State gambling laws and the internet

OK, now its time to delve into the really arcane subject matter. We have previously seen that if federal law covers online poker it almost certainly only does that by virtue of referencing "gambling that is illegal under state law."

(Link:http://www.pocketfives.com/poker-for...-money-4398793 )

We have also previously seen how it is far from a closed question as to whether state gambling laws cover poker, primarily due to poker being a game of MOSTLY skill.

(Link:http://www.pocketfives.com/poker-for...-poker-4480031 )

So now the big question, assuming a state's gambling laws cover poker, do they also apply to poker played over the internet?

Again, there is no definitive answer to that question as I write this. Courts have hardly even begun to tackle the issues here, and so far only a few state legislatures have addressed it either. So again what this article will do is break down the question into the various issues that are out there. I will also again only refer to specific states as an example, I still want to keep creating the running list of each individual state discussion in the PPA's "Ask Skallagrim" Fourm (Link: http://theppa.org/forums/forum/55 )

So onto the actual issues.

1) The Commerce Clause

Article I, Section 8, Clause 3 of the U.S. Constitution states that :
"Congress shall have Power....To regulate commerce with foreign nations, and among the several states, and with the Indian tribes; " Over the years this clause has been the subject of much debate. For our purposes however, we need only concentrate on one aspect - the fact that the power to regulate international and interstate commerce is reserved to the US Congress. So although written as an express grant of power to the federal government, the Commerce Clause also contains an �implicit restraint on state authority� to regulate interstate or international commerce. The Supreme Court has referred to this restraint as a �negative command, known as the dormant Commerce Clause.� According to the Court, the dormant Commerce Clause bars states from discriminating against interstate commerce and favoring in-state economic interests over out-of-state economic interests.

Well, internet poker is clearly "interstate" and/or "Foreign" commerce. So the question is whether states have the right to regulate. ban, or otherwise interfere with internet poker AT ALL, or whether only Congress has that right. This issue is really ripe for a Law Review article, not a forum post. Lucky for us, such article have been written, One of the most recent and best (IMHO) is by Mark B. Dubnoff and can be found at GAMING LAW REVIEW AND ECONOMICS, Volume 12, Number 3, 2008. Ultimately Mr. Dubnoff concludes that if a state allows ANY form of gambling within its borders. it would violate the Commerce Clause to allow that state to ban or prevent internet providers from offering gambling within their borders.

If thats right, only two states can have laws against internet poker without violating the Constitution; every state but Utah and Hawaii has some form of in-state gambling. And even in Utah and Hawaii, there are other issues.

2) Was the state gambling law meant to apply to the internet?

Here the answer depends, as always it seems, on a number of lesser questions:

a) Does the state law mention the Internet?

Well if it does, then, other than the commerce clause argument, it clearly applies to the internet. Probably all of you have by now seen the infamous list of 12-14 (interpretations vary) states that have gambling laws which "directly mention the internet." Only one, however, the state of Washington, has a law which clearly and specifically says PLAYING poker on the internet is a crime. Illinois has a clear law against playing poker for money, and a clear law against offering illegal gambling over the internet, but even there it is still open to question as to whether the law was meant to make criminal PLAYING poker on the internet. All the other states on the list either only make operating the game illegal, or they only make operating and playing at a site THEY DONT LICENSE illegal. Both NJ and NV are in that last category, surprise. This type of law, however, is the classic type of law that violates the commerce clause.

b) If the state law does not specifically mention the internet, should it be applied to the internet anyway?

To answer this question you need to really look at the specifics of the state law. Except for the laws that explicitly mention the internet, all state gambling laws were written long before the internet existed. Thus the first issue to consider is one of general policy: should laws written before an activity existed ever be applied to that activity? Consider that before the airplane became common, many states had laws limiting how fast a "motor driven vehicle" could go. Since an airplane had to go much fast than the law allowed, should that law be read to ban airplanes? Common sense would say no, as traveling in the air is fundamentally different from traveling on the ground. A similar argument exists regarding the distinction between B&M gambling/poker and internet gambling/poker.

Secondly, one has to look at the INTENT of the statute. Many gambling statutes were written not to ban gambling, but to ban (or restrict) gambling businesses and places. South Caroline, Hawaii, and Massachusetts all have references in their laws to "illegal gambling places," Since obviously one's den and computer are not among the places listed, it certainly seems that those laws, at least, should not apply to the internet. Also, some states, New York and Kentucky for example, only have laws against gambling businesses, not gamblers. Since there is no gambling business in the state, why should the law apply to businesses in other jurisdictions merely because a technology lets folks access those businesses without having to physically travel there?

In the end, all of these remain pretty much open questions that the Courts will have to decide sooner or later. But for us, it does narrow how we proceed with the analysis: 1) does the state law mention the internet - if it does, does it violate the commerce clause 2) if it doesn't mention the internet, is it a place or business specific law, or does it just make "gambling" a general offense? 3) If the latter, does it violate the commerce clause, and/or does it have any other distinguishing aspects which would argue against internet application?

A murky word, this. Someday, either through legislation or Court decisions, how much a state can control what its citizens do on the internet, and probably more importantly, how much a state can control what is offered on the internet to its citizens, will have to be decided. Until then, all we can do is identify the arguments.

Skallagrim

Excellent post Skall, thank you.

Skall,
Why is there no update on Lee Russo's case in Washington State? The last update was 4/11/08. I was of the impression that he was arguing the Commerce Clause and the State was asking for too much self incriminating information. It looked good for Lee in court. What has happened?

Is the Commerce Clause not applicable in Washington?

Sorry for the delayed response here folks, for a still unknown reason Pocket5s will not let me log in when using my FireFox browser. I have given up trying to figure it out, and am now logged in with a different browser.

Tacoman98, last I heard Lee Russo's case in Washington is currently being considered for appeal by the Washington State Supreme Court. I will have to check with Lee for the full status at this point in time, but if his state options were over I think we would have heard (and the matter would be pursed in Federal Court) - of course the Commerce Clause applies in Washington .

And also, Tacoman, I can't just reprint that article here, that would violate copy write law. To read the full article you will either have to pay the fee or, , go to a library, sorry.

TheVillageGrinder, you ask some very important questions. The Frank bill, as currently written, appears to leave opting in or opting out ENTIRELY up to a state governor's discretion. The final version will not stay that way, laws and legislators must be involved in this decision. Unfortunately, Barney F. has been a little preoccupied with other issues (of hardly greater significance, I agree ) and amending his bill is not currently on the schedule.

A better place to look for details will be in the Senate bill to be introduced by NJ Senator Menendez. That bill is expected to be filed before 8/07/09.
The PPA has had some very good lobbyists working very hard to get better specifics on this point (and others) out of these generally very good bills. Specifically on this issue, we are working to make sure any opt outs are based on clear state law not a governor's whim. If we don't get it in the original language, we will work to get it as the bill passes through the committee(s).

But at this point we can only continue working to make sure the FINAL version of any bill is a favorable to poker as is politically possible. Once we see a final bill, then we can re-evaluate and discuss other and future strategies meaningfully.

Skallagrim

PS: TheEngineer is already working on a campaign to influence state officials; stay tuned to this forum for details (if he already hasn't posted it by the time I finish this edit .