Legalized gambling made the small desert town of Las Vegas, Nevada into one of the most recognized and glamorous places in the world. It attracts millions of visitors each year with its lure of economic freedom, cheap buffets, and elaborate shows. Gambling, however, is not limited to Nevada. Gambling, in some form, is legal in 48 states and the District of Columbia.1 Bingo, state lotteries, Indian Casinos, and horseracing tracks are popping up all over the country. In addition, Illinois, Iowa, Mississippi, Louisiana, Missouri, and Indiana have all legalized riverboat casinos, and upwards of 60 riverboats are now in operation in the United States.2
In 1997, Americans spent $586 billion on legalized gambling.3 That is more than was spent on cars, clothes, movies, and food combined.4 The gambling industry grossed $48 billion in profit from legalized gambling in 1997.5
As of May 1998, there were approximately 90 online casinos, 53 sports betting parlors, 39 lotteries, and 8 Bingo games online and available to Internet users.6 Without government intervention, the number of Online casinos will undoubtedly increase. Additionally, Australia is contemplating legalizing Internet gambling and one territory, Queensland, already has taken steps toward legalization. If online casinos are legalized in Australia, then Internet gambling sites would undoubtedly become firmly entrenched on the Internet.
Congressional reports estimate Internet gambling revenues could reach $10 billion by 2000.7 Private experts estimate Internet gambling revenues will reach close to $60 billion.8 $600 million in sports betting alone was wagered over the Internet in 1997.9 If other countries, such as Australia, legalize Internet gambling, the undoubted surge in international Internet gambling would dwarf estimates. Internet gambling would be no longer be viewed skeptically, but would be seen as a legitimate and fair form of entertainment. Australia's actions would legitimize Internet gambling in the eyes of the world.
The Internet
The Internet was not initially developed as a means of mass media and commerce, as it is used today. The Advanced Research Project Agency Network, or ARPANET, was created in 1969. The ARPANET was a network of interconnected computers used by the military, defense contractors, and universities. The purpose of the network was to provide a means of communication between participants that would still function if one section of the network were incapacitated by war. ARPANET was used for communication of defense-related research and development. Although ARPANET no longer exists, it was the basis for the development of what we now know as the Internet.
The Internet is a network of computers linked together via high-speed communications lines, which together, act as one unit. From any one of the millions of access points to the Internet, a user can access all of the information available on more than 10 million host computers. The Internet enables millions of people to communicate freely with each other and exchange vast amounts of information, for little or no cost.
In 1996, there were approximately 40 million people using the Internet worldwide.10 Today, there are currently 100 million users all over the world.11 People access the Internet in various ways. The most common is through Internet Service Providers (ISPs). ISPs, such as America Online, the Microsoft Network, and Prodigy provide dial-up computer access to their own proprietary computer networks and access to the rest of the Internet. In addition to ISPs, almost all universities provide access for students and staff, and many corporations provide access to the Internet for their employees as well. Public libraries are also using the Internet, providing free access to patrons.
A relatively new development in Internet access is pay-for-play shops. These shops provide access to the Internet for a small fee. One example would be computer coffee shops, where one can browse the Internet and drink coffee.
Access to the Internet is growing. Almost every person in the United States can access the Internet in some form or another. Whether through work, school, or a public library, the Internet is emerging as a dominant media for the twenty-first century.
The Internet contains five main types of media/information accessible by users. The first, and most common is e-mail. E-mail is electronic messaging sent over the Internet from one user to another. The volume of e-mail messages sent daily is astounding. There have been estimates that over 2 billion e-mail messages are transmitted over the Internet every day. Compare that to 566 million pieces of mail handled by the U.S. Postal Service.12
The second type of media are e-mail lists, also known as "listservs." A listserv is an automatic e-mail communications system that broadcasts e-mail messages to hundreds or thousands of subscribers. A user will send a message to the automatic listserv software, and that software will copy the message and sent it to every subscribed user. This method of communication is used frequently by academics and children alike. There are thousands, if not millions of listservs accessible to the public.13
The third type of media is newsgroups. A newsgroup is essentially a computerized bulletin board. Users can freely post their opinions or questions about any topic. Those messages are then available for others to read and comment upon. The messages left on newsgroups are sent around the world to thousands of mirror or duplicate sites. Users can access the newsgroups from a local site, but when they post, their information becomes available internationally. The topics for newsgroup discussions are very diverse.14
The fourth type of media is chat rooms. Chat rooms are areas that people can get together and type messages in real time back and forth. It is akin to having a telephone conversation by typing. There are designated "rooms" which segregate topics to enable unencumbered discussion. Users connect with the Internet, logon to the room, and are able to talk (type) with the other participants.
The fifth, and perhaps the best known, media type is the World Wide Web. The World Wide Web is a collection of files on computers that are programmed in a uniform language, hypertext mark-up language (HTML). These HTML files contain all sorts of information. Aside from plain text, HTML provides the benefit of formatting, color changes, and interconnectivity based upon "links." Links are pointers to other information on the Internet. All that is required to access the additional information is a click of the mouse. HTML documents also can contain movie clips, pictures, sounds, and other multi-media enhancements.
The process by which Internet users retrieve data from the Internet is complex, but the theory underlying it is simple. When a computer user accesses a web site over the Internet, several steps occur. First, the user initiates a request for information, a file, from a specific computer. The user's computer sends the information to their Internet Service Provider who in turn sends it over the Internet until it finally reaches the destination computer. The destination computer then reverses the process, sending the requested information. The Internet Service Provider acts as a middleman for all information accessed by its users.
