Betting on the Net: An Analysis of the Government’s Role in Addressing Internet Gambling

Respect for the law is among the most precious qualities a decent society Can adorn and protect itself with, and when that respect is attenuated by attempted enforcement of moral principles widely flaunted by the otherwise law abiding, foolishness is surely at work.(1) I. INTRODUCTION Recognizing that gambling was spreading and gaining greater acceptance among many Americans, the 1976 Commission on the Review of the National Policy Toward Gambling (1976 Gambling Commission) recommended that the legality of gambling should be determined by individual state governments as a better method for capturing the will of the people.(2) Since the issuance of that report, gambling has flourished in the United States to the extent that every state, except Hawaii and Utah, has some form of legalized gambling.(3) In the intervening years since that study, an entirely new industry has developed--Internet gambling. Because of the borderless, interstate nature of the Internet,(4) its recent union with gambling renews the controversy surrounding an issue thought to have been resolved by the 1976 Gambling Commission--whether gambling policy should be formed primarily at the state or national level. Congress currently appears poised to settle this state versus national debate within the realm of Internet gambling in favor of the federal government. Somewhat reminiscent of Congress's earlier effort to establish a federal ban of all indecent materials on the Internet, congressional lawmakers are now seeking a blanket ban on Internet gambling.(5) Asserting not only that states are unable to address the issue adequately on their own, but that existing federal anti-gambling laws are insufficient and that children must be protected from this vice, the Senate passed the Internet Gambling Prohibition Act (IGPA) in July 1998.(6) As currently written, the IGPA makes Internet gambling a federal crime and thereby removes state governments from having a role in determining whether or not such an activity should be legal in a particular state.(7) This Note asserts that a federal ban on Internet gambling is problematic because of its impact on principles of federalism, its possible unconstitutionality in light of Reno v. ACLU,(8) and its unlikely enforceability. First, since the IGPA makes Internet gambling a federal crime, states cannot permit their citizens to gamble over the Internet even if all the gambling occurs within states that have legalized various forms of traditional gambling.(9) The Internet Gambling Prohibition Act would also prohibit Internet gambling between residents of states that already permit the use of telephone wires for placing bets.(10) Second, recent language of the Supreme Court in Reno suggests that Congress should not dismiss Internet gambling as merely a vice activity that is undeserving of any First Amendment protection. Finally, the IGPA could meet with considerable enforcement difficulty because of the ability of Internet users to disguise their identities(11) and the fact that most online gambling services are currently based outside the United States.(12) These significant enforcement problems could cause the IGPA to be only a national moral proclamation lacking legitimacy because it does not reflect the will of the citizenry--the very situation against which the National Gambling Commission cautioned in 1976. Part II of this Note describes the nature of Internet gambling including its rise and continued development as well as some of the concerns that such gambling raises. Part III outlines the Senate's response to the issue of Internet gambling, the Internet Gambling Prohibition Act, and explains several difficulties inherent in this blanket ban. Finally, Part IV suggests an alternative, state-centered method for addressing gambling on the Internet. II. NATURE OF INTERNET GAMBLING A. The Development of Internet Gambling With the growth of state lotteries, riverboat gambling, racetrack betting, and Native American casinos in the United States over the last several years, the opportunity to gamble no longer requires an excursion to Las Vegas. …