The Mouthpiece: G, what’s coming next?

The Mouthpiece: G, what's coming next?

We don’t know where we’re goin’

but the season’s right for knowin’….

 The Who

5G is coming. It is a major breakthrough in wireless technology, we are told, and will allow mobile devices and networks to operate at a speed and capacity which, up to now, was only found on cable services. It will set new standards for reliability and capacity in wireless communications.

This promise is at the core of all the promised development that use digital technology, such as self-driving cars, robots, and interactive virtual reality programs.

Since the gaming industry worldwide is increasingly moving to wireless mobile networks, what effect can gaming expect from all this? Will the new system comply with existing laws, or challenge them? And what do gaming operators and customers get out of all this?

The glossary of G

The Mouthpiece: G, what's coming next?What do we mean when we talk about 1G, 4G, 5G and so on?

The G stands for “generation.” How do we tell the generations apart? At the point where a given piece of technology changes the way we perceive and use it, a new generation can be declared. First generation cell phones could only handle analog phone calls. Then came the second generation, which allowed digital calls, texting, and encryption of messages. 3G allowed wireless broadband for mobile phone networks. 4G is several orders of magnitude more efficient and effective at transmitting and handling digital content.

5G is not quite here yet—Verizon and AT&T have set up what amounts to beta testing in several U.S. cities. Full-scale nationwide access will probably be complete around 2020. It is predicted to double the data speed and capacity now available through 4G networks, by using heretofore untapped frequencies of bandwidth.

It’s all about the bandwidth

Bandwidth is another name for carrying capacity. The more bandwidth is available, the faster, more accurate, and more interesting Internet offerings become. Speed of delivery is measured in bits per second (bps). To compare, 1G, the first generation, delivered at 2.4 thousand bits per second (kbps). 2G upped the ante to 64 kbps and introduced digital rather than analog technology. 3G , a major improvement, could deliver at a low end of 144 kbps, up to a maximum of 2 million bps (2MBPS). 4G can handle 100 Mbps all the way to 1 Gbps (gigabytes,or billion bites per second). The latest, 5G, may go ten times that high. This is because 5G can use higher frequency bands (millimeter) than its predecessors.

In addition, 5G promises better quality connections. There will be much less latency—that is, lag time between transmission and reception. Too much latency means a jerky, fragmented picture, and delay in uploading customer interaction with the site or program. This is poison for video games, which depend on smooth realistic depictions and animations (the famous “look and feel” standard). Latency poses an added risk to gaming operators as well.

If you are, for instance, making in-game or in-race bets, delay can mean the difference between being able to make a bet that is registered in time to be counted, and just missing, because you weren’t able to see what was going on real-time, or because your bets, moves, and instructions didn’t arrive fast enough to be applied. Right now the average latency for 4G connections is 16 to 60 milliseconds (ms), almost imperceptible. 5G aims to cut latency down to 1 ms, which for practical purposes means no latency at all. Along the same lines upload time for input from the users and customers to apps, programs and data will also shrink.

For gaming, this will mean better quality pictures and instant communication and feedback. It will give the ability to service more and more customers at the same time, making such things as team play for esports and in-game or even in-race betting reliable—and therefore, more profitable. And it also promises to make Virtual Reality and Augmented Reality features possible as part of gameplay.

The catch

Of course, there are limitations and requirements that come with any new technology. For 5G, the principal problem is range and wavelength. 5G will use higher frequencies, but higher frequencies mean shorter range. They are also subject to be blocked by large obstacles such as buildings, or absorbed by rain, snow, and wooded areas. That means a need for many more cell towers than 4G now requires—about one every 300 yards, according to some estimates. The good news is that these are mini-towers, about the size of a file cabinet drawer, and they will allow really comprehensive coverage. You may even be able to get one for your home.

Legal climate-potential points

At first glance, the advent of 5G’s would seem to be a neutral development from a legal standpoint. Online gambling will be doing the same thing, only faster.

But other considerations may also make themselves felt. Reliable high-speed and broad bandwidth will enable augmented reality and virtual reality offerings over wireless networks. Augmented reality is essentially a template, a computer artifact which appears on the screen in tandem with a real-time real life picture. The best examples are games like Pokémon Go, where animations of creatures and treasures are overlayed on the real life map in your mobile device. Virtual reality, on the other hand, is completely immersive. With those big goggles on, all of a sudden nothing else exists but the VR world. In a virtual reality setting, you’re not just looking in. You ARE in.

And this could create an extra level of problems with problem gambling. For some individuals the “stickiness” or “addictiveness” of a given game or scenario may become irresistible once that game is in AR or VR mode. It might become necessary to screen individual players for tics and obsessions that can turn harmful. In that case, it might be possible to limit such customers’ playing time or access. At the very least, the Terms and Conditions page of the gaming business website should include a disclaimer for such unpredictable reactions, and probably an upper limit on potential liability (no higher than the value of a given bet, or the total funds in the customers ADW account).

Another new problem might arise in the area of online privacy and protection of sensitive information. It is called the “Internet of Things.” Increasingly, household appliances and systems such as doorbells and thermostats can be monitored and controlled via wireless links, as well as cars. So it’s a self reinforcing phenomenon: the more bandwidth is available, the more demand is aroused for it. But while it’s very convenient to have appliances and household systems that can be controlled via the Internet, these connections and links are also possible avenues of entry for hackers and cyber crooks.

