|This is from the Times-Picayune. I honestly think the gaming industry can take the initiative on this issue, and government will have to follow. But the gaming industry is taking a wait and see attitude.|
<<Online casinos await Congress' hand
Congress may be forced to tackle Internet gambling issues when it convenes in January after a decision by a federal appeals court in New Orleans last month said casino-style gambling over the Internet is legal under existing federal law.
Two plaintiffs had filed a class-action lawsuit alleging MasterCard, Visa and other financial services companies profited illegally by processing illegal online bets, and the two sought to have their gambling debts forgiven. But the lawsuit was dismissed, and in November the 5th U.S. Circuit Court of Appeals in New Orleans affirmed that dismissal.
The lawsuit tested whether the 1961 Interstate Wire Act, which prevents illegal sports betting across interstate telephone lines, could apply to the Internet gambling. The U.S. Justice Department and others have previously interpreted the law to say the Wire Act extends to casino-style gambling on the Internet, and the Wire Act has become the primary act for deeming Internet gambling illegal.
But the 5th Circuit upheld an opinion by the U.S. District Court in the Eastern District of Louisiana that said the law applies only to sports events such as games and contests, not card games or other casino-style gambling.
"Because the Wire Act does not prohibit nonsports Internet gambling, any debts incurred in connection with such gambling are not illegal," the appeals court decision said. The two original plaintiffs "simply are not victims under the facts of these cases. Rather, as the district court wrote, 'they are independent actors who made a knowing and voluntary choice to engage in a course of conduct.' In engaging in this conduct, they got exactly what they bargained for: gambling 'chips' with which they could place wagers."
Obviously a blow to opponents of Internet gambling, the ruling could help fuel the continued growth of the $4.09 billion online gambling industry. Though online casinos are based outside the United States in places such as the Caribbean or the Isle of Man, about half the customers are in the United States.
But experts say U.S. gambling companies are still reluctant to step into Internet gambling without more clarification from the federal government and from states on the legality of online casinos.
The question is, should the federal government ban Internet gambling to protect people from runaway gambling in their homes, even though enforcement will be difficult? Or does should the government accept Internet gambling but regulate it?
"I think the next step in the Internet gambling debate is going to be whether or not to regulate," said Michael Tew, vice president of gambling equity research at Bear Stearns, a New York investment firm. "I think they're still going to be reluctant to move forward until they have clarification on the federal level of the Wire Act and exactly what it means for Internet wagering."
Nelson Rose, a gambling law expert at Whittier Law College in California, said those clarification efforts will take place in both Congress and in states where the gambling industry is important. Immediately after the 5th Circuit decision, Rose said, Nevada passed a law saying Nevada casino companies could operate on the Internet as long as they didn't take sports bets, and turned the matter over to the Nevada Gaming Control Board to draft specific rules. So far the Nevada gambling board has not moved forward on the matter.
Meanwhile, several Internet gambling bills that died in Congress are likely to be reintroduced, Rose said.
During the congressional session that just ended, the House of Representatives debated two bills to update the language of the Wire Act to prevent most forms of online gambling. It passed a different bill, HR 556, sponsored by Rep. Jim Leach, R-Iowa, that would have banned financial institutions from accepting online gambling transactions. But the bill died when the Senate failed to take up the matter before recessing.
In late November another bill, sponsored by Rep. John Conyers, D-Mich., was introduced that called for creating a commission to study Internet gambling and how to regulate it. That bill also died with the congressional recess, but Conyers plans to reintroduce the matter.
Rose thinks the Conyers bill has the best chance to pass, but that still means the much-needed congressional clarification could be several years away by the time a committee studies the issues and recommends a course of action>>