Aces and eights: why the Unlawful Internet Gambling Enforcement Act resides in "dead man's" land in attempting to further curb online gambling and why expanded criminalization is preferable to legalization.

AuthorConon, Jonathan
  1. INTRODUCTION

    IS the ability of the citizenry to gamble legally on the Internet a fight that must be protected? Since the enactment of the Unlawful Internet Gambling Enforcement Act (1) in October of 2006, the answer is no. But Representative Barney Frank, along with at least fifty House cosponsors, hopes to change this reality through the passage of H.R. 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act. (2) This Comment attempts to distill the arguments both for and against using the criminal law to control Internet gambling and ultimately concludes that a stronger law, which reaches both operators and individual gamblers, is necessary to address the serious concerns associated with the activity.

  2. THE CURRENT STATE OF THE LAW: UNLAWFUL INTERNET GAMBLING ENFORCEMENT ACT OF 2006

    The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) was passed into law in an attempt to combat online gaming. (3) The drafters of the UIGEA cited a growing concern that debts stemming from Internet gambling would be uncollectable as a main reason for the Act's passage. (4) In addition to the issues surrounding uncollectible debts, concerns over fraud, money laundering, and pathological and underage gaming were also advanced as valid reasons for the law. (5) The alleged inadequacy of current taw enforcement mechanisms to prohibit an activity that, by its nature, crosses both national and state borders was also proffered as justification for the UIGEA's passage. (6)

    Despite the efforts of the drafters to address these evils, the UIGEA fails to fully accomplish its objectives because of a lack of serious enforcement. (7) This result is not surprising considering that key terms of the law, such as "unlawful internet gambling," are not clearly defined. (8) Additionally, the UIGEA includes numerous explicit exemptions that suggest a comprehensive online gambling ban was not intended. (9) Lastly, the absence of a prohibition on individual gamblers leaves the supply of online players virtually unaffected. (10) These problems are briefly considered below.

    The UIGEA functions by prohibiting monetary transfers from individuals involved in Internet gambling. (11) However, the law does not subject the individual bettor to criminal penalties, (12) nor does it explicitly prohibit all forms of Internet gambling. (13) Thus, one substantive problem with the UIGEA is that a vague definition of "unlawful internet gambling" has caused some to believe that particular areas of online gambling are still legal. (14) The Act defines unlawful Internet gambling as "plac[ing], receiv[ing], or otherwise knowingly transmit[ting] a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is unlawful under any applicable federal or state law...." (15) Instead of defining what constitutes illegal gambling, the UIGEA relies on pre-existing state and Federal law, which it previously describes as inadequate to handle the problem, (16) as the source of a vital component of the legislation. (17) For this reason, proponents of online gambling, particularly poker, continue to advance the position that some forms of Internet gambling are still legal. (18)

    A second substantive problem with the UIGEA is the number of explicit exemptions it grants, (19) which again reinforces the notion that some forms of Internet gambling are legal. In particular, [section] 5362(1)(E)(ix) excludes participation in a fantasy sports game or contest from the definition of "bet" or "wager" so as to place these activities outside the UIGEA's reach. (20) Fantasy sports proponents believe their games rest on the skill of the competitors, rather than on pure luck or chance, and thus are deserving of an explicit exemption. (21) The problem with this exemption and others like it arises when advocates for borderline games like poker contend that they, too, are deserving of a skill-based exemption. (22)

    Another explicit exemption under the UIGEA that makes the status of other types of Internet gambling unclear is the exemption for any activity legal under the Interstate Horseracing Act (IHA). (23) In 2000, an amendment to the IHA allowed for the placing of interstate wagers "via telephone or other electronic media" where lawful in both states involved. (24) Although the Department of Justice maintains that this amendment does not make the placement of horseracing bets on the Internet legal, their position seems to be at odds with the language in the IHA. (25) If Internet gambling on horseracing is excluded from the confines of the UIGEA, proponents of other forms of gambling have a stronger argument that further exceptions, particularly for games with elements of skill like poker, are warranted.

