There currently exists no federal law banning a state from passing legislation regarding online poker. Since the first online casino opened its 'virtual' doors in 1995, federal lawmakers have proposed legislation to proscribe online poker each and every year, with no success. If such law already existed, there would be no need to introduce prohibitive legislation.
In 1996, the 104th Congress created the National Gambling Impact and Policy Commission (Public Law 104-169), whose purpose was to conduct a comprehensive study of the social and economic impacts of gambling in the United States. In 1999, the Commission recommended that Congress pass legislation and develop enforcement strategies affecting Internet Service Providers. Again, if such prohibitions were already in place, such legislation would be superfluous.
It has erroneously been suggested that there are three federal laws that prohibit online poker.
The Anti-Gambling Act
18 U.S.C. §1955
Federal Code section 18 USCS § 1955 (2003) prohibits illegal gambling where such gambling is a violation of law in the state where it is operating. By the words of this statute, there is no federal violation as long as the state sanctions online poker.
The "RICO" Act
18 U.S.C. §§ 1961-68
Similar to the Anti-Gambling Act, a violation of Rico requires a crime "chargeable under State law and punishable by imprisonment for more than one year." This would have no application in North Dakota once legislation was passed.
The Wire Act
18 U.S.C. § 1084
Years ago I predicted that the 1961 Wire Act would not be found to speak to online poker. The reason is simple. There is a recognized, time worn format for analyzing a statute. First, we look to see if the words in the statute are clear and unambiguous. If the words are not clear, we move on to the legislative history, then we look at past construction of the statute, case law on point and finally, proposed amendments to the statute. What we find with regard to the Wire Act is as follows:
1) The WORDS of the statute specifically prohibit SPORTS BETTING and nothing more.
2) The LEGISLATIVE HISTORY indicates the statute was aimed at organized crime, specifically in the area of sports betting.
3) CASE LAW construes the statute as applying to sports betting.
4) The only CASE ON POINT to address the issue specifically found that the Wire Act does not apply to online poker; and
5) Recent PROPOSED AMENDMENTS to the Wire Act demonstrate that legislators do not believe that the statute prohibits online poker.
WIRE ACT TEXT: Title 18 USCS section 1084 (The Wire Act) speaks to the transmission of wagering information. Congress enacted this section as part of a series of legislation supporting a federal policy against organized racketeering.
Subsection (a) of section 1084 states in relevant part:
"(w)hoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the pacing of bets or wagers on any SPORTING EVENT OR CONTEST, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the pacing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both."
WORDS: The operative words of the statute are "SPORTING EVENT OR CONTEST". When we consider what activity the statute prohibits by its clear language, the plain words state that it prohibits certain activities relating to a SPORTING EVENT OR CONTEST.
When the plain language of the statute and case law interpreting the statute are clear, there is no need to go to the second step, which is to look to the legislative history of the Act. (In re Abbott Laboratories, 51 F.3d 524, 528 (5th Cir. 1995).
LEGISLATIVE HISTORY: If we look to the legislative INTENT and UNDERSTANDING at the time the Wire Act was enacted, the House Judiciary Committed Chairman explained, "This particular bill involves the transmission of wagers or bets and layoffs on horse racing and other sporting events." See 107 Cong. Rec. 16533 (Aug. 21, 1961).
GENERAL CASE LAW: Next, courts have already construed the statute as requiring a sports event. See United States v. Kaczowski 114 F. Supp. 2d 143, 153(W.D. N.Y. 2000) (Wire Act "prohibits … placing of bets or wagers on any sporting event or contest"); U.S. v. Marder 474 F.2d 1192, 1194 (5th Cir. 1973) (first element of statute satisfied when government proves wagering information "relative to sporting events").
CASE ON POINT: Finally, there has been a judicial determination regarding the precise question addressed herein. In the case of In Re Mastercard International, decided on February 23, 2001, the Honorable Judge Stanwood R. Duval, Jr. was faced with whether the Wire Act applied to online poker. The suit was brought by deadbeats who didn't want to pay their gambling debts so they brought suit against credit card companies alleging the credit card companies violated the Wire Act by allowing them to use the credit card to put money online at a poker site.
The judge analyzed the statute precisely as I have here and he concluded that the Wire Act only prohibited wagering on SPORTS EVENTS. "Comparing the face of the Wire Act and the history surrounding its enactment with the recently proposed legislation, it becomes more certain that the Wire Act's prohibition of gambling activities is restricted to the types of events enumerated in the statute, sporting events or contests." (Id. 132 F. Supp.2d 468, 482.) In 2002, the U.S. Circuit Court of Appeals in Louisiana affirmed the lower court's ruling.
PROPOSED AMENDMENTS: Sine 1995, federal legislators have introduced amendments to the Wire Act in order to include poker. No such amendments would be contemplated if the Wire Act applied to online poker.
In sum, The Wire Act does not regulate on line poker playing because the WORDS of the statute specifically prohibit only sports betting, the LEGISLATIVE HISTORY indicates the statute was aimed at organized crime (specifically in the area of sports betting), CASE LAW construes the statute as applying to sports betting, the only CASE ON POINT to address the issue specifically found that the Wire Act does not apply to online gambling, and PROPOSED AMENDMENTS to the Wire Act demonstrate that legislators do not believe that the statute prohibits online poker.
The Tenth Amendment
"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." Laws relating to the health and welfare of its citizens usually fall within the purview of state law. Almost every state has some form of legal gambling, be it a casino, lottery, video, lottery terminal, horse wagering, bingo, or some other form of gambling. Traditionally, the federal government has stayed out of the gambling arena and left its regulation to the states. A respected Congressional Leader, House Majority Whip Tom Delay announced his opposition to proposed legislation regarding Internet gaming for fear that the legislation would diminish state's rights.
The Position of the Federal Government
There is no doubt that both the Clinton and the Bush administrations take the position that online poker is illegal. They allude to the Wire Act and other federal laws, but upon careful analysis not one legal expert agrees. Remember, since 1995 when the first online casino began operating, there has not been one single judicial ruling that online poker playing violates any federal law whatsoever; quite the contrary. The only judicial ruling available clearly holds that the Wire Act clearly speaks to sports betting, and NOT poker playing.
This content was taken from Allyn Jaffrey Shulman's testimony on HB 1509 to the North Dakota State Senate. Her testimony was entitled "Three Issues Regarding Online Poker: Legality, Congressional Efforts and Poker is a Game of Skill"
