Journal of Criminal Law and Criminology Volume 99 Article 6 Issue 4 Summer Summer 2009 Aces and Eights: Why the Unlawful Internet Gambling Enforcement Act Resides in Dead Man's Land in Attempting to Further Curb Online Gambling and Why Expanded Criminalization if Preferable to Legalization Jonathan Conon Follow this and additional works at: https://scholarlycommons.law.northwestern.edu/jclc Part of the Criminal Law Commons, Criminology Commons, and the Criminology and Criminal Justice Commons Recommended Citation Jonathan Conon, Aces and Eights: Why the Unlawful Internet Gambling Enforcement Act Resides in Dead Man's Land in Attempting to Further Curb Online Gambling and Why Expanded Criminalization if Preferable to Legalization, 99 J. Crim. L. & Criminology 1157 (2008-2009) This Comment is brought to you for free and open access by Northwestern University School of Law Scholarly Commons. It has been accepted for inclusion in Journal of Criminal Law and Criminology by an authorized editor of Northwestern University School of Law Scholarly Commons. 0091-4169/09/9904-1157 THEJOURNAL OF CRIMINAL LAW & CRIMINOLOGY Vol. 99, No. 4 Copyright © 2009 by Northwestern University, School of Law Printed in U.S.A. COMMENTS ACES AND EIGHTS: WHY THE UNLAWFUL INTERNET GAMBLING ENFORCEMENT ACT RESIDES IN "DEAD MAN'S" LAND IN ATTEMPTING TO FURTHER CURB ONLINE GAMBLING AND WHY EXPANDED CRIMINALIZATION IS PREFERABLE TO LEGALIZATION Jonathan Conon* The legalization of Internet gambling is a hotly contested issue among its various supporters and detractors, despite the topic remaining in relative obscurity within criminal law scholarship. Advocates for online poker are particularlyvocal in the belief that their activity should be exempt from any form of a gambling ban. Recent academic articles, as well as current legislative proposals, have in fact advocated for an environment where Internet gambling is regulated and taxed by the federal government. This Comment is intended to balance the Internet gambling debate by presenting economic and social arguments against a legalization regime. It also seriously questions whether Internet poker is deserving of an exemption from a gambling ban. Before reaching these issues, this Comment surveys the current focal point of Internet gambling law, the Unlawful Internet Gambling Enforcement Act, as well as other existing and proposed gambling legislation. Ultimately, this Comment concludes that clearly defining "unlawful Internet gambling" and then broadening the criminalization of the activity to reach both operators and participants is a preferableapproach to proposals that callfor regulation and taxation. * J.D. Candidate, Northwestern University School of Law, May 2010. 1157 1158 JONATHAN CONON [Vol. 99 I. INTRODUCTION Is the ability of the citizenry to gamble legally on the Internet a right that must be protected? Since the enactment of the Unlawful Internet Gambling Enforcement Act' in October of 2006, the answer is no. But Representative Barney Frank, along with at least fifty House cosponsors, hopes to change this reality through the passage of H.R. 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act.2 This Comment attempts to distill the arguments both for and against using the criminal law to control Internet gambling and ultimately concludes that a stronger law, which reaches both operators and individual gamblers, is necessary to address the serious concerns associated with the activity. II. THE CURRENT STATE OF THE LAW: UNLAWFUL INTERNET GAMBLING ENFORCEMENT ACT OF 2006 The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) was passed into law in an attempt to combat online gaming.3 The drafters of the UIGEA cited a growing concern that debts stemming from Internet gambling would be uncollectable as a main reason for the Act's passage.4 In addition to the issues surrounding uncollectible debts, concerns over fraud, money laundering, and pathological and underage gaming were also advanced as valid reasons for the law.5 The alleged inadequacy of current law enforcement mechanisms to prohibit an activity that, by its nature, crosses both national and state borders was also proffered as justification for the UIGEA's passage.6 Despite the efforts of the drafters to address these evils, the UIGEA fails to fully accomplish its objectives because of a lack of serious 31 U.S.C. §§ 5361-5367 (2006). 2 H.R. 2267, 11 lth Cong. (2009). 31 U.S.C. §§ 5361-5367. 4 Id. at § 5361(a)(3). This fear grows out of the finding that states that chose to legalize casino gambling saw a subsequent increase in the number of personal bankruptcy filings. Kiran S. Raj, Comment, Drawing a Line in the Sand: How the Federal Government Can Work with the States to Regulate Internet Gambling, 56 EMORY L.J. 777, 793 (2006). 5 See Michael Blankenship, Note, The Unlawful Internet Gambling Enforcement Act: A Bad Gambling Act? You Betcha!, 60 RUTGERs L. REv. 485, 500 (2008). 