US Internet Gambling Law Not Impressive Says Lawyer
TheLawyer.com gave its analysis of a recently passed law related to internet gambling in the US. The Lawyer is the market leading title for commercial lawyers and corporate directors, reporting on the news and opinions shaping the world of business.
The Unlawful Internet Gambling Enforcement Act of 2006 makes it a crime for any gambling business to accept a transfer of funds in connection with unlawful internet gambling. It further provides that regulation must be put in place requiring financial service providers to “identify and block” any payments relating to unlawful internet gambling. The law does not make it illegal to actually gamble on the internet, therefore gamblers themselves are not breaking any laws.
“When read outside its complex factual context, the act is a peculiar piece of legislation. On its face it does very little, primarily because it does not define what “unlawful internet gambling” is. In essence, the 2006 act only covers internet gambling that was already illegal under state or federal law.
“The act is nevertheless important because it removes some of the ambiguity that existed within the arsenal of US gambling prohibition laws. First, it makes it clear that any internet gambling that violates a state law is automatically a breach of federal US law, irrespective of the type of gambling and the supply method. Second, the act makes it clear that internet gambling that takes place legally within the territory of one state does not violate US federal law.
“One thing that the 2006 act clearly doesn’t do is to bring the US into compliance with its World Trade Organisation (WTO) obligations, following the loss of the dispute settlement case brought by Antigua. In that case the WTO Appellate Body found in April 2005:#that the US had made specific commitments under the General Agreement on Trade in Services (Gats) to provide market access and non-discriminatory treatment for gambling services supplied cross-border from other WTO members;#that the US prohibition on the use of the internet to supply cross-border gambling services violates the US’s obligations;#that the US had made a prima facie case under the Article XIV Gats exemption clause that such a prohibition is “necessary” to address public interest concerns, such as underage gambling, and could not be replaced with less trade-restrictive measures; and#that the US did not meet all conditions for a successful use of the Article XIV exemption clause because it maintains a de facto exemption from the Wire Act for internet gambling on horse races.
“A WTO panel is investigating whether the US has in the meantime complied with its WTO obligations. The act, however, has made US non-compliance considerably worse. First, by making it crystal clear that the US does not oppose internet gambling per se, but only internet gambling that crosses the border of a state. Second, by the act recognising that public interest concerns can be addressed by regulation and technology. Third, the act explicitly preserves the de facto exemption for internet betting on horse races.”