One of the many advantages of the Internet is that it coordinates the routes by which all information travels. At specific intervals, all of the computers on the Internet send status signals to designated Internet routers. These routers choose the least active, and therefore, the fastest computers to send messages through. Using this means of communication, a user has no idea of the route a specific piece of information will travel. For example, an e-mail message from Minneapolis to Chicago may be sent via Tokyo, as opposed to Milwaukee, because the route to Tokyo was the least cluttered path. By enabling this kind of efficiency regulation, the Internet retains high-speed data transmission capabilities.
Internet Gambling Web Sites
The vast majority of Internet gambling sites contain more than just a place to gamble.15 Some sites have chat rooms or bulletin boards that allow people to post and read messages left by other users. Discussions on these sites include gambling, sports, technical assistance questions, computer topics, and almost anything else you can think of. These sites contain information that is, often times, difficult to find anywhere else.
Most Internet gambling sites contain thorough explanations of the rules of the games, including odds and procedures. This information can be invaluable to users not gambling over the Internet. With the proliferation of gambling in the United States, consumers are increasingly looking to the Internet for information on gambling, such as rules and odds.
Take for example, a person wishing to visit a local casino. A person can visit an Internet gambling site that contains information on the rules of various casino games. The information provided on that site can give that person the information needed to participate in local gambling operations. The rules of some games, such as craps or baccarat, are not inherently obvious. A person can learn how to play craps from the Internet, without risking the loss of any money. By obtaining information on terminology, procedure, betting, and odds of craps, over the Internet, that person would then be able to take the information learned to a casino and avoid making bad bets.
Online casinos, however, are primarily in existence to entice Internet users to gamble. Typically, a user creates an account with the online casino before commencing gambling. The user either sends money to the casino (typically overseas), or more frequently, provides the casino with a credit card number. A sum of money, oftentimes around $100, is charged automatically to the user's credit card account to be used as working funds. Along with the user's name, address, username, and a password, the online casino creates an account that enables them to begin gambling. Upon completion of this simple process, a user is ready to bet. The total time needed to create an account can be as little as a few minutes.
A new development in online gambling is wagering through proprietary software. A site will prompt a user to download and install the site's special gambling software on the user's computer. After the proprietary software is installed on the user's computer, the user logs onto the Internet as usual, and the new software connects the user to a special network belonging to the gambling site. Designed to eliminate the encumbrances of web browsing software, the proprietary software makes gambling easier and enhances the visual experience. Aside from downloading the software, the procedures for betting via the Internet or proprietary software are the same.
Some of the software available for download does not require betting at all. It allows betting with fantasy money so the user could become acclimated with the games. This advantage hooks players into thinking that since they can win without betting money, they can also win using their money. This increases the market for Internet casinos.
Internet Gambling Procedure
After an Internet user enters the casino either via their web browser, or through the site's software, the user is directed to choose a game. Games offered include Blackjack, Roulette, Craps, Baccarat, Solitaire, Video Poker, Keno, Slots, and many others. The user chooses the game they wish to play and begins. All of the games offered via the Internet are computer generated. There is no live-action dealer being filmed and telecast over the Internet. In an ideal situation, all outcomes of the games are generated randomly, however, in reality, most Internet casinos are not completely fair. By programming the gaming software themselves, they can increase the casino's advantage over the player's.
If a player loses at the game they are playing, the amount of that loss is taken out of their working funds, which have already been deducted from their credit card account. If the working fund reaches zero, the user is prompted to authorize another $100 credit card charge. If the player wins, those winnings are credited to the user's working fund. At any time, the player can authorize the online casino to credit all the money in their working fund back to their credit card, minus transactional fees of course.
The Current State of the Law
The Interstate Wire Act (IWA) currently bans all wagering using wire communications.16 However, it appears to limit only the actions of bookies, thus reducing its effectiveness against Internet casinos. The most relevant portion of the text reads:
Although it can be interpreted as prohibiting the use of the Internet, as the Justice Department interprets it, the public and many in law enforcement officials do not believe it is effective.17 Most Internet casino web sites contain disclaimers and warnings instructing users that it may be illegal to bet over the Internet. Most sites contain specific warnings for Minnesota, Indiana, and Hawaii users, because their state legislatures have either specifically outlawed Internet gambling or officials have contacted the site. The Internet gambling sites warns all other users that it is their responsibility to ensure that Internet gambling is legal in their states. This shows that Internet casinos and many users do not believe the IWA governs Internet casinos.
The Internet as Free Speech
In the landmark case of Reno v. American Civil Liberties Union,18 the U.S. Supreme Court examined the role of the Internet and its legal status. The case arose from a challenge by the ACLU of the constitutionality of the Communications Decency Act (CDA). Passed almost unanimously by Congress in 1996, and signed into law by President Clinton, the CDA forbade the transmission of any communication which is "obscene or indecent," while "knowing that the recipient of the communication is under 18 years of age." Additionally, the act made it a crime to "use any interactive computer service" to "display in a manner available to a person under 18," any communication that uses "patently offensive" language or images. The ACLU challenged the statute as being unconstitutional because it violated the First Amendment.
The Court examined the CDA and all nine Justices agreed the second part of the act, displaying offensive images, violated the First amendment and was unconstitutional. Seven of the Justices also believed the first part of the CDA, transmitting material knowing the recipient is under 18, violated the First Amendment as well.
