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J.D. Bullington: Internet gambling is a den of confusion

Internet gambling is a $12 billion industry. Our appetite to wager on sporting events and casino games is apparently insatiable.
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I say our appetite because I seriously doubt if just one person with a computer and a love for gambling is responsible for taking the industry from $3 billion in 2001 to where it is now.

To give you a comparison, the entire pornography business in the United States brought in $12.6 billion in 2005, with about $2.5 billion generated through the Internet.

Everyone talks about how big the online porn industry is. I've got news for you - the Internet portion of the gambling industry alone is now as big as the entire porn industry in this country. And the revenue estimates are projected to double by 2010.

But wait, you ask. Isn't online gambling illegal? Well . . . yes, and no, kinda, sorta, maybe. Who knows? If Congress and the states are considering a new set of laws making it illegal, then it must be legal, right?

No, not exactly.

The U.S. Justice Department has insisted for several years that online gambling is against the law. The justification for that opinion stems from the federal Interstate Wire Act of 1961, which prohibits individuals from engaging "in the business of betting or wagering knowingly or using a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers."

This would seem straight forward enough, except there was no such thing as an Internet back then, let alone a wireless one, and the 1961 language is limited to sporting events and contests.

Here's a question: If you play poker on the Internet or spin a cyber roulette wheel, are you competing against people in a contest or mathematical odds? If it is the latter, then it can be argued that you are not technically involved in a contest, and therefore not doing anything illegal. I could pose a whole series of questions like that one, and it wouldn't take long before I had you completely confused about the legality or illegalities of various Internet gambling options.

That's one reason so many people are doing it, even though a large portion of the interstate gambling activity being conducted over the Internet is most likely illegal in nature. But the U.S. Justice Department has rarely prosecuted anyone for online betting because the considerable amount of legal confusion over this subject reigns supreme.

So where does that leave us? Frankly, in the hands of lobbyists representing hundreds of special interests, like the Poker Players Alliance, the National Indian Gaming Association, the American Greyhound Track Operators Association and the National Association of Convenience Stores. Between 1998 and 2005, lobbying firms have been paid roughly $17.6 million to represent clients with a stake in Internet gambling legislation.

With the introduction of two bills in Congress, one by Rep. Jim Leach, an Iowa Republican, and Sen. Jon Kyl, an Arizona Republican, and another by Rep. Bob Goodlatte, a Virginia Republican, the amount spent on gambling lobbyists is expected to increase significantly.

Goodlatte's bill amends the Wire Act to prohibit all forms of Internet gambling that are not specifically exempted (here is where the lobbyists come in), such as horse racing, fantasy sports leagues, greyhound racing, intrastate lotteries, etc.

What both the Leach and Goodlatte bills have in common is this: Their primary target is the flow of money wagered from the United States to offshore operations in the Caribbean and elsewhere.

That type of foreign activity is a threat to American gambling interests who know they are on a roll, and want to keep it that way - in America, off the Nassau streets, where we all know gambling belongs.

Bullington is senior policy adviser and director of New Mexico government relations for the Brownstein, Hyatt & Farber law firm. He writes this column weekly.