By: Jerry Chapin
The Internet has done so much to move us forward. It has served as an educational platform for billions of people who now have access to information, services, and goods they would otherwise be without. The Internet used to be an unregulated cyber world where the good, the bad, and the ugly shared a certain freedom of existence. However, as the dangers of the web have slowly become realized, regulations and laws have taken effect that serve to prohibit certain online activity. One such activity is gambling.
Gambling laws in the United States are far from homogenized; one can gamble away their college fund in Las Vegas and leave with nothing but a hangover. Whereas if the same occurred in New York state for example, that person would be in violation of a slew of state gambling laws and subject to prosecution and even imprisonment. Although arguably unfair, this reality is the 10th Amendment in action, which gives the states sovereignty within their own borders to make and enforce laws not delegated to the Federal government through the Constitution. Although owning and operating an online casino is illegal anywhere within the United States, placing bets online with an offshore based gambling website is only illegal in certain states.
For brick and mortar casinos, the patchwork of state laws that govern gambling in America make sense. But when it comes to online casinos, American lawmakers face the task of writing Federal legislation that won’t destroy state sovereignty by taking away the right of each state to govern gambling, while simultaneously advancing the national objective of restricting the widespread growth of online gambling, an activity deemed by many lawmakers to be degenerative.
18 U.S.C. § 1084, a Federal gaming statute that governs the transmission of wagering information, has been used successfully to prosecute American nationals operating online gambling sites offshore—when they have taken bets from residents in states where online gambling is prohibited by state laws. See U.S. v. Jay Cohan. So the real issue facing those looking to run an offshore gambling site and avoid prosecution is this: how do we provide our services to states where gambling is legal while excluding our services in states where it is illegal?
Although state specific laws exist, they do not completely ban online gambling within the United States and thus are ineffective at prohibiting someone in a state where gambling is illegal from engaging in online gambling. The result is a large and ever expanding population of American citizens breaking the law and not being prosecuted.
Wealthy casino mogul Sheldon Adelson, the 8th richest man in the world, has been spending large amounts of money to lobby congress for an all out ban on online gambling. Sheldon Adelson, who contributed over 150 million dollars to republican candidates during the 2012 elections, is clearly testing the loyalty of these lawmakers. Instead of getting in on the online gambling action, Sheldon would rather restrict the activity altogether to drive would-be online gamblers into his casinos. The bill he is funding is known as the RAWA (Restoration of the American Wire Act) and, if passed by Congress, it would make all online gambling illegal across America. Critics call the legislation unconstitutional because it would restrict the states’ ability to create and enforce their own laws on the matter, thus violating the 10th Amendment’s protection of state sovereignty.
A recent hearing by the House Judiciary Committee on the matter has confirmed what most already predicted; heavily funded Republican lawmakers are supporting the RAWA, a law that does what most of them campaigned against—it grants the Federal government power over that of the states. Although this hand is yet to play out, it looks like Sheldon Adelson has the deck stacked in his favor.
Bio: Jerry is a staff member of the Journal of High Technology Law. He is currently a 2L at Suffolk University Law School with a concentration in Civil Litigation. He holds a B.A. in Political Science from Roanoke College.