The rationale of this decision has great constitutional bearing on all future Internet related cases. First, the court stated that the Internet, and other widely available computer networks, was more like traditional print media and deserved the very broad First Amendment protection given to books and newspapers. Second, the Court distinguished regulation of the Internet from content regulation of cable and over-the-air broadcasting as stated in FCC v. Pacifica and subsequent cases.19 The Court stated that the rational for content-based regulation of over-the-air transmission was to protect the listener from unexpected messages. Because the Internet needed an affirmative act to find the offending material, Pacifica was not applicable.
The final portion of the analysis stated that Internet
speech is protected by the First Amendment and all limitations of which
must undergo strict scrutiny. Because the right in question is fundamental,
the government must use the least restrictive means necessary to achieve
their compelling state interest. In the case of the Communications
Decency Act, the government failed to use the least restrictive means possible,
and the act was therefore, unconstitutional.
The Internet Gambling Prohibition Act, which will be adopted by Congress in the near future, is designed to address three areas of concern: Legal, Social, and Economic.
CONCERNS
The first area of concern is legal. The Internet Gambling Prohibition Act (IGPA) is designed to fix specific problems in the Interstate Wire Act (IWA).20 The IWA was passed in 1961, well before Internet gambling was even conceived. The Internet, therefore, is not specifically prohibited as a vehicle to gambling. Additionally, the IWA only prohibits those "engaged in the business of betting or wagering," which does not encompass the casual bettor.21 Finally, the IWA specifically mentions sports betting but fails to specify other forms.22
The second Concern of the IGPA is social repercussions of Internet gambling. The IGPA is created to curb under-aged and compulsive gambling because unfettered access to the Internet will increase under-aged and compulsive gambling.23 Children, it is thought, will treat Internet gambling and computer games as the same. They would be unable to differentiate between the two because of their similar user interfaces. Because children usually are more Internet-savvy than their parents are, parental controls would be ineffectual. Children would easily circumvent any form of controls.24
Moreover, because of the Internet's detached atmosphere,
compulsive gamblers would have increased difficulty controlling their gambling.
Gambling from the comfort of home lacks the noise and personal connections
that most people associate with gambling. Furthermore, people may
fail to recognize the amount of money they have lost. In a real casino,
chips physically represent money being wagered.
Without some kind of disincentive, like chips physically
being taken from the gambler, people may not be able to determine when
one has gone beyond one's means.25
Internet gambling would inevitably increase the numbers of addicted gamblers, as does any new form of gambling. In testimony before the Subcommittee on Technology, Terrorism, and Government Information, Ann Geer the chair of the National Coalition Against Gambling Extension stated, "gambling is one of the fastest growing addictions in the country. Internet gambling would multiply addiction exponentially, increasing access and magnifying the potential destructiveness of the addiction. Addicts could literally click their mouse and bet the house."26 The ease of access and the availability of credit would dramatically increase the numbers of gamblers.
The third area of concern over Internet gambling, and probably the largest, is economics. The adoption of the Internet Gambling Prohibition Act is necessary to keep the economic benefits of gambling in the United States. The only reason gambling is at all legal in the United States is the tax revenue it generates.
The majority of Internet gambling sites are located in Caribbean nations. Proponents argue that with widespread international Internet gambling, billions of dollars will be lost to local economies. Gambling not only produces great revenues for casinos, but it also provides many jobs. It is argued that Internet gambling will not only fail to create new jobs for the American economy but will result in the loss of existing jobs at casinos. One of the main justifications for allowing legalized gambling in the United States is the creation of jobs and the generation of local revenue.
Moreover, it is feared Internet casinos would move offshore to avoid taxes. States and the Federal Government heavily tax legal gambling establishments in the forms of sales tax, corporate tax, income tax, and property tax. If gambling moves offshore, a main justification for allowing gambling, increased tax revenues, would not exist. In addition, current companies engaged in gambling would move their corporations out of the United States to avoid paying local taxes. They would find a method of wiring their profits out of the country and away from U.S. taxes.
The final consideration is money laundering. Much of the money earned from illegal activities is identified by law enforcement because it is difficult to spend. Illegal businesses must "launder" their money, or make it look legitimate, before they can spend it without worry. The concern of law enforcement is if massive amounts of money are being gambled over international telephone lines, then it will become almost impossible to identify money laundering from other illegal activities. The Internet casinos would become a haven for drug dealers, mobsters, and terrorists. They would purchase a casino and funnel all their illegal profits through legitimate businesses, thus making the illegal funds virtually untraceable. Because the casinos would be located outside the United States, Congress and law enforcement would not be able to regulate and monitor their financial dealings.
Text of the Internet Gambling Prohibition Act
Senator Jon Kyl, Republican from Arizona, created the Internet Gambling Prohibition Act (IGPA) in 1997. Senator Kyl's legislation would amend the Interstate Wire Act (IWA) to include all forms of gambling and the Internet. It institutes six main changes to the IWA.
First, it expands the definition of communication used in the IWA. The definition is altered to specifically include the Internet as a form of communication. To do this, it eliminates the word "wire" which modifies "communication" in the existing act. The bill also changes "transmission or receipt of data, writings" to "transmission of writings." Finally, the bill inserts "radio, electromagnetic, photo-optical, photoelectric, or other similar facility" in the definition of transmission facility. These changes make it abundantly clear that the Internet, and all future technology, are intended to be covered by the statute.
