State Law and the Unlawful Online Gambling ActCard Player's Legal Expert Examines the Issue of State Rights |
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Today's article addresses an important issue that has created a great deal of concern: How the new federal legislation affects state law.
My previous article analyzed the new bill as it relates to federal law and can be found here. This article focuses on the new bill as it relates to state law. For a complete collection of articles pertaining to this issue, click here.
State vs. Federal Constitution
Prior to analyzing how the new federal law interacts with state gaming law, it is necessary to have a basic understanding about the two constitutions by which we are all bound.
Every state has a constitution that is a body of laws that the citizens of that state must follow. There is also a federal Constitution that all citizens of the United States must follow. (The federal Constitution and the US Constitution mean the same thing.) We are each subject to both the laws of our state and federal laws.
The Tenth Amendment to the United States Constitution states that: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people." The Tenth Amendment was intended to confirm the understanding of the people at the time the Constitution was adopted that powers not granted to the United States were reserved to the states.
Historically, the states have successfully regulated gambling within their borders, as that is seen to be a power reserved to the state. Almost every state has some form of legal gambling, be it a casino, lottery, video, lottery terminal, horse wagering, bingo, or other forms of gambling.
As to the issue of which law applies (state or federal), the US Supremacy Clause states that the "Constitution and the laws of the United States...shall be the supreme law of the land...anything in the constitutions or laws of any State to the contrary notwithstanding." This means of course, that any federal law - even a regulation of a federal agency - trumps any conflicting state law.
Finally, the Commerce Clause makes Congress the guardian of interstate commerce. Article I, Section 8, Clause 3 of the US Constitution states in relevant part: "The Congress shall have power to... regulate commerce with foreign nations, and among the several states …."
Every federal law must have a constitutional basis in order to be valid, and the Commerce Clause has been widely used as a constitutional base for federal legislation of every type. It has been predicted that the Commerce Clause will ultimately regulate many activities on the World Wide Web.
Those three constitutional mandates taken together basically mean that any federal law must be constitutionally based. If it is, and if there is a federal law on a subject, it preempts state law. The federal government is to regulate commerce, but powers not granted to the federal government are "reserved to the states. And laws relating to the health and welfare of its citizens usually fall within the purview of state law."
So what powers does the federal government have regarding online gaming law? Traditionally, the federal government has stayed out of the gambling arena and left its regulation to the states. However, when gambling crosses into different states or countries, the federal government has a legitimate interest and therefore gets involved.
The Unlawful Internet Gambling Enforcement Act
As I explained in a prior article, section 5361(b) of the Unlawful Internet Gambling Enforcement Act specifically states that nothing in this new law shall be construed as "altering, limiting, or expanding any Federal or State law… prohibiting, permitting or regulating gambling within the US."
In other words, the language of the statute confirms that this new law does not change existing gaming law. The federal government has merely enacted a law that attempts to enforce state or federal laws already in existence.
The operative section of this new legislation states that "No person engaged in the business of betting or wagering may knowingly accept…" electronic transfers, credit cards, etc. where a person is engaged in "unlawful Internet gambling." This new law applies, if and only if, the gambling is already illegal under current state or federal law.
Whereas my previous article focused on current federal law, this one addresses applicable state laws.
State Gaming Law
From the letters I have received, I am concerned that some readers do not know the gaming laws of their states.
A few states have passed statutes making it a misdemeanor to participate in Internet gambling. For example, Illinois passed legislation that criminalized the activity of the individual bettor, making it a Class A misdemeanor (720 ILCS 5/28-1 (2001)(a)(c)).
This legislation was ridiculed by deputy district attorneys, who would be the enforcers of this law, causing The Chicago Sun Times to conclude that the legislation "has bark and no bite" and that "without cyber cops monitoring households and their computers, the law will be difficult to enforce."
To my knowledge, there has not been one prosecution in those states that make it unlawful to play online poker in their state.
Problems with Enforcement
In a nutshell, the reason it is almost impossible to enforce a law prohibiting a gambler from playing poker online is because prosecutors are hard-pressed to come up with admissible evidence.
A criminal case must be pleaded and proved with specificity. What this means is that a crime must be alleged to have occurred on a specific date in a specific place, in order that the accused can lodge a defense. How could a state prove that one was playing poker on a certain date and time in its jurisdiction?
First, a county prosecutor would have to have sufficient information to file a lawsuit against an individual and then prove that the crime occurred within that county. With the advent of the Internet and laptop computers, it is almost impossible to prove that someone was playing poker in a certain jurisdiction. Many gamblers travel around the country to different venues. The government would have an extraordinarily difficult time proving from where a poker site was accessed. If a prosecutor cannot prove jurisdiction, the case gets thrown out of court at its inception.
