An Anti-KYL Bill Argument: Interesting Article from "The UCLA Online Institute for Cyberspace Law and Policy"
Editorial: I found this author's arguments a perfect example of why the KYL Bill or any bill will not and should not succeed. Concentration on legalization and control is a much better alternative and one that will ultimately happen, imo, after the political posturing is over.
"HOW MUCH DO YOU WANT TO BET THAT THE INTERNET GAMBLING PROHIBITION ACT OF 1997 IS NOT THE MOST EFFECTIVE WAY TO TACKLE THE PROBLEMS OF ONLINE GAMBLING?"
by Andrea M. Lessani
A CRITIQUE OF THE INTERNET ACT
A prohibition on Internet gambling, as proposed in the Internet Act, is problematic for three reasons.(45)
First, the federal government has
neither the human nor technological resources to effectively enforce a ban on gambling.
Second, the Internet Act's effect of driving online
gambling underground may increase the dangers of online gambling.
Third, while the U.S. may have jurisdiction over off-shore cyber-casinos,
exercising jurisdiction offends principles of comity and sovereignty.
1. Problems of Enforcement
The Internet Act's prohibition on online gambling is not likely to eliminate gambling over the Internet. Instead, this legislation is likely to drive
more cyber-casinos and individual gamblers underground.(46) The difficulty with underground online gambling is that inexpensive,
sophisticated technology renders detection of online gambling difficult.(47) The following examples provide illustrations of how this technology
renders detection difficult:
[T]he ease with which an Internet gambler may disguise his or her identity makes it difficult to trace users of Internet gambling
sites. Indecipherable and untraceable financial transactions, accomplished through the use of encryption and electronic money,
could essentially thwart law enforcement's ability to trace violations of gambling laws over the Internet.(48)
Even when law enforcement is able to trace the identities of gamblers, they may not have enough time. For instance, although law
enforcement may unmask a false identity after a few hours through the use of tracing procedures, most gamblers will not play games for
hours. Ultimately, the time required by tracing procedures often renders tracing ineffective.(49)
Even assuming that law enforcement has the technological resources to easily detect gambling violations over the Internet, they lack the
substantial human resources that would be necessary to enforce the Internet Act. The provision in the Internet Act that allows for prosecution
of gamblers would require law enforcement to obtain thousands of search warrants, subpoenas, and undercover agents.(50) Therefore,
prosecuting gamblers is a cost-ineffective and time-consuming approach to combat Internet gambling.(51)
In short, federal and state officials could not effectively enforce the Internet Act given the ease of evading detection as well as the
extraordinary time, money, and human resources necessary for enforcement.
2. Increasing the Dangers of Online Gambling
By driving online gambling underground, the Internet Act would not eliminate the dangers of Internet gambling. Instead, it may even increase
the dangers:
If...prohibition is enacted, it will only drive the industry off-shore, where enforcement of age-restrictions [sic.] and other
regulations are far less likely to be in place, and virtually impossible for U.S. authorities to enforce (especially when sovereign
governments have already set their own gaming standards). As such, passage of the Goodlatte...bill [the House of
Representative's counterpart to the Internet Act that generally tracks the Internet Act] may have the unintended effect of actually
increasing the exposure of children and compulsive gamblers to on-line wagering....(52)
Furthermore, law enforcement officials would not be able to monitor the fairness of games if online gambling goes underground.
Consequently, the Internet Act may also increase fraud over the Internet.
3. Jurisdiction, Comity, and Sovereignty Concerns
A third reason why the Internet Act is flawed is because it raises jurisdiction, comity, and sovereignty concerns. With respect to jurisdiction
issues, the question of whether U.S. courts may exercise personal jurisdiction over overseas defendants because of contacts with the United
States via the Internet is a murky one. The question of jurisdiction is murky, in part, because it is hard to define where the defendants'
prohibited activity took place; did the activity take place where the bet was placed or where the cyber-casino's server was located?(53)
To determine whether the U.S. may exercise extraterritorial jurisdiction, courts look to whether the express language of the statute clearly
indicates an intent to apply to acts outside the U.S. If the express language of the statute clearly indicates an intent to apply to acts outside the
U.S., then federal law may apply to foreign defendants.(54) It appears that the Internet Act would permit the federal government to exercise
personal jurisdiction over overseas defendants. The Internet Act contains a provision stating that "t is the sense of the Senate that the
Federal Government should have extraterritorial jurisdiction...."(55) Thus, the Internet Act makes explicit the intent of Congress to have
extraterritorial jurisdiction.