Second, the IGPA redefines "bets and wagers" to encompass all wagering using the following language:
Third, the original act only included "[w]hoever being engaged in the business of betting or wagering" (bookies) and did not prohibit the casual gambler. The IGPA strikes "[w]hoever being engaged in the business of betting or wagering" and "shall be fined ... or imprisoned not more than two years, or both" and instead inserts:
(2) Other Persons -- Whoever other than a person described in paragraph (1)) knowingly uses a communication facility for the transmission or receipt in interstate or foreign commerce of bets or wagers, information assisting in the placing of bets or wagers, or a communication that entitles the transmitter or receiver to the opportunity to receive money or credit as a result of bets or wagers, shall be fined not more than $2,500, imprisoned not more than six months, or both.
Fifth, and equally important to this analysis, the bill inserts a means by which a law enforcement agency can acquire an injunction for a common carrier that refuses to block access to an offending Internet site:
The sixth and final change to the law is the United States government will have extraterritorial jurisdiction over anyone who transmits or receives any wagering information to or from the territorial United States. It is conceivable that information relayed over Internet connections in the United States, but neither originates nor ends in the U.S. would be illegal under the law. In any event, the express purpose of the bill is to allow law enforcement to close gambling operations that have contact with the U.S.
Enforcement
The enforcement of the IGPA is to be carried out by any law enforcement agency in the United States. This may become problematic as to the uniform nature of enforcement, but enforcement is not a primary concern of this paper.
The Current State of the Internet Gambling Prohibition Act
The Senate passed the IGPA in 1998 by a vote of 90-10. The amendment also was introduced in the House of Representatives, but because of a lack of time, it was dropped at the end of the session. The bill is expected to be reintroduced in 1999. With the bipartisan showing of support in the Senate, the bill is expected to pass both houses of Congress and be signed into law by the President.27
Application of the IGPA and its effect on the Internet
The effect of the IGPA on individual Internet users is twofold. First, the IGPA would make it illegal to wager over the Internet. The individual user would not be allowed to bet over the Internet, but the likelihood of detection, under the current bill, is very unlikely. Because the bill is not intended to stop individual gamblers, it does not contain provisions that would aid law enforcement in detecting individual bettors. The only realistic method of catching individual Internet users would be via the seizure of records of offending Internet casinos.
The second effect on individual users would be blocking of Internet gambling sites by ISPs. The law, as written, requires ISPs to block Internet gambling sites on the Internet. If they fail to do so, law enforcement agencies can obtain an injunction forcing them to comply. The effect of the IGPA would force ISPs to actively engage in Internet censorship.
The effect on Internet gambling sites needs to be analyzed according to whether the site is based in the U.S. or is foreign. Domestic Internet sites are more likely to be identified and prosecuted. However, the likelihood of domestic sites being prosecuted is remote. Identifying the ownership of Internet sites is not an easy task. Additionally, because of the interstate nature of Internet gambling, only federal law enforcement would be able to effectively locate and close sites. Moreover, most domestic Internet sites when faced with the proposition of criminal prosecution would relocate offshore to avoid U.S. restrictions.
Foreign-based Internet casinos would be virtually immune from prosecution. The ability to identify the owners of foreign Internet sites is even more difficult than identifying domestic sites. Most Internet sites do not require proof of identification to be connected to the Internet. Law enforcement officials would have to spend an inordinate amount of time attempting to determine the ownership of Internet casinos, making it virtually impossible to find the owners.
Another factor that hinders the prosecution of Internet casinos is the ability of sites to change their location on the Internet. If law enforcement does identify an offending Internet site and blocks access to it, in under one hour that site could be relocated to another address on the Internet. Thus, by the very nature of the Internet, Internet gambling sites could easily evade IGPA imposed blockades.
The effect on Internet Service Providers is the focus of this paper. ISPs are required under the IGPA to block access to offending Internet gambling sites. However, the Internet gambling sites are expected to easily circumvent this provision of the IGPA. One of the benefits of the Internet is the ease upon which one can create an Internet site. It is also extremely easy to alter the address, or location of sites. It would therefore become difficult for the ISPs to maintain a constant ban on all gambling sites.
It is logical to assume that several groups would keep a close eye on Internet gambling sites and would notify law enforcement of offending sites. Law enforcement would, in turn, notify ISPs to block access to those sites. However, there are no provisions in the IGPA to create or fund these "watchdog" groups. The success of the IGPA rests upon the ability to refuse access to Internet gambling sites. Without an explicit means of detecting sites and notifying law enforcement agencies, this provision falls short of its expectations.
Additionally, if an ISP does not want to block access to an offending site, law enforcement agencies can obtain an injunction ordering the ISP to comply. The ISP has choice but to blindly follow the orders of law enforcement. Even if the site is not overtly engaged in gambling, or gambling is only a portion of the site, the ISP has no choice but to comply with the law.
There is a chance that law enforcement would abuse its
powers and block access to an Internet site that is not engaged in gambling.
The Internet site and the ISP would have no means to appeal their injunction,
as there is no remedy provision in the IGPA. For example, law enforcement
officials acting on a tip are told that a children's web site is really
a front for illegal betting. That law enforcement agency would probably
be able to get ISPs to block the Internet site from public view.
The text of the IGPA does not contain any provisions by which the site
could challenge the actions of law enforcement and the ISP. Moreover,
if the ISP blocked access to the Internet site based upon an informal request
from the law enforcement agency, reversing that action may be difficult.
