right of states to regulate the gambling activities that occur within their borders. [97]

The Senate IGPA has at least one major weakness. The bill makes the optimistic assumption that nations will be eager to sign a treaty that will expose their citizens to criminal liability for activity that those nations either passively allow or even actively promote. [98] Nations that legalize Internet gambling certainly cannot be expected to then sign a treaty that would obligate them to extradite law abiding corporate officers to the United States to face criminal charges. [99] In the end, the only nations that the United States is likely to have such agreements with are those countries that decide to outlaw Internet gambling themselves, and these nations would be the most likely to extradite without such agreements. Moreover, it is extremely unlikely that such nations would contain many of the gambling operations the US would like to prosecute.

50 Both the House and the Senate versions of the IGPA will clarify the issue of whether federal gambling laws are intended to apply to Internet gambling. The House version, while making this minimal contribution in furtherance of states’ claims against Internet casinos, still does not solve the perplexing problem of enforcing judgments against foreign casinos. Meanwhile, the Senate version appears to preclude states from having the flexibility to approach Internet gambling in a way that fits a state’s already-established gambling policy. Thus, neither of these avenues provides an adequate solution to the tensions that exist between Internet gambling and gambling under Colorado’s Limited Gaming Act.