Assuming the U.S. clearly has personal jurisdiction over foreign defendants, it is still troubling for the U.S. to exercise jurisdiction.(56)
Exercising jurisdiction over overseas defendants may undermine principles of comity and sovereignty.(57) Unlike the U.S., many countries
have chosen to legitimately regulate Internet gambling. For instance, in Antigua, cyber-casinos pay a licensing fee between $50,000 and
$75,000, undergo personal and credit investigations, and post $500,000 bonds.(58) The U.S. should not impose its views of online gambling
on sovereign countries, like Antigua, that have chosen to legitimately regulate Internet gambling. As Sue Schneider, chairman of the Interactive
Gaming Council ("IGC") and editor of Rolling Good Times Online, asserts, "how arrogant is it for American politicians to say that those
nations aren't good enough to regulate this industry?"(59) Others have expressed similar sentiments, stating "[t]he problem with Senator Kyl's
view is that it follows the old American vision of the world as being headed by the United States. But the United States does not control the
world."(60) Ultimately, actions by the U.S. to interfere with foreign laws may result in international destabilization of legal and commercial
relations.(61)
Furthermore, America's attempts to impose its laws on others may ultimately have an adverse impact on the Internet:
If every state and nation...attempts to apply its laws with respect to Internet activities it deems illegal, the end result will be an
Internet that satisfies the lowest common denominator in terms of acceptable activity...Values and mores are so different and the
desire to regulate so different--especially from country-to-country--that agreeing to a common framework would be
difficult.(62)
IV. ALTERNATIVES TO THE INTERNET ACT
Given the flaws in the Internet Act, it is important to explore alternative ways to protect against the dangers of online gambling. The Internet
Act's ban represents one way to address the problems of Internet gambling. There are, however, other alternatives, including: (1) government
licensing and regulation in conjunction with the taxation of winnings; (2) regulation by parents and schools; and (3) a uniform international
policy against online gambling.(63)
The first alternative would require cyber-casinos to be licensed and regulated by the federal government.(64) Strict licensing and regulatory
requirements may help legitimize online gambling operations by requiring online operators to pay licensing fees, by subjecting online operators
to personal and credit investigations, and by mandating that online operators post bonds. Once online operators have complied with strict
licensing requirements, the government could continue to monitor their activities by relying on existing technology to randomly audit web sites
to ensure the fairness of games.(65) The government could pay for the costs of monitoring gambling activities through licensing fees rather
than taxpayer dollars. Although cyber-casinos may be able to evade licensing requirements and government monitoring, online gamblers could
choose to interact only with licensed cyber-casinos. Therefore, online gamblers could reasonably be assured that they are dealing with
legitimate organizations. In conjunction with imposing licensing requirements on cyber-casinos and monitoring their activities, the government
could control online gambling by taxing winnings. However, whether the taxation of Internet commerce is a viable alternative is a murky
question open for debate. A second alternative to prohibiting all online gambling is to encourage parental and school regulation of online
gambling. Parents and schools could employ two types of programs - filters and an Internet rating system - to block children's access to
online gambling.(66) A filtering program typically compares a user's informational requests with a list of prohibited sites. Some filtering
programs allow parents and schools to add sites to the list of blocked sources, while others allow parents and schools to prohibit access to
gambling sites during certain hours of the day.(67) In addition to filtering programs, a ratings system also may help block children's access to
Internet gambling sites: "A ratings tool would be encoded into the browser software used to gain access to Internet data sites...Parents could
choose a browser endorsed by the Christian Coalition, for example, or by the local school board...."(68) A benefit to both filtering programs
and a ratings system is that parents and schools can select what they want their children to see without imposing their views on everyone.(69)
A third alternative to prohibiting online gambling is to establish an international policy prohibiting or regulating online gambling. This alternative
would ultimately require countries to uniformly agree on how to address the issue of Internet gambling. |
