Monday brought a flood of action in response to the passage of Internet gaming legislation in the U. S. Congress late Friday evening. Some companies have come out already and stated that they will suspend American action from their sites (most notably PartyGaming and 888.com) while others have yet to decide what action to take. I was interested in the analysis of the issue from one of the finest legal minds on gambling when I contacted Professor I. Nelson Rose over the weekend.
Professor Rose is viewed as the foremost authority on gambling law. He has published several books on the subject, most notably his book from 1986 "Gambling and The Law", and continues to write many articles regarding the subject. He also is a professor of law at Whittier Law School in California and has been involved both civil and criminal legal cases regarding gaming on both personal and industry wide levels. His views regarding the passage of the bill were quite eye opening and his thought processes very complete.
In an e-mail that I received from Professor Rose, he first took on the methods through which the bill was passed. "Would-be presidential candidate Sen. Bill Frist warped the law-making process to score a few points with his right-wing religious base," he stated in the opening of our conversation. Professor Rose quickly moved on to his analysis of the bill by remarking, "The new law will be difficult to enforce. It only applies to "unlawful" gaming, but does not expand the reach of the main federal anti-gaming statute, the Wire Act. So, there are still going to be arguments that Internet poker, for example, is not unlawful."
"The new crime on transferring money only applies to gambling businesses," he continued. "Payment processors are not covered, unless prosecutors want to use theories of aiding and abetting. Treasury will make new regulations to require money transferors to identify and block funds from gambling sites. Banks will thus not be required to read paper checks."
When looking at offshore payment processing houses, Professor Rose pointed out a very important factor. "Why should NETeller comply with U.S. regulations? The U.S. and state Attorneys General can get court orders preventing ISPs from hosting sites that transfer money, but NETeller is not hosted by a U.S. server. Foreign nations are not usually required to enforce U.S. injunctions."
Professor Rose was also kind enough to send along his complete, line-by-line breakdown of the legislation as it appears in the Port Security bill that is awaiting President Bush's action. You can visit Professor Rose's website, gamblingandthelaw.com, to view the entire text and I certainly appreciate the time Professor Rose took to respond on this issue during his teachings overseas.