A Winning Hand: A Proposal for an International Regulatory Schema with Respect to the Growing Online Gambling Dilemma in the United States
Andrle, John D., Vanderbilt Journal of Transnational Law
While a multitude of Internet enterprises folded in the 1990s, online gambling websites not only have held strong, but appear to be ready to increase the stakes. No business relating to the Internet currently generates more revenue than online gambling, and that trend does not look like it will change soon. While many Americans desire to participate in this form of cyber-gambling, the current legality of their ability to do so remains vague. For the most part, an American's ability to gamble currently resides under the purview of state law and a hodgepodge of antiquated federal wire acts. The nature of the Internet, however, mandates that any scheme, regulatory or prohibitory, be constructed in the international arena. For various reasons, there have been efforts by members of Congress to create strong prohibitory legislation specifically targeting Internet gambling. The Author analyzes not only whether a domestic prohibition schema is the best model to implement, but also whether such a model could even be truly effective. The Author further shows that an international regulatory model can provide a legitimate method of control while allowing individual countries to maintain discretion over the form of online gambling they allow to their citizens. At the same time, this international regulatory schema would still provide a valid international enforcement net against offenders. Under this regulatory schema, problem gamblers can be protected while still preserving the opportunity for other patrons to get lucky and hit it big.
TABLE OF CONTENTS I. INTRODUCTION II. BACKGROUND: THE CURRENT STATE OF ONLINE GAMBLING IN THE UNITED STATES A. Online Gaming and State Law B. Online Gaming and Federal Statutes C. Online Gaming and Proposed Legislation D. Online Gaming and the Credit Card Industry E. Relevant U.S. Case Law III. ANALYSIS A. The Need for Movement and a Solution B. Criteria and Policy Implications of a Solution (Factors and Guidelines) C. Regulation Versus Prohibition IV. ONLINE GAMBLING AND CURRENT INTERNATIONAL SCHEMAS A. The Caribbean Countries B. The Australian System C. The European Union D. Examples from Other Nations E. World Trade Organization V. CRITERIA OF THE PROPOSED INTERNATIONAL REGULATORY SCHEMA VI. JURISDICTIONAL CONCERNS INVOLVED WITH INTERNATIONAL SCHEMAS VIII. CONCLUSION
No business on the Internet earns more revenue than online gambling. (1) In 2002, two million players lost a collective $3.5 billion at nearly 2,000 "virtual casino" websites. (2) In 2003, online gambling sites took in more than $4.1 billion dollars. (3) In 2004, it is projected that revenues from online gambling activities could be $6 billion with potentially 15 million players. (4) Some estimates suggest that gamblers in the United States are responsible for sixty-five percent of this amount. (5) In describing the scope of online gambling's potential influence on the American populace, the Final Report issued by the National Gambling Impact Study Commission stated that "[o]nline wagering promises to revolutionize the way Americans gamble because it opens up the possibility of immediate, individual, 24 hour access to the full range of gambling in every home." (6)
As the popularity of online gambling continues to swell, the issues surrounding its legitimacy have yet to be resolved. It is too simplistic to say that online gambling is or is not per se illegal in the United States. For the most part, gambling legislation has largely been a matter of state law. (7) Not surprisingly, state responses to online gambling legislation have varied considerably, running from prohibition to regulation to taxation. (8) Historically, the federal response to the issue of online gambling has been to acquiesce to the various approaches taken by the states. …