BUSINESS

The Mouthpiece: Digging up the truth on internet gambling law

TAGs: Department of Justice, gambling law, the mouthpiece, Wire Act

“[W]agering on the Internet isn’t illegal because it’s bad. It’s bad because we’ve chosen to make it illegal.”  

Jacob Weisberg

We all know that the law of Internet gaming in the USA is what sailors used to call “a soup sandwich”: a self-contradictory circus. As of this moment, the U.S. Department of Justice considers all Internet gambling to be in violation of the Federal Wire Act. This reverses the position DOJ took for the last seven years, which in turn reverses the assumption of the last Bush administration. Before that, under the Clinton administration, most people hadn’t heard of it, and nobody cared.

Digging Up the Truth on Internet Gambling LawIn any case, the basis of U.S. gambling law, online and off, rests on state laws. And these vary immensely. Not just from state to state, but from game to game, gambling format to gambling format. Even Nevada, America’s Vatican of gambling, does not authorize a state lottery.

California authorizes pari-mutuel horse betting, including betting online. But online poker is still taboo, and observers don’t hold out much hope that the Golden State will allow sports betting, online or off. The vested stakeholders are having too much fun kicking each other in the shins. Meanwhile, New Jersey, Delaware, and Nevada share their online customer lists. So far no other states have joined in, except as regards online bets for horse racing, which just about everybody has now.

The DOJ’s latest pronouncement has not deterred other states from moving to legalize sports betting. It is, after all, an opinion, not a statute or a court decision. And it certainly doesn’t override existing state statutes for licensing. So certain kinds of gambling are legal in certain places, except that none of them are legal, really.

What lies beneath?

It is obvious that the legal status of online gambling has no connection to a coherent, reasonable policy, or even a shared basis of fact. Very well, what does drive online gaming to be legalized (or not)?

And here we have good news! After careful analysis, diligent study, and a pitcher or two of margaritas, this office has discovered the guiding principle of iGaming expansion. It has little if anything to do with the law, foreign policy, domestic policy, projected tax income or any moral code. Rather, the success of Internet gambling in any country or region has been found to rely directly on the population of large burrowing mammals. And this is applicable worldwide.

In Australia, Internet betting has had an on-again-off-again history. In 2001, the Internet Gambling Act prohibited casino style games from being offered online. Australians can make all the online sporting bets they want, except in-game wagering. And in 2016 online poker was prohibited, except, of course, online poker licensed by Australian state governments.

The ups and downs of Australian iGaming law apparently follow the population trends of Northern Hairy-Nosed Wombats. Once widespread, they have been been an endangered species for years. Their numbers went as low as 50 individuals at the end of last century. Now, with government help, the population has grown to about 200, with further expansion anticipated.

In just the same way, Australian iGaming started off wide open, but shrank almost to nothing by the early 21st century. Even online poker was nixed. But with the help of licensing by state governments there, Australian iGaming is making a comeback

Looking over to South Africa, we see a similar pattern, based on the fortunes of the African aardvark. Originally found all over sub-Saharan Africa, aardvark numbers have been slowly shrinking, but their population is sturdy enough to rate a “least concerned” status as far as extinction. In fact, further study has revealed the existence of no less than seventeen subspecies of these odd beasts

Likewise, South African iGaming started off with a rush. Online gambling has supposedly been illegal since 1994, but nevertheless continues to operate quietly (just as aardvarks do). Online betting was supposedly legalized in 2008, but only the enabling legislation was passed. There are no regulations and guidelines. As a result, many South Africans gamble online even when they’re not supposed to. And subspecies of iGaming are making a legal and licensed comeback too. At present this only covers online sportsbooks, but a continual need for extra revenue would seem to point toward bringing in online casino games and poker, as well.

Looking up to Eurasia, the burrowing mammal theory seems stronger than ever. Russia has no burrowing mammals of any size. And so it is no surprise to find that Internet gaming never really took off in that country. No native establishments exist outside of a limited black market, and foreign ISPs that carry such content are subject to be blacklisted.

And while China has greatly expanded brick-and-mortar gaming operations, particularly in Macau, iGaming remains firmly taboo. And sure enough, we see China has no burrowers bigger than the average fox. Neighboring Japan is in the same boat. Only now are the Japanese even beginning to consider licensed gambling, and it is mostly for brick-and-mortar operations. As with Australia, a concession has been made for online, including sports betting, official lotteries, and a beast called Soccer Toto.

The same pattern goes for South America. Despite large populations who love to bet and an economic climate that is improving overall, no burrowers once again means no progress. iGaming cannot be licensed at all in Brazil, while Argentina is experimenting with the idea of online gaming, but meantime maintains an active blacklist against iGaming providers.

North America, however, is the acid test for the burrowing mammal theory. It is no accident that legalized online gaming flourishes only east of the Mississippi River. By no coincidence whatever, that is the native range of the woodchuck, north and south of the Canadian border. These are member of the marmot family (very large ground squirrels).

West of the Mississippi, the ground squirrel/marmot population tends to max out at 5 pounds and under. But the lack of large burrowing mammals as a barrier to iGaming holds true here, more than anywhere. California, at first glance, would seem to be the ideal candidate for legalization of online gaming. First, there would be no interstate licensing problems, for the population of California (almost 40 million now) is big enough to constitute a worthwhile market all by itself. But year after year, attempts to legalize even online poker, never mind online casino games, run aground again and again on the opposition of the vested Golden State gambling interests. Racetracks, poker rooms, Indian casinos, and state lottery all oppose California’s expansion into sports betting, unless they, and they alone can control it.

It’s a stalemate that has no obvious solution, at least for the near future.

Tracking further up the West Coast, we see that Oregon forbids unlicensed online casino play or wagers. But all that means is the customers go someplace else. The state of Washington is alone among the 50 states in making the mere participation in online gambling into a felony. Most other jurisdictions list it as a minor misdemeanor. What is the cause of this difference? Digging down to the truth, we once again find that lack of borrowers is at the bottom of it all. Washington’s biggest tunnel makers are critters known as mountain beavers, who topped out at a pound and a half each.

Up north of the Canadian border, British Columbia offers lottery action, casino games, and sports betting online but this is carefully restricted to residents of the province, and even then they cannot participate unless they are physically within the province’s borders. Once again, this ambivalence is not due to any government policy. British Columbia’s biggest burrowing mammal is the true beaver, but beavers are part-time cellar dwellers; they spend at least as much time in the water and in the woods as they do in their lodges. This tentative approach to burrowing is exactly mirrored by the provinces tentative approach to online gaming.

The future?

For the foreseeable future, state law will remain the main reference point of Internet gambling law. And there does seem to be some movement underway.

California is gradually, slowly moving away from the years long stalemate, and seriously considering sports betting and online casino games of all kinds. Once again, our master thesis explains all. Up to now, there simply wasn’t a worthwhile population of large burrowing mammals. But lo and behold, the critter called the nutria is infiltrating and taking over California’s wetlands on a wholesale basis. Think of a standard-issue muskrat, blown up to twice its ordinary size, and equipped with orange incisors. Nutria love to make their homes along rivers by digging deep tunnels in the embankment. The more nutria there are, the more tunnels they will dig in California’s outdated levees. So the expansion of Internet and interactive gaming in the Golden State may be a mixed bag. People will be able to participate in online gaming, but if the levees don’t hold they’ll have to do it from a riverboat.

Oh well, back to the drawing board. We may be able to draw a coherent program of Internet gaming expansion by means of wombats, aardvarks, and such, but time is running out. We need to see a plan very soon.

Say, by April the first?

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