INTERNET GAMBLING: LAW ENFORCEMENT, CONSUMER PROTECTION, AND OTHER POLICY CONSIDERATIONS FOR THE STATES AND THE FEDERAL GOVERNMENT
Presentation to the Republican Attorneys General Association November 10, 2013 David J. Satz Senior Vice President, Government Affairs Caesars Entertainment Corporation
How we got here: Key milestones in the recent history of U.S. online gambling
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Today’s Reality –
Millions of Americans gamble on internet sites in all 50 states notwithstanding laws that prohibit/regulate such activity - no consumer protections (underage gambling, no protections for problem gamblers, ripe for fraud and criminal activity) and no tax collections from illegal market www.pokerscout.com
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Growth of Internet gambling consistent with growth of eCommerce
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Explosive period of growth beginning in the 1990s - Market = $300 million in 1997
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Market grew to $4 - $6 billion by 2010
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Illegal Operators -
Market dominated by rogue offshore operators in defiance of U.S. and state laws - little provision of consumer protections (underage gambling, problem gambling, fraud, privacy, fairness of games, etc.)
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Wire Act
- Until 2011, the federal Wire Act was the primary law enforcement tool and had been broadly interpreted by DOJ to apply to and prohibit Internet gambling
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UIGEA
- Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006
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UIGEA focus is on financial institutions -- establishes penalties for banks and financial firms that process such Internet gambling payments
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UIGEA doesn’t define which specific games are illegal. Instead, it relies on existing state and federal laws, including the Wire Act and the Interstate Horseracing Act
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Defines a bet as occurring where the player is located
How we got here: Key milestones in the recent history of U.S. online gambling
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DOJ Memo
- In December 2011, the DOJ, responding to inquiries from state lotteries, changed its long-standing interpretation
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“Interstate transmissions of wire communications that do not relate to a ‘sporting event or contest’ fall outside the reach of the Wire Act.”
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A complete game-changer: reversed five decades of federal law enforcement precedence, and removed the Wire Act as a mechanism to prosecute illegal Internet gambling operators
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The DOJ ruling also opened the door for states to pursue online gambling
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UIGEA remains in place as core tool to deal with illegal Internet gambling
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State Activity
- State legalization in wake of DOJ memo was swift:
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Illinois began selling lottery tickets online in March 2012
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Georgia’s online lottery program became operational in November 2012
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Internet poker began in Nevada in April 2013
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A full range of Internet casino games will be available in Delaware and New Jersey beginning Fall 2013
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Many other states are examining Internet gambling through legislative and other paths
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Some Tribes have also examined ways to enter the market (Oklahoma compact)
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Illegal Activity –
continues unabated, with estimates that the illegal market is $2 to $4 billion