Tuesday, July 25, 2006

Some good news on the limits of the Gambling Prohibition Act

in today's WSJ (subscription required). Here are two excerpts:
The government won a court order to temporarily shut down BetOnSports.com and other sites, but didn't file charges against any bettors. Instead, it asked BetOnSports to return funds held in their accounts.

The case raises the question: Why hasn't the government pursued U.S. gamblers? They accounted for roughly half of the estimated $12 billion in annual world-wide revenue for offshore casinos last year, according to research firm Christiansen Capital Advisors. Some gamblers are fearful they might soon become entangled in the government's widening probe, but legal analysts say there's no federal law that explicitly bars individuals from placing bets online, and few state laws that do.

For its part, the Justice Department said it is focused on the online gambling businesses, not individuals. "There is certainly not a law that expressly prohibits a bet by a casual bettor," said a Justice Department official in a phone interview. "We think that is more for state law to decide."


Legal analysts said it is unlikely federal prosecutors will target individual bettors, in part because the government prefers to leave prosecution of such cases to the states. And, like New York, few states explicitly bar the casual bettor from wagering online. Even in Washington state, which recently made it a felony for a person to gamble online, state officials said it's unlikely they would prosecute casual bettors.

Gambling experts said one of the few reported cases of an American being prosecuted for online gambling involved Jeffrey Trauman, a North Dakota resident. In 2003, Mr. Trauman, a professional bettor, pleaded guilty to a misdemeanor for violating a state law that limited legal gambling to wagers at a tribal casino or sanctioned charity. He received a $500 fine and one-year deferred sentence.

"It is politically difficult or unwise to go after consumers if they're not significant gamblers," said Bill Eadington, a professor of economics who runs a gambling-research institute at the University of Nevada, Reno. "One can make a case that if an individual bettor is moving hundreds of thousands of dollars, he may be a target."

Arresting gamblers would bolster the federal government's efforts to curb the activity, said Lawrence G. Walters, a Florida attorney who represents offshore casinos. However, he said, "there could be Constitutional problems with attempting to regulate a local activity, such as the placement of individual bets by people in their own home."

Of course, congressional restrictions on money exchange between TS and its willing customers is still a problem.

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