Friday the 13th Was an Unlucky Day for Online Casinos

Gambling law expert I. Nelson Rose analyzes the Unlawful Internet Gambling Enforcement Act of 2006, which was part of the Safe Port Act (naturally) signed by President Bush on Friday. Based on bills introduced by Reps. Jim Leach (R-Iowa) and Bob Goodlatte (R-Va.), the new law does not extend the reach of the Wire Act, which pretty clearly prohibits online sports betting but may or may not ban other forms of online gambling. Instead it prohibits financial institutions from processing money for "unlawful Internet gambling," defined as gambling that is already banned by federal, state, or tribal law.

Rose notes that "the Act exempts activities that we all know are gambling, but are, by statute, declared not to be gambling. These include securities and commodities, including futures, that are traded on U.S. exchanges." There is also special treatment for closed-system intrastate gambling in states where it's legal, for horse racing (but not dog racing), and for tribal casinos. But unlike earlier versions of the legislation, the bill does not allow state lotteries to go online.

Rose emphasizes that the U.S. government will have a hard time preventing overseas payment processors with no U.S. presence from continuing to help Americans gamble online. He says even U.S. banks are not required to keep track of paper checks to make sure they're not used to settle debts with online casinos. And while the law ostensibly allows the Justice Department to seek court orders compelling search engines to remove links to gambling sites, Rose writes, "what prosecutor would want to be ridiculed internationally for trying to prevent Google from showing links?" I'd guess there are at least a few, since the DOJ is willing to be ridiculed internationally for trying to impose the U.S. government's ideas of decent recreation on businesses in other countries.