| In the last interview, readers were
informed that you had released Gambling Report II, operated
CasinoLaw, and worked with Lionel Sawyer. Would you like
to add any new information? |
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| I have testified before the US Senate
and the National Gambling Impact Study Commission on Internet
gambling. I have chaired conferences on the subject in
New Orleans, Chicago and Sydney. I have been a conference
speaker on the subject before the World Gaming Congress,
the American Gaming Summit and, most recently, the National
Association of Attorneys General. |
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| In your last interview, slightly
more than a year ago, you incorrectly predicted that the
US would prohibit online gambling before the end of -99.
What do you think was the main reason that the Kyl Bill
did not become law in -99? |
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"The new Kyl Bill should
be renamed The Interactive Gambling Promotion Act"
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The Kyl Bill continues to go through
an evolution as politics have overtaken policy. This evolutionary
process has taken longer than I initially estimated. As
you know, the Kyl Bill slipped passed the Senate just
before the close of the 106th Congress. |
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| How do you view the latest version
of the bill? |
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| The new Kyl Bill should be renamed
"The Interactive Gambling Promotion Act." Senator Kyl
obviously could not garner enough support for his original
bill. To overcome the opposition, he conceded to exceptions
that have basically consumed the ruled. The major exceptions
are for the horse and dog race industries and state lotteries.
The latter exception is especially significant because
state lotteries can offer a variety of games under the
guise of a lottery including slot machines. While these
exceptions are for closed-looped subscriber systems, they
still permit interactive home wagering. |
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| As you know, the Kyl Bill slipped
passed the Senate just before the close of the 106th Congress.
How do you view the latest version of the bill? |
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| The new Kyl Bill should be renamed
"The Interactive Gambling Promotion Act." Senator Kyl
obviously could not garner enough support for his original
bill. To overcome the opposition, he conceded to exceptions
that have basically consumed the ruled. The major exceptions
are for the horse and dog race industries and state lotteries.
The latter exception is especially significant because
state lotteries can offer a variety of games under the
guise of a lottery including slot machines. While these
exceptions are for closed-looped subscriber systems, they
still permit interactive home wagering. |
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| Is the bill enforceable? |
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Enforceability is really not the issue. No bill that
attempts to regulate Internet content will achieve the
noobjective of removing that content from the Internet.
All US lawmakers can hope for is to impact the size
of the industry. A US prohibition, which the Kyl Bill
is not, would impact the size of the industry for three
principal reasons. First, strong US brands (i.e. traditional
casinos or media companies) will not enter the industry.
Second, US institutional money will be readily available
to build strong brands. Third, some percentage of US
bettors will not gamble over the Internet if it is unlawful.
The Kyl Bill, if passed in its current form, will result
in an increase in interactive wagering as those fortunate
to be granted exceptions will work to exploit their
good fortune.
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| Is the bill wise? |
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"I disagree with the notion
that Government should interfere with a person's
freedom to gamble online or anywhere else."
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Surprisingly, this is the first
time that anyone has asked my personal opinion of the
law. I have always given both sides of the argument, which
both are logically supportable. I am fundamentally a civil
libertarian in the spirit of John Stuart Mill. Therefore,
I disagree with the notion that Government should interfere
with a person's freedom to gamble online or anywhere else.
But, I recognize also that no one has any natural rights
to cheat or steal from any other person and, if they do
they should be punished. The Internet and Internet gambling
scare me because of the lack of accountability. This is
the problem that the lawmakers should be most concerned
about. Unfortunately, I am not sure there is a good solution.
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| Can you make another prediction
as to if and when it will become law? |
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| The great Yogi Berra allegedly once
said, "It is difficult to make predictions especially
about the future." But, I will go out on a limb and say
sometime before June 2000 or else sometime later in the
millennium. |
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| How do you think a law based on
the latest version of the bill would affect the online
gambling industry? |
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| I would seriously consider investing
in those companies that provide support to state lotteries
because their revenues are going to soar. The players
in the online racing industries will be interesting to
watch, although I think in time only one or two of these
companies will survive and prosper. |
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| What would prohibition mean to the
social online player in the US? |
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| For most players, not much. The current
bill does not make it illegal for a social bettor to place
a wager over the Internet. |
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| Considering the fact that other
countries are legalizing and regulating online gambling,
do you think US lawmakers will take on a regulatory model
somewhere down the line? |
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| I am not sure what type of model that
the Kyl Bill espouses. It is schizophrenic. Regarding
online lotteries, it adopts a government-run model. Regarding
online racing, it adopts a state-controlled regulatory
model. Regarding online www wagering and most casino
gaming, it adopts a prohibitory model. |
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| Will US lawmakers change their position
regarding casino and www wagering? |
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My thoughts are that the answer is
negative regarding www wagering. The US government
made a broad policy statement some years ago that www
wagering generally should be prohibited (with a limited
exemption for Nevada and two other states). Today, despite
that illegal www wagering is quite widespread and substantially
tolerated by law enforcement, the US lawmakers are not
considering the regulatory model. Just the opposite is
occurring as Congress is considering revoking a part of
Nevada's exemption for amateur www.
With regard to casino wagering, any exemption would have
to come before passage of the Kyl Bill. If not, I do not
see future support for liberalization of any Federal gambling
laws in the near term. |
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| Let's talk about a different issue.
What are your comments on the Cynthia Haines settlement?
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| It should be apparent that the profit
margins in the online gaming industry are large enough
to absorb loses due to refusals of some customers to pay
their bills. You need to remember that gaming debts were
not enforceable in Nevada until 1981 and the state gaming
industry did quite well. Simply put, most players pay
their debts. It has long been part of the Gambler's Code.
Nor do I believe that the case will scare off most credit
card companies. They will simple shift the burden of loss
back to the Internet gambling operator. |
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| What do you think about Ira Rothken
(Cynthia Haines's lawyer) now taking on the similar case
of Fred Marino? |
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| I do not know Mr. Rothken's motivation
for taking on this case or his fee arrangement with his
client. But, most often lawyers are simply representing
their clients' interest for a fee. I am sure that the
credit card companies will hire good attorneys for a fee
to represent their interests. This is simply the American
way. |
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| Are we seeing the beginning of a
trend? |
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| Sure. Gambling debts are not enforceable
in most states. So the online operators better begin factoring
bad debts into their business models. |
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| In a decision on July 26th, New
York State Supreme Court Justice Charles Edward Ramos
ruled that a foreign-based Internet casino web site was
subject to New York State gambling laws. What consequences
could this ruling have on Internet gambling? |
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"The New York decision
was not unique, nor particularly well-thought- out
or written."
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The ultimate ruling in that case
is that an out-of-state operator that accepts online wagers
from a resident of a state is subject to the criminal
laws of that state. This ruling, I believe, will withstand
the test of time. The New York decision was not unique,
nor particularly well-thought- out or written. The cases
from Wisconsin, Minnesota & Missouri are better specimens
of the legal principle.
These decisions collectively are bad news for persons
within the reach of state governments, e.g. Americans,
that want to get into the online industry. These people
could, and many will, face prosecution all across the
United States.
Non-US operators (who are not planning to visit Disneyworld)
will likely ignore the ruling unless a U.S. law suit could
impact their licenses in their place of operation. A non-U.S.
operator cannot be adjudicate to be in violation of the
law unless the court obtains physical custody of the person
charged. If the person is outside the US, no practical
method of obtaining physical custody is available because
no current extradition treaty covers gambling violations.
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| Thank you very much for sharing
your expertise and thoughts with us. |
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