Next, even if it could be proven that a certain computer was used, the identity of the user must be proven beyond a reasonable doubt. To prove the user's identity, the prosecutor would have to provide first-hand knowledge regarding who was at the computer playing poker. Also, subpoena power is not available overseas, meaning that an offshore online site would not turn over its records regarding who was playing and when.
The state cannot come into one's home without "probable cause" to believe a crime was being committed, which would entitle it to have a search warrant signed by a judge. The search warrant must be based upon probable cause, which is defined as objective facts that raise in the mind of a reasonable person the probability that a crime is being committed. It would be nearly impossible to demonstrate probable cause to believe a crime was being committed.
Finally, considering that some people play one- and two-penny poker, it would be embarrassing for a prosecutor's office to dedicate its scarce resources to catch a penny-ante online gambler, while murderers and rapists are on the loose.
The State of Washington Makes Online Gambling a Felony
It is important for our readers to understand that Washington did make it a felony to play online poker in their state. Although no entity appears to be enforcing this law, it does exist.
On March 28, 2006, the state of Washington passed a law prohibiting Internet gambling, which went into effect on June 7, 2006. The Washington bill upgrades online gambling from a misdemeanor to a class C felony.
Gambling Commission Director Rick Day and State Senator Margarita Prentice, who sponsored the legislation, have publicly stated that the aim of the law is not directed toward the online gambler. Day said that jailing small-time online gamblers is "not the focus of our work." Day said his priorities are to go after national and international promoters or operators based in Washington state. Evidently he thinks gamblers are like children, needing protection. He has publicly stated that he wants to protect gamblers from sites that won't pay, colluders, and money launderers.
In my opinion, this offensive, overbearing law is unconstitutional and needs to be challenged in a Washington court. Besides the fact that it attempts to legislate morality, the law is inconsistent with other Washington laws that allow gambling in brick-and-mortar casinos. The prohibition does not include online horse-race wagering, so that certain forms of online gambling are still legal where the state makes money. These issues will have to be hammered out in court. I eagerly await the first lawsuit and hope to be personally involved.
Furthermore, the sentencing scheme is ridiculous. Playing poker online in Washington has been deemed a class C felony, punishable by an amount not to exceed $10,000 and/or confinement in a state correctional institution for up to five years.
Other class C felonies in Washington include certain degrees of rape, child molestation, stalking, bestiality, making deadly threats, failure to register as a sex offender, theft, assault on a child, custodial sexual misconduct, sex and labor trafficking, and the list goes on.
This means that under Washington law, a penny-ante poker player could ostensibly receive the same sentence as one involved in certain types of child molestation. This violates the Eighth Amendment's proscription against cruel and unusual punishment. Allow me to explain.
In 1977, there was a law in Georgia that made rape punishable by death. In the famous case of Coker v. Georgia, the US Supreme Court ruled that a sentence of death for the crime of rape of an adult woman was grossly disproportionate and excessive punishment forbidden by the Eighth Amendment to the US Constitution. A sentence cannot be disproportionate to the crime. This issue will also have to be tested in court.
Regardless of what we all think about the Washington law, it currently exists. The next question is how it relates to the Unlawful Internet Gambling Enforcement Act.
How Does the Federal Enforcement Act Interact with State Law?
Only in the case where a state makes it a crime to play poker online, the new statute (if signed into law, of course) also makes it a crime for the "person engaged in the business of betting or wagering" to "knowingly accept" funds. As I have stated before, this rule does not apply to the online gambler, but rather, to the online sites.
In other words, where Washington makes it a crime to play poker online, the federal statute makes the operator of a site liable for accepting payment. However, since all gaming sites are offshore and not subject to our laws, this is a law with no teeth.
Recognizing that the US has no jurisdiction offshore, the bill ends in section 803 by saying that the US government should "encourage cooperation by foreign governments." Dream on.
People in the gaming world already know that a place like the Isle of Man does not feel sympathy with US laws and refuses to enforce a violation of a US law where no similar law exists there. As a matter of fact, the Isle of Man was one of the first jurisdictions in the world to introduce legislation specifically designed to benefit gambling and e-gaming firms as well as protect consumers. The last thing they would consider is cooperating with US antigaming laws.
In sum, the 2006 Enforcement Act does make it a felony for an owner or operator of a site to accept money for gambling where it is already illegal (that is, Washington), but since all gaming sites are located outside of the jurisdiction of the United States, this portion of the law is, in all practical terms, unenforceable.
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