The most recent example was in 2018, when a casino that declined to be named had its database of highrollers swiped by online intruders. The back door, the Achilles heel of this casino system was, of all things, the thermometer in a big aquarium tank, kept on the gaming floor for decoration. That thermostat was connected to the master server for the casino. So the cyber crooks broke in via the thermometer app, scrolled over to the highroller list, uploaded it and then departed.

To avoid liability, operators could consider isolating actual gaming and sensitive databases on one or more separate servers After that, the bad guys can take over the broom closet all they want.

Changing the rules

Next, we return yet again to the vexed question of state law jurisdiction. If 5G signals are short range, then any bit of information they transfer must necessarily go through a series of small towers. So getting content over long distances, it seems, will involve hopping from 5G tower to 5G tower. If that is the case (don’t forget, extensive 5G networks have yet to be built), then the signal must necessarily cross state lines.

Now suppose that there is a bet transmitted between residents of two states, A and B, which both allow Internet gambling. But the passage from A to B uses links and towers which are physically located in a third state, Z.

If state Z doesn’t allow Internet gambling, is it a violation of state law when the bet passes through its towers, even for a few milliseconds? Even if no residents of states Z are involved?

There is an argument that the pass-through is a violation. It has already been established, for instance, that an airliner crossing through the airspace of a given state can be subject to the laws of that state.1

But wouldn’t Federal rules supersede state rules, given that interstate communications are a federal concern under the FCC? Not necessarily.

In a declaratory ruling set down in 1999, the U.S. Third Circuit concluded that where there is no intent of Congress or the FCC to strip state regulators of their in-state jurisdiction, state jurisdiction over Internet traffic remains, provided that jurisdiction conforms to the regulatory goals set forth by the FCC. 2 Got that? State authorities do have a say in Internet and wireless traffic, except where they don’t.

The Mouthpiece: G, what's coming next?At this point, we need to consider the recent Department of Justice’s reversal of its previous policy on Internet gambling. Since 2011, the Wire Act (18 USC 1084) covered only sports betting. But in January of this year, the Trump Department of Justice reversed its view, now asserting that the Wire Act covers all betting online. This gave rise to concerns that the Federal government might move against all online gambling within the United States.

But this is not yet a genuine threat, at least not one that is liable to be carried out. Leaving aside the fact that there is a perfectly serviceable safe harbor in the text of the Wire Act itself3, such a move would not immediately result in prohibition, but in litigation. It is one thing to enact a law forbidding a given business model from getting started. Forcing the shutdown of existing, profitable sources of state-level income is something else altogether. If the Trump administration attempts this, they will certainly have a fight on they hands, one that will cost them political support that they can ill afford to lose.

Could the states get away with defying the new DOJ view on online gambling? Why not? They’ve done it before, with Interstate Horse Racing Act. Despite the clear intent of Congress to permit online betting on horse racing, via state authorities cooperatively using the Internet, the second Bush administration insisted that interstate horse wagering was forbidden by the Wire Act, which somehow took precedence over the revised IHRA.

But while the Bush administration pronounced the state-level programs to be illegal, they never actually took criminal or civil action against the respective state authorities involved. The offering of interstate and even international horse betting via the Internet goes on to this day.

And the fact remains that mobile phones are, well, mobile. Thus far signing up in one state that licenses i-Gaming, but then betting from another state that doesn’t, is not a significant problem. Gambling business already have to keep track of customer location. However, the technology which can track the GPS location of a given customer depends on the use of large, powerful cell towers. G5 will move away from this, toward a network of smaller sites. It isn’t yet clear that G5 technology will be able to do the same job as G4 technology. Would a G5 network be somehow legally liable if an unauthorized customer were to sneak through? We have yet to know. But it looks like very strong protection for the operator will have to be written into the Terms and Conditions.

The future

There will of course be other legal questions relating to other aspects of 5G or even 10G capacity. Will problem gambling be accelerated by the intense user experience that Augmented Reality and Virtual Reality will provide? What liability will AR and VR services and programmers have to look out for? Will the required density of 5G mini-towers require the application of eminent domain?

But the big questions will still take front and center. How is state jurisdiction determined in such new networks? What new formats will escape the legal definition of “gambling,” and which ones won’t? What liability would fall on 5G systems which are used for monetary transfers which are later determined to violate the UIGEA?

As usual, these are questions which have not even been seriously discussed, let alone adjudicated. As usual with U.S. gambling law, we don’t quite know where the hell we are, or where we’re going.

Only one thing is certain: we’re gonna to get there a lot faster now.

1      Grace v. MacArthur, 170 F. Supp. 442, 446 (E.D. Ark. 1959)

2     AT&T Corp v. Core Communications Inc” No. 14-1499 (3d Cir. 2015).

3     18 USC 1084 (b) : “ Nothing in this section shall be construed to prevent the transmission in interstate or foreign commerce of information for use in news reporting of sporting events or contests, or for the transmission of information assisting in the placing of bets or wagers on a sporting event or contest from a State or foreign country where betting on that sporting event or contest is legal into a State or foreign country in which such betting is legal.”

Mr. Owens is a California attorney specializing in the law of Internet and interactive gaming since 1998. Co-author of INTERNET GAMING LAW with Professor Nelson Rose, (Mary Ann Liebert Publishers, 2nd ed 2009); Associate Editor, Gaming Law Review & Economics; Contributing Editor, TSN. Comments/inquiries welcome at [email protected].