All legislation enacted by Congress must comply with the Constitution of the United States. Over the years, the Supreme Court has developed a sophisticated, yet easily applicable test to determine the constitutional validity of all laws in the United States.
Developing a Test to Evaluate the Regulation of Constitutional Rights
Due process began, in essence, with the Slaughter-House Cases.28 The United States Supreme Court, deciding if Louisiana can grant a monopoly on New Orleans-area slaughterhouses to a single company, declined to apply the text of the Fourteenth Amendment to Louisiana. The Court held a monopoly did not violate the Due Process Clause of the Fourteenth Amendment on the theory that the Due Process Clause only gives Procedural Due Process protection. One Justice dissented, arguing a statute that restricted a large portion of the population from lawful employment deprived them of liberty and property without due process. This view was later adopted by the Court.
After the Slaughterhouse Cases, the Supreme Court was under pressure to look more deeply at state legislation and its purposes. The court began to do so in the late 1800's. The cases of Munn v. Illinois and Mugler v. Kansas the Court began to indicate it would be willing to engage in substantive review of future cases.29 In Munn, the Court indicated that in the future, it would determine which regulations of "private contracts" were reasonable. In Mugler, the Court stated legislation enacted under the states' police powers would only be valid if the legislation actually related to the protection of public health, safety, or morals. Additionally, the legislation would only be valid of it did not violate rights secured by fundamental law.30
Finally, in 1897, the Court used substantive due process to invalidate a statute for the first time.31 In Allegeyer v. Louisiana, the Court struck down a Louisiana statute prohibiting its citizens from purchasing insurance from a company not licensed in Louisiana. The Court reasoned that the statute violated the freedom of contract. The significance of this case lies in the Court's Constitutional interpretation of the Fourteenth Amendment. The Court stated that liberty, in the Fourteenth Amendment, encompasses more than just physical liberty but also the rights to choose where to live and work, the freedom to contract, and to earn a living by any legal means. This is a sharp change in attitude over previous cases, but the Court had not established a solid method for evaluating legislation. The Court began structuring a test with Lochner v. New York.32
Lochner involved a law limiting the number of hours a bakery employee could work per week to 60. The Court struck the down the law as an abridgment of the "liberty of contract," and a violation of due process. The Court rejected New York's arguments that the law was a valid labor law and it protected the health and safety of workers. The Court quickly dismissed the argument that it was a valid labor law because it was not within the state's police power. The Court decided that bargaining power between bakery workers and employers was sufficient to govern working conditions. Lacking a showing that bakery workers were in need of protection because of some diminished capacity, the law was not within the police power of the state.
The argument that the law was a health and safety measure failed because there was, again, no proof that bakery workers needed protection, such as miners did. Additionally, long hours did not endanger the health and safety of the products, and therefore did not effect the public.
The Supreme Court looked past the legislation to the motives of the legislature. The Court did not believe that the Legislature was acting for health and safety reasons. This implied that, in the future, the Court would examine actual motive for legislation, not just hypothetical motive when evaluating legislation. Additionally, and probably more importantly, the Court did not defer to the legislature's findings of fact. The Court made its own decisions as to the conclusions the legislature made. The Court decided the number of hours a baker may work and the quality of the bread did not have a connection. Thus, the Court created a means-end test for prospective legislation.
The decision in Lochner was heavily criticized in the three decades following that case. But the significance of Lochner is still intact: the United States Supreme Court was going to examine seemingly innocuous state legislation for constitutional validity. The Lochner means-ends test was further developed into a solid constitutional test. In the years following Lochner, the Supreme Court invalidated several more state statutes on Due Process grounds.
The first major modern case which used a substantive due process approach to protect fundamental rights is Griswold v. Connecticut.33 In Griswold, the case involved a Connecticut statute forbidding the use of contraceptives, and aiding or counseling others in their use.
The United States Supreme Court struck down the statute 7-2. The majority opinion created a "penumbra" of rights or area of privacy which the government should not intrude upon. It concluded that the use of contraceptives by married people fell within this penumbra. The means-end test the current court uses initially was developed in Justice White's concurring opinion to Griswold. In his concurrence, Justice White indicated he would have upheld the statute if it had been "reasonably necessary for the effectuation of a legitimate and substantial state interest." The Connecticut statute, which served the state's policy against unmarried sex, was too broad because it effected married couples. The statute was therefore too broadly drawn to effectuate a supposedly legitimate state interest.
Justice White's concurrence in Griswold was explicitly adopted by the Court in the controversial case of Roe v. Wade.34 The Court, deciding on the legality of abortion, held a fundamental right could only be outweighed by a "compelling state interest" and the statute is "narrowly drawn" so that it fulfills only that compelling state interest. The Court stated that a woman's interest in deciding an abortion was fundamental. It could only be outweighed if the state could prove a compelling state interest in limiting that right. In addition, even if that interest was compelling, the state's means to achieve that end must be narrowly drawn and not effect other rights. This test, although slightly altered in later cases, holds true today.
Non-Fundamental Rights
In the alternative, if a right infringed upon by a statute is not fundamental, the statute is subject to the rational relation test. In the case of Duke Power v. Carolina Environmental Study Group, Inc.35, the court held that when a regulation does not effect a fundamental right and it falls within the state's police power, all that is required is that there be a minimally rational relation between the means chosen and the end being pursued. If the Internet Gambling Prohibition Act does not effect a fundamental right, it is then subject to this test.
