Inside Asian Gaming

INSIDE ASIAN GAMING | January 2012 40 Gambling and the Law ® GAMBLING AND THE LAW ® An Internet Gambling Present from the US Dept. of Justice Unassailable—the DOJ ruling eliminates almost every federal anti-gambling law that could apply to gaming that is legal under state laws T he United States Department of Justice (“DoJ”) has given the online gaming community a big, big present, made public two days before Christmas. President Barack Obama’s administration has just declared that the major federal anti- gambling statute, the Wire Act, applies only to bets on sports events and races. This is also a gift to the states, which are desperate to find ways to raise revenue without raising taxes. In fact, Nevada and the District of Columbia have already passed laws authorising most forms of Internet gambling. The two jurisdictions are now free to start their online games immediately.They can even enter into agreements to allow operators in Las Vegas to accept players fromWashington, and vice versa. The opinion requires that the gambling be legal under state laws. It will take some time for legislatures to react. But many of the state lotteries can set up online games quickly.TheywillstartwithInternetvariations of the lotteries they already sell with paper tickets and in-store computer terminals. But some will follow the lead of government lotteries in Canada and elsewhere and set up online poker and casino games. The political fights will be over who gets the licenses. In D.C., the operator is the Lottery. In Nevada, where there is no state lottery, the licenses will naturally go to the privately owned casinos. But what happens in a state like California? The politicians will legalise Internet poker solely to raise revenue, not to protect the local operators. Giving the exclusive right to Internet games to the State Lottery might bring in more money in the long run, but the state is desperate for cash, now. Only outside companies, like Caesars Entertainment, can come up with the $100 million or so the state will want, up front. But California has long-established and politically powerful card clubs and Indian casinos. They will not quietly accept an outsider setting up a competing operation that brings legal gambling into every home in the state. Still, there is so much money at stake that political deals will be made. In states like Nevada and New Jersey, where the local operators are the big money, the landbased casino companies will get the Internet gambling licenses. In states like California, local operators will get a license or two, but others will also be sold to the highest bidders. The great irony is that this coming explosion of legal Internet gambling in the US was created by a conservative Republican attempting to outlaw online gaming.WhentheGOPcontrolledCongress and George W. Bush was President, Bill Frist (R.-TN), then majority leader of the US Senate, rammed through the Unlawful Internet Gambling Enforcement Act, by attaching it to a must-pass anti-terrorist bill. Frist did such a terrible job of writing the UIGEA that he accidentally opened