    As a result of these ambiguities and exemptions, recent Congressional proposals have attempted to amend and clarify the UIGEA. (26) Most relevant to this discussion are the Skill Game Protection Act, introduced by Representative Robert Wexler in 2007, (27) the Internet Skill Game Licensing and Control Act of 2008, introduced by Senator Robert Menendez, (28) and the recently introduced Internet Gambling Regulation, Consumer Protection, and Enforcement Act. (29) This last bill, introduced by Representative Frank, calls for the regulation and licensing of Internet gaming, including online poker, as opposed to outright bans. (30) Instead of resorting to these options, Congress should choose to resolve the uncertainties in the UIGEA by enacting a strengthening amendment that specifically defines unlawful Internet gambling and criminalizes facilitation as well as participation in the activity.

  3. BACKGROUND

    1. EVOLUTION OF THE MARKET

      Measuring the size of the online gambling market is difficult, but it is believed that the United States represents at least half of a market with total revenues estimated to be between $7 billion and $10 billion in 2004. (31) Market revenues have been projected to reach over $24 billion by 2010. (32) The growth in online gambling was caused, in part, by the rapid increase in online poker play. (33) From 2003 to 2005, online poker site revenue increased from approximately $34 million per month to nearly $200 million. (34)

      The popularity of online poker can be attributed to two main causes: the explosion of televised live poker on numerous national networks, including ESPN, NBC, and the Travel Channel, and the 2003 World Series of Poker victory by "every-man" Chris Moneymaker, who won his entry to the event through an online qualification. (35) With the advent of downloadable poker programs facilitating poker play through the Internet, (36) experienced and novice gamblers were able to join in poker's popularity without having to drive to often distant casinos.

    2. LEGALITY OF POKER

      Despite its appeal, poker is still against the law in most states. (37) Those who favor legalization advance arguments that the game is one of skill and not of chance. (38) At least one poker authority has claimed that the game demands a greater skill set than that required for contract bridge or chess. (39) Some of these advanced skills include:

      (1) Ability to calculate precise mathematical odds of a needed card(s) coming on a Turn or River ... (4) Ability to read opponents['] behavior and body language to accurately estimate the cards opponent was dealt ... (6) Ability to understand and apply advanced strategic concepts such as semi-bluffing and playing for implied odds. (40)

      One study attempted to quantify these skills and claimed that, at least statistically, the amount of skill in poker dominates the amount of chance. (41)

      Not surprisingly, the case law surrounding the treatment of poker as a game of skill is not as straightforward. (42) Courts attempting to define poker as a game of skill as opposed to a game of chance typically rely on either the pure chance doctrine or the dominant factor test, with the latter being preferred in most jurisdictions. (43) A court will not find an activity to be a game of skill under the dominant factor test "when an element of chance dominates the distribution of prizes, even though such a distribution is affected to some degree by the exercise of skill or judgment." (44) Put another way, the dominant factor doctrine requires a court to determine where, on a spectrum bookended by chance and skill, a particular activity falls. (45)

      Modern courts applying this doctrine have often declined to classify poker as a game of skill. (46) For example, in People v. Mitchell, the Illinois Appellate Court upheld a jury's conclusion that a skill-based exception did not apply to poker games. (47) Likewise, the Colorado Supreme Court found in Charnes v. Central City Opera House Ass 'n that poker "constitutes a form of 'gambling' in its commonly understood sense" because of its reliance on elements of chance. (48) Even states that have legalized poker, such as California and Montana, have done so through specific statutory language, not by finding that poker constitutes a game of skill. (49) Judiciaries in both states have routinely found that poker was a gambling game containing elements of chance. (50) A recent case from Pennsylvania, however, took the opposite position. (51) The court in Commonwealth v. Watkins used the predominance test to find that Texas Hold'em poker was not "unlawful gambling" because it was a game dominated by elements of skill. (52)

      In spite of, or perhaps because of, this uncertainty in the state courts regarding the legality of casino-style poker, gamblers flocked to the Internet in droves to participate in the activity. (53) One 2005 estimate placed nearly 100,000 people playing online poker for money during peak hours, with nearly an equal number participating in free games. (54) Although no single reason motivated Congress to curb online gambling by passing the UIGEA, the massive participation in online poker since 2000 was certainly not an insignificant...

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