Applying the IGPA to the Constitution
The Supreme Court's holding in ACLU v. Reno stated that the Internet is similar to print press so it should be afforded the utmost protection from governmental interference. Reno requires all legislation limiting the Internet to be tested under the fundamental rights analysis stated in cases like Roe v. Wade. The Court's two-tier approach to evaluating the constitutionality of any law that may impinge upon a fundamental right is therefore applicable to the IGPA. The state must have a compelling state interest to regulate Internet gambling, and the means must be as tightly related to the ends as possible.
The steps of the analysis are: (1) Does the law
in question touch upon a right? If yes, (2) is that right a fundamental
right? If yes, the law is then subject to "strict scrutiny."
If the answer is no, then the law is subject to the Rational Relation test
as stated in Duke Power.36 If strict scrutiny, (3) does the state have
a compelling state interest? And (4) are the means narrowly tailored to
the end - does the law adopt the least restrictive alternative to achieve
the purpose of the statute? If the answer to all four of these questions
are yes, then the law is constitutional. If the answer to either
(3) or (4) is no, then the law is unconstitutional and is struck down.
The Internet Gambling Prohibition Act must be analyzed under this analysis.
The IGPA Infringes Upon the Right to Free Speech
The first step is to determine if the law in question, the IGPA, infringes upon any right. The answer is yes. The IGPA restricts the publishing ability of web sites. The Court in ACLU v. Reno held that the Internet was similar to print publication, and therefore was entitled to First Amendment protections.
The Right to Free Speech is a Fundamental Right and Therefore
Requires Strict Scrutiny
The second step is determining if the rights in question
are fundamental, thus requiring strict scrutiny. There is no doubt
the law has the effect of censoring a web site owner's right of free speech
and freedom of the press. The IGPA provides for the total blocking
of all content on the Internet that concerns Internet gambling. The
Supreme Court in ACLU v. Reno stated the publishing over the Internet is
a fundamental right which should not be restricted.37 Because Internet
gambling web sites contain more information than merely illegal gambling,
they are publications. The effect of the IGPA is to infringe upon
the rights of the owners of web pages to publish. Therefore, there
is a fundamental right to free speech and to publish over the Internet.
The IGPA should therefore be subject to strict scrutiny.
The State has a Compelling State Interest
Step three is the application of the first tier of the
strict scrutiny analysis; does the state have a compelling state interest
in prohibiting Internet gambling? The answer to this question is
uncertain. The state undoubtedly has a legitimate state interest
in prohibiting Internet gambling, but whether the interest rises to the
level of a compelling state interest is unknown. The Court in past
cases has carefully considered whether a legitimate state interest is compelling,
but it fails to give guidance as to what is considered compelling.
In the past cases, the Court has merely determined that the state's interest
is compelling and continued on with the analysis. The only case which
carefully considers if a state interest is compelling is Roe v. Wade.38
However, in Roe, the court examined each of the stated justifications for
the state interest and made a determination if the interest was compelling.
The court engaged in no analysis in determining that a compelling state
interest existed. Therefore, the determination of whether the state
has a compelling interest in prohibiting Internet gambling is solely up
to the Justices of the Supreme Court.
I would argue the state does not have a compelling
interest in banning Internet gambling. Gambling is almost uniformly
accepted as legitimate entertainment. As stated earlier, only two
states ban all forms of gambling, Hawaii and Utah.39 The rest of
the nation and the District of Columbia allow some form of legalized gambling.
For Congress to authorize gambling in Washington D.C., but then state there
is a compelling state interest to stop gambling is illogical. If
gambling is such a harmful vice, then Congress should outlaw it in Washington
D.C.
Additionally, the claim that underage gambling will increase if Internet gambling is allowed is nonsense. Underage gambling exists now, and is easy to come by. Gambling over the Internet would not significantly increase underage gambling. Most sites require that a credit card number be entered before a person can gamble. Most people under the age of 18 do not own a credit card. If they steal a credit card for use of gambling, gambling is the least of society's worries, theft and credit card fraud are of far more concern. While government may have a legitimate interest in Internet gambling, it hardly raises itself to a compelling state interest.
The determination of whether there is a compelling state interest lies entirely with the Justices of the Supreme Court and cannot be anticipated. Because it is uncertain if the state has a compelling state interest in prohibiting Internet gambling, I will assume that there is a compelling state interest and continue with the analysis.
Assuming a Compelling State Interest, are the Means used
by the IGPA Narrowly Tailored to the End
The forth and final step in this analysis is the question
whether the means of the law are narrowly tailored to the end. In
this case, they are not. The state has an interest in prohibiting
Internet gambling. The effects of the IGPA reach farther than just
Internet gambling. The IGPA abridges the right to free speech.
In order for this law to be upheld, the state must use the least restrictive
means necessary to achieve their compelling state interest. That
means there cannot be another way in which the state can prohibit Internet
gambling without restricting access to Internet casino web sites.
In this case, there is a less restrictive alternative, banning Internet
gambling without restricting access to Internet sites.
A least restrictive means to outlaw Internet gambling
would be to simply make it a crime to engage in gambling over the Internet.
Another alternative would be banning bettors and casinos from doing business
over the Internet or other interstate networks. Because these alternatives
would not effect a person's right to publish materials over the Internet,
it would not involve free speech. In addition, because it does not
interfere with a person's right to read information over the Internet,
it would be constitutional.
Because the means by which the government wishes to stop
Internet gambling encompasses more than just it's stated cause, the means
used are too broad and are therefore unconstitutional. A least restrictive
means by which the government can ban Internet gambling is available.
