The game's the same: why gambling in cyberspace violates federal law.

• Author: Keller, Bruce P.

1. INTRODUCTION

   For more than a century, Americans have believed that the social ills fostered by gambling outweigh its recreational value.(1) As a result, gambling has been extensively regulated in order to restrict access to, and control the operation of, legalized gambling facilities.(2)

   These restrictions, however, have not diminished gambling's popularity.(3) Moreover, significant technological developments, most notably the Internet, threaten to circumvent the current regulatory approach in ways that were unimaginable just a few years ago. Unlike brick-and-mortar casinos, the action at "virtual casinos" and in other forms of online gambling(4) is nonstop and accessible to anyone with Internet access.(5) Bets can be placed anonymously or pseudonymously, regardless of the bettor's age, sobriety, or finances. Moreover, unlike lawful domestic gambling operations, many Internet gambling sites operate from servers in foreign countries that are unsupervised by U.S. government regulators.

   The sudden and ready accessibility of Internet gambling has the potential to turn every home and office into a gambling parlor. Such widespread, unsupervised, and unregulated access, however, is completely inconsistent with a regulatory model that frowns on teenagers playing lotteries or entering casinos.(6) Thus, the government's interest in regulating Internet gambling is at least as strong as, if not stronger than, its interest in regulating gambling in its traditional forms.(7)

   There are, however, at least two related schools of thought rejecting this view. First, many commentators believe that the unique attributes of the Internet, not the least of which is its inherently transborder nature, require it to be treated as a separate and sovereign jurisdiction where traditional legal approaches should not apply.(8)

   Second, operators of online gambling sites offer a specific variation on this theme. They maintain that they escape U.S. law by locating their server and related operations offshore--in countries such as Belize, Curacao, and Antigua--making it irrelevant that their American customers are playing in Peoria. As one Internet gambling operator has put it:

   All wagers take place in Antigua on our server. No money is transferred on a bet by bet basis. People must open accounts and wager from their accounts. When players bet they are directing a foreign transaction, no different than moving money from one offshore business to another.... The bet takes place in Antigua. The money is already here.... They are making a virtual visit to Antigua.(9) These arguments are echoed in various law review articles that call for the creation of new Internet legal models. Commentators raise the concern that, without such a new framework, the Internet's transborder nature and unique mores virtually ensure that no "stable body of jurisprudence" can be developed.(10)

   The weakness underlying all of these arguments is that they accept too literally the concept of "cyberspace" as an actual "place." In so doing, they embrace a metaphor that is far from exclusive and, in many ways, far from appropriate. For example, competing with the term "cyberspace" is the description of the Internet as an "information superhighway."(11) Other metaphors and analogies abound.(12)

   As Professor Clay Calvert has recognized, one of the problems with using metaphors to describe online activities is that the metaphor can replace the reality and thus "frame our thinking too narrowly."(13) Thus, although it may be colorful, it is not analytically useful to think of the Internet as a transportation vehicle in which one makes "virtual" voyages.(14) To the contrary, the Internet is an earthbound network of interconnected computers, each with a specific physical location, connected by a physical telecommunications backbone. One no more makes a "virtual visit" when using the Internet than when telephoning long distance.

   Equally fanciful is the concept of the Internet as its own, ethereal jurisdiction. "Cyberspace," after all, is not a real place, but a term coined in a science fiction novel.(15) For all of its unique attributes, it "exists" as a separate jurisdiction only in the sense that Never-Never Land does.(16)

   Rather than debate which of several competing metaphors may be appropriate to describe online activities, it is more appropriate to step back and inquire, in a media-neutral manner, whether the particular activity under review takes on a different complexion when it occurs over the Internet as opposed to other contexts. By eschewing all labels, one avoids having to choose among them. By focusing on the underlying activity, one reduces the risk of being trapped in a confining analogy. By frankly assessing the conduct at issue, without undue regard for the medium through which it is conducted, one gets to the heart of the policy concerns that led to the creation of the applicable legal rule.

