Keith Miller
10-5-03
QMCS 425
ONLINE GAMBLING LAW
Introduction
At one time, few states permitted gambling in any form. Even by 1976, only thirteen states had lotteries, two states had approved off-track wagering, and there were no casinos outside Nevada. Today 37 states have lotteries, 28 states have casinos, and 22 states allow off-track betting. This has given rise to the Internet and the access it gives Americans to gambling facilities.
Jurisdictional Challenges
When dealing with Internet transactions, which encompass online gambling, jurisdictional issues become complicated. What can a state government do if residents of the state place bets online? After all, states have no constitutional authority to regulate activities that occur in other states. The problem becomes even more complicated because many Internet gambling sites are located outside of the United States in countries where Internet gambling is legal, and obviously states have no control over activities that take place in other countries.
Where does gambling occur?
An issue in regulating online gambling has to do with determining where the physical act of placing a bet on the Internet occurs. Suppose a resident of Minnesota place bets via the Internet at a gambling site located in Antigua. Is the actual act of “gambling” taking place in Minnesota or in Antigua? According to Minnesota law, the act of entering a bet and transmitting information form Minnesota to Antigua via the Internet is adequate to constitute gambling activity within Minnesota, which in turn is against the law.
Review of Federal Gambling Law[1]
· Wire
Act of 1961
· Travel Act of 1961
· Interstate Transportation of Wagering
Paraphernalia Act of 1961
· Illegal Gambling Business Act of 1970
· Racketeer Influenced and Corrupt Organizations
Act of 1970
· Professional and Amateur Sports Protection
Act of 1992
· Interstate Wagering Amendment of 1994
· 2000 Amendment to the Interstate Horseracing
Act of 1978
Congress is currently debating a bill that would prevent the use of certain payment instruments, credit cards, and fund transfers for unlawful Internet gambling and other purposes. The bill is known as the Unlawful Internet Gambling Funding Prohibition Act. The bill would prohibit a person involved in a gambling business from knowingly accepting from a participant the following: all forms of credit, electronic fund transfers, checks, or proceeds from any other financial transaction involving a financial institution.
For a complete text of the bill please visit the following website:
http://www.legal-perspectives.com/cases/gambling/s627text.html
Review of Minnesota Gabling Law[2]
· Persons outside of Minnesota who transmit information via the Internet knowing that information will be disseminated in Minnesota are subject to jurisdiction in Minnesota courts for violations of state criminal and civil laws.
· Gambling appears to be an especially prominent aspect of criminal activity on the Internet. There are a number of services outside Minnesota that offer Minnesota residents the opportunity to place bets on sporting events, purchase lottery tickets, and participate in simulated casino games. These services are illegal in Minnesota.
· As with most other states' law, Minnesota law makes it a crime to operate a gambling facility, see Minn. Stat. Ann. §§ 609.75 subd. 2 & 5, 609.76 (1987 & Supp. 1998), which would seemingly include an Internet gambling operation. It is also a crime for an entity to "intentionally participate in the income of a gambling place." Id. § 609.76 subd. 1.
· Minnesota law, unlike that of New York, makes the placing of a bet with a gambling operation a crime. "Bet" is broadly defined, see Minn. Stat. Ann. § 609.75 subd. 2, and any person making a bet is guilty of a misdemeanor, see id. § 609.755(1). The law does exempt "a private social bet not part of or incident to organized, commercialized, or systematic gambling." Id. § 609.75 subd. 3(1). Hence, a private individual in Minnesota may be prosecuted for Internet gambling in her home, while the same person would have committed no such violation if she were a resident of New York.
· Moreover, Minnesota law defines "gambling device" in such a way to include the computer used for Internet gambling: "A gambling device is a contrivance which for a consideration affords the player an opportunity to obtain something of value, other than free plays, automatically from the machine or otherwise, the award of which is determined principally by chance." Id. § 609.75 subd. 4. And such gambling devices are subject to forfeiture. See id. § 609.762.
So Minnesota residents should beware: a bet made out of curiosity could cause the bettor to lose his computer, find himself in jail for up to 90 days, or be fined for up to $700. See id. §§ 609.755, 609.02 subd. 3.
Conclusion
The problem with Internet gambling is determining where the transaction is taking place. Congress is taking steps to try to make it illegal for a person to fund their online gambling habits. The fact aside, residents of states such as Minnesota and New York are not allowed to make these types of transactions over “wires” located in the state’s boundaries. One can solve this problem by simply driving to Mystic Lake and losing one’s money there.