There is no need to burden free speech.
The Internet Gambling Prohibition Act is Unconstitutional
Because the Internet Gambling Prohibition Act is not narrowly tailored to the means, the statute is unconstitutional if passed by congress.
Congress' goal to restrict Internet gambling is commendable, but the means by which they restrict it are unconstitutional. Congress could effectively curtail Internet gambling through constitutional alternatives. I would propose a four-tier attack on Internet gambling, which would be constitutional.
Prohibit Credit Card Transactions with Known Companies
The first tier would be a prohibition of credit card transactions with known Internet gambling companies. This is a simple provision. This provision would outlaw conducting transactions both as an Internet casino, and with an Internet casino. It would provide a means by which law enforcement agencies can instruct credit card companies to disallow transactions with known offending companies. In addition, it would grant jurisdiction over all companies that conduct business with the U.S. Primary law enforcement jurisdiction would be granted to the Department of the Treasury and the Secret Service to enforce its provisions. National enforcement by a federal agency would ensure uniform application.
Implementing this provision requires little work. First, a known Internet gambling company would be identified. The easiest way to do this would be to search the Internet. Once the site is found, an attempt to determine the company's name and location would be made. If the information were not readily available, then a law enforcement agent would proceed to gamble and lose a nominal amount of money to the company. The agent would use an undercover credit card number that is not traceable to the government. The next day, inquiries would be made to the credit card company to determine the name and bank account of the Internet casino. The information of the Internet casino would then be transmitted to the networks that oversee credit card transactions, such as Visa, MasterCard, Discover, and American Express. These networks would be instructed not to honor all transactions with these companies. Additionally, the credit card companies could be instructed to provide the government with the names of individuals who had incurred charges from Internet casinos. The government could later use this information to prosecute individual gamblers.
The advantages of this approach are great. First, there is no infringement of the First Amendment because it does not ban any publications on the Internet. Citizens are free to look at the Internet casino web sites, but they cannot gamble. Second, because there is no longer a question of free speech, there is no fundamental right to be abridged. If there is no fundamental right, then the appropriate test is rational relation. Third, the ease of credit card transactions facilitates Internet gambling. If people had to conduct business through the mail, consumers would be more wary of transaction made with these casinos. Removing credit cards as a means of payment cuts off the main method of commerce for Internet gamblers. Finally, because the means by which the companies conduct business is restricted, it would effectively shut down Internet casinos.
The disadvantages of this method are few. Finding illegal
betting sites may become difficult after a period of time. However,
this is not a significant disadvantage because the IGPA would suffer from
this as well.
Another conceivable disadvantage is burst-transactions.
Burst-transactions are many transactions occurring over a short, and infrequent
period of time. A gambling site would conduct all transactions only
once a week or so. The government can shut down their account, but
a week later, the site will have a new account. By creating a new
account every week, it would effectively circumvent the closing of accounts.
However, all transactions from the accounts could be nullified, thus making
every week's transactions illegal and void. The sites would conceivably
not make any money.
Prohibit Banking Transactions with Known Companies
By outlawing of credit card transactions over the Internet,
Internet casinos would attempt to find additional means to conduct business.
The next logical option would be wire transfers, checks, and bankers drafts.
The second tier of my proposed legislation would restrict all bank transfers
to the accounts of known Internet casinos. Using similar means as
credit cards, law enforcement agencies would transfer money to the casino
to determine the bank account numbers used by the casinos. Then the
agency would instruct all banks to disallow all money transfers to those
bank accounts.
The advantages of this approach are similar to the credit
card approach of the first tier. By removing the means by which companies
do business, restricting transactions would effectively shut these companies
down.
The disadvantage to this approach is the negative effect on legitimate companies. For example, an Internet company may submit its receipts to another company which deposits their money combined. By restricting the illegal transaction, a legitimate company may have their legitimate transactions voided. Although unfortunate, the conduct of the legitimate company is illegal. The conduct of the legitimate company is similar to laundering money. The legitimate company knowingly engaged in an illegal activity and therefore should have its transactions voided as well. Regardless of the culpability of the actors, the possession of the ill-gotten proceeds is illegal.
Outlaw Internet Gambling
The third prong to this proposition would be to outlaw Internet gambling. Using the information obtained in the first two prongs, and by any other means, people could be prosecuted for gambling over the Internet. This provision is necessary to catch people engaging in cash transactions. By creating a statute that clearly outlaws Internet gambling, it would allow law enforcement agencies all over the country to pursue cases against offenders.
The main advantage of this provision is that it encompasses
every type of transaction that exists. Internet gambling sites would
inevitably discover other means by which to conduct business. By
simply outlawing the gambling altogether, law enforcement can keep up with
the changes in technology and methods the
sites use to conduct business.
There really is no disadvantage to this provision as any improprieties would be dealt with on an individual basis by the criminal courts.
Make all Gambling Debts Unenforceable
The fourth and final provision would make all Internet gambling debts unenforceable. For example, take the case of Ms. Cynthia Haines of Marin County California.40 Ms. Haines is suing her credit card companies for trying to enforce her Internet gambling debts. Her theory is that the credit card companies cannot act to enforce an illegal debt. This is what this provision seeks to do. By making all debts unenforceable, Internet gambling companies would never be able to collect their money and would go out of business. People who gamble on credit, despite the earlier provisions, could nullify their debts. Without a method of collecting money, the Internet gambling companies would surely cease their activities.