   Internet gambling offers an excellent test case for this approach because, although the Internet may change the mechanics of gambling by a considerable degree, it does not change the nature of gambling itself. Moreover, the differences in mechanics, which stem from the pervasive and instantaneous nature of this medium, only compound the problems generally associated with gambling. As Professor I. Trotter Hardy has noted, notwithstanding the unique nature of some acts in cyberspace, the Internet presents no new legal issues when it is being used "simply [as] a medium of direct communication between people--much like the telephone, mail or fax."(17) Internet gambling readily falls into that category. For the purposes of federal antigambling laws, it is the 1990s equivalent of using the telephone to play the numbers or place bets. It is a type of online activity whose medium does not affect the legal consequences. Moreover, it illustrates why certain laws, both criminal and civil, are properly applied in a media-neutral fashion.

   Most articles on Internet gambling disagree, but fail to identify what it is about long-distance gambling online that distinguishes it from longdistance gambling via the mail or telephone and makes it incapable of regulation. Most focus almost exclusively on jurisdictional issues or perceived enforcement problems, leading them to conclude that applying United States laws to prevent online gambling operators from transacting business with U.S. citizens is at least unwise, if not impossible.(18)

   This Essay disagrees. Troubling policy issues lurk in the assumption that gambling in cyberspace, along with countless other Internet issues, requires a new legal regime. These issues are broader than the problems associated with the proliferation of gambling. First, accepting these arguments requires a departure from existing case law upholding over one hundred years of congressional efforts that respond to developments in communications technology when they threaten the federal regulatory approach to interstate and international gambling.(19) Second, a "hands off" approach sends the wrong message to courts that otherwise must grapple, and by and large have done so successfully, with new issues created by the Internet and other digital technologies.(20)

   Third, and perhaps most disturbing, waiting for the development of a new legal regime capable of resolving "all issues Internet" would require turning a blind eye to the immediate and pervasive nature of the non-Internet contacts these so-called "offshore" sites have with the United States. Some sense of these contacts can be gained from reviewing the complaints filed in the series of precedent-setting prosecutions commenced in March 1998 against twenty-one Internet sports gambling sites.(21) In a direct challenge to Internet gambling operators' contentions that they avoid violating federal antigambling laws by locating their operations offshore, the United States Attorney for the Southern District of New York has alleged that these Web sites violate the Wire Wager Act.(22) The allegations detail the ubiquitous nature of the contacts those purportedly offshore operations have with U.S. citizens and how similar these transactions are to gambling transactions previously conducted by mail and telephone.

   Finally, measured against brick-and-mortar casinos, Internet gambling has a greater potential to exacerbate the abuses associated with addictive or underage gambling and appears to pose a much higher risk to society. The anonymity and ubiquity of Internet gambling, coupled with its reliance on credit cards to foster long-distance betting, increases these risks, particularly given that video gambling devices have been characterized

   as the most addictive form of gambling. Some call them the "crack cocaine" of the gambling world. When the personal computer becomes a video gambling machine, the problem gambler will confront a powerful temptation in the next room 24 hours a day ... [A]s Internet gambling grows, society stands to suffer from more gambling addiction.(23) In short, there are powerful policy and process reasons why it makes sense to prosecute those who entice and enable U.S. citizens to gamble online. Even after giving due deference to the nearly unanimous line of contrary commentary, this Essay concludes: (1) there is nothing unique about Internet gambling that should lead the federal government to abandon its traditional protective role in this area;(24) and (2) there is no reason why existing gambling laws cannot be applied online as successfully as other laws have been.

   Part II of this Essay gives a brief overview of U.S. gambling laws, including the role of federal law in maintaining the integrity of each state's approach to gambling. It focuses on the Wire Wager Act, which has become the federal government's main weapon against Internet gambling. Part III details various failed attempts to challenge federal antigambling laws, leading to Part IV, which describes the recent prosecutions of...