6 31 U.S.C. § 5361(a)(4). Those with a less sanguine view of the law claim that the U.S. government is trying to paternalistically control the morality of its citizens. See, e.g., Michael A. Tselnik, Note, Check, Raise, or Fold: Poker and the Unlawful Internet Gambling Enforcement Act, 35 HOFSTRA L. REV. 1617, 1622 (2007). Others posit that the government only acted when it realized the magnitude of the tax receipts it failed to capture from the online activity. See, e.g., Christopher Grohman, Reconsidering Regulation: A Historical View of the Legality of Internet Poker and Discussion of the Internet Gambling Ban of 2006, 1 J. LEGAL TECH. RISK MGMT. 34, 64 (2006). 20091 ACES AND EIGHTS 1159 enforcement.7 This result is not surprising considering that key terms of the law, such as "unlawful internet gambling," are not clearly defined. 8 Additionally, the UIGEA includes numerous explicit exemptions that suggest a comprehensive online gambling ban was not intended.9 Lastly, the absence of a prohibition on individual gamblers leaves the supply of online players virtually unaffected.10 These problems are briefly considered below. The UIGEA functions by prohibiting monetary transfers from individuals involved in Internet gambling." However, the law does not subject the individual bettor to criminal penalties,12 nor does it explicitly prohibit all forms of Internet gambling. 13 Thus, one substantive problem with the UIGEA is that a vague definition of "unlawful internet gambling" has caused some to believe that particular areas of online gambling are still legal.' 4 The Act defines unlawful Internet gambling as "plac[ing], receiv[ing], or otherwise knowingly transmit[ting] a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is unlawful under any applicable federal or state law. ... , Instead of defining what constitutes illegal gambling, the UIGEA relies on pre-existing state and Federal law, which it previously describes as inadequate to handle the problem,' 6 as the source of a vital component of the legislation.1 7 For this reason, proponents of online gambling, particularly poker, continue to advance the position that some forms of Internet gambling are still legal. 18 7 See Mark Aubuchon, Note, The Unlawful Internet Gambling Enforcement Act of 2006: A Parlay of Ambiguities and UncertaintiesSurrounding the Laws of the Internet Gambling Industry, 7 APPALACHIAN J.L. 305, 312 (2008). 8 See Blankenship, supra note 5, at 496. 9 See infra text accompanying notes 19-25. 10 See infra text accompanying notes 104-120. 11 Blankenship, supra note 5, at 486. 12 See id. at 496 (contending UIGEA "does not specifically aim at criminalizing Internet gamblers"). 13 Id. 14 Id. ' 31 U.S.C. § 5362(10)(A) (2006). 16 See supra text and accompanying note 6. 17 Aubuchon, supra note 7, at 306. 18 See, e.g., Poker Players Alliance FAQ #4, http://pokerplayersalliance.org/about/ faq/#faq7 (last visited Sept. 25, 2009) ("There is currently no federal law that prohibits anyone from playing poker online. The Unlawful Internet Gambling Enforcement Act of 2006, does not change any federal gambling [law] and does not make it illegal for people to play on the Internet."). 1160 JONATHAN CONON [Vol. 99 A second substantive problem with the UIGEA is the number of explicit exemptions it grants,19 which again reinforces the notion that some forms of Internet gambling are legal. In particular, § 5362(1)(E)(ix) excludes participation in a fantasy sports game or contest from the definition of "bet" or "wager" so as to place these activities outside the UIGEA's reach.20 Fantasy sports proponents believe their games rest on the skill of the competitors, rather than on pure luck or chance, and thus are deserving of an explicit exemption.2' The problem with this exemption and others like it arises when advocates for borderline games like poker contend that they, too, are deserving of a skill-based exemption.22 Another explicit exemption under the UIGEA that makes the status of other types of Internet gambling unclear is the exemption for any activity legal under the Interstate Horseracing Act (IHA).23 In 2000, an amendment to the IHA allowed for the placing of interstate wagers "via telephone or other electronic media" where lawful in both states involved.24 Although the Department of Justice maintains that this amendment does not make the placement of horseracing bets on the Internet legal, their position seems to be at odds with the language in the IHA.25 If Internet gambling on horseracing is excluded from the confines of the UIGEA, proponents of other forms of gambling have a stronger argument that further exceptions, particularly for games with elements of skill like poker, are warranted. As a result of these ambiguities and exemptions, recent Congressional proposals have attempted to amend and clarify the UIGEA. 26 Most relevant to this discussion are the Skill Game Protection Act, introduced by Representative Robert Wexler in 2007,7 the Internet Skill Game Licensing and Control Act of 2008, introduced by Senator Robert Menendez,28 and '9 31 U.S.C.