The main disadvantage of this provision would be the hesitation of people to come forward to nullify their debt. Because gambling over the Internet is illegal under the third tier, people would be unlikely to declare themselves criminals. Unfortunately, if an exemption were created which would allow people to nullify their debts without being arrested for Internet gambling, it would greatly reduce the deterrent effect of outlawing Internet gambling.
A small exception might help this provision. By making all confessions to Internet gambling a lesser crime, people may be more likely to come forward.
This four-tier approach would have a detrimental effect on Internet gambling. First, by outlawing all credit card transactions and banking transactions, it removes the main methods of conducting business for Internet gambling companies. Second, by outlawing Internet gambling altogether, all other means of Internet gambling would therefore be illegal. This approach would deter a large portion of the population from engaging in Internet gambling. Third, by nullifying all Internet gambling related debts, it would make it more difficult for Internet gambling companies to conduct business successfully. If a site cannot make any money, it would not be in existence. Finally, all the means by which this provision outlaws Internet gambling are constitutional. It does not interfere with a person's right to create and visit an Internet gambling site.
This entire proposal would have a great effect on
Internet gambling. By outlawing Internet gambling, without interfering
with the right to free speech, this provision would surely have a significant
impact on Internet gambling. By creating a neutral law outlawing
Internet gambling (provision three), whatever means by which Internet gambling
companies choose to operate, is illegal. This four-tier approach
would curtail Internet gambling to an almost undetectable level.
Without significant and timely restrictions on Internet gambling, Internet gambling will surely grow and thrive. Internet gambling will have many undesirable effects on society and commerce. The Internet Gambling Prohibition Act, while a laudable idea, is clearly unconstitutional. By restricting the access to Internet gambling sites, the act unconstitutionally limits a web site publisher's right to free speech and freedom of the press. Since the Internet is afforded the utmost protection from restrictions, an alternative must be found that does not effect a person's right of access to Internet sites. By adopting a comprehensive set of laws that restrict transactions, outlaw Internet gambling, and nullify existing debts, Internet gambling can easily be curtailed.
2 William Blake Bennett, Waterborne Woes: Legal Difficulties Of Riverboat Gaming In Emerging Jurisdictions, 3 NEV. LAW. 19 (1995).
3 World News Tonight: A CLOSER LOOK - PLAYING THE WEB (ABC television broadcast, May 5, 1998)
4 See World News Tonight, note 3.
5 See World News Tonight, note 3.
6 John Frees, Bet on the Net, BUS. FIRST OF COLUMBUS, October 16, 1998.
7 Edwin Chen, Internet Gaming Ban Clears Senate With Ease Legislation: Measure Targets Burgeoning Industry, Which, Critics Say, Fosters Fraud And Wagering By Minors, L.A. TIMES, July 24, 1998.
8 See World News Tonight, note 3.
9 See Edwin Chen, note 7.
10 Reno v. American Civil Liberties Union, 521 U.S. 844 (1997).
11 Bill Burnham, The Internet and Retail Banking, (visited April 12, 1999) http://www.strategy-business.com/briefs/97101/.
12 United States Postal Service Web Site, (visited April 12, 1999) http://www.USPS.gov/.
13 Some of the listservs that the author has participated in related to the X-Files, aquariums, tropical fish, computer hardware, archeology, and the Simpsons.
14 The author's family and the author have accessed newsgroups on Ham Radio, Scanners, Dr. Who, the X-Files, archeology, computers, stamp collecting, aquariums, and other topics.
15 All observations are those of the author.
16 18 U.S.C.A. § 1084 (1998).
17 Debra Baker, Betting on Cyberspace, 85 A.B.A.J. 54 at 56.
18 Reno v. American Civil Liberties Union, 521 U.S. 844 (1997).
19 See FCC v. Pacifica Foundation, 438 U.S. 726 (1978).
20 John Bigness, Companies Place Bets on Internet Gambling, CHI. TRI., Aug. 25, 1997.
21 18 U.S.C.A. § 1084 (a) (1998).
22 18 U.S.C.A. § 1084 (a) (1998).
23 Louise Kehoe & Nikki Tait, High Rollers in a Virtual Casino, FIN. TIMES, June 14, 1997, at 9.
24 Scott M. Montpas, Gambling On-Line: For a Hundred Dollars, I Bet You Government Regulation Will Not Stop the Newest Form of Gambling, 22 U. DAYTON L. REV. 163, 164 (1996).
25 See Scott M. Montpas, note 20 at 164.
26 Press Release of Senator John Kyl, Federal Ban on Internet Gambling Needed, Panel Told -- Witnesses Call for Passage of Kyl Bill to Stop "Abuse, Access, and Addiction" (July 28, 1997).
27 See note 17, at 56.
28 Slaughterhouse Cases, 83 U.S. 36 (1873).
29 Munn v. Illinois, 94 U.S. 113 (1877); Mugler v. Kansas, 123 U.S. 623 (1887).
30 Id. at 627.
31 Allgeyer v. Louisiana, 165 U.S. 578 (1897).
32 Lochner v. New York, 198 U.S. 45 (1905).
33 Griswold v. Connecticut, 381 U.S. 479 (1965).
34 Roe v. Wade, 410 U.S. 113 (1973).
35 Duke Power v. Carolina Environmental Study Group, Inc., 438 U.S. 59 (1978).
36 See note 35.
37 See note 18.
38 See note 34.
39 See note 3.
40 See note 17, at 56.