Igaming Focus: Not ready for prime time – American igaming needs regulatory progress By Martin Owens, Attorney At Law, Special to CDC Gaming Reports July 30, 2020 at 1:22 pm Martin Owens is a California attorney based in Sacramento, specializing in Internet and interactive gaming law since 1998. “The best way to predict the future is to create it.” – Peter Drucker The full impact of the COVID plague will not be known for years, but there are some obvious trends. In the world of Internet and interactive gaming, vast opportunities are unfolding. Especially since the main competition, brick-and-mortar operations, are still for the most part literally locked up. Even where land-based gambling is starting to revive as in Vegas, new restrictions are limiting operations to half of their former capacity, or even less. That has resulted in a ready-made demand for the expansion of online gaming. Trouble is, online gaming is not ready, legally speaking. The official attitude toward gambling has always been ambivalent. Licensing it promises increased tax revenue; on the other hand, gambling is a known vice, and in most jurisdictions it is a minor crime (if not licensed) as well as a sin. In the United States, that meant gambling fell under the police power of the individual states, rather than the Federal government. But if state law is the primary reference point for American gambling law, then it’s a reference point that is scattered all over the road. To this day, sixteen States and the District of Columbia do not have any definition of what “gambling” is or is not, in their statute books. Instead, they outlaw particular games and devices (California’s list of no-noes still lists games that haven’t been played since the Gold Rush of 1849). Even where gambling is allegedly defined, the situation is not much better. Many states use the “dominance test”: if chance is the predominant element in determining the outcome of a given game, then that makes it a game of chance, eligible for supervision under gambling laws. It sounds reasonable until we realize that there is no objective measure of chance. Statutes speak of “predominant” or even “substantial” appearance of chance, but nowhere is there a neutral measure of it. Is it 51%? 66%? And even if such clear demarcations were used, there is no baseline. We measure water in pints and quarts and gallons; electricity in watts and volts. If your blood alcohol reading is over .08 %, you’re legally drunk. But here we have the nation that measured the heights of ice mountains on Pluto, using best- guesstimates and I’ll- know- it- when- I- see-it to establish criminal guilt and penalties for gambling cases. But the biggest failing of gambling law, both American and foreign, is the lack of guidance to determine jurisdiction. Jurisdiction is the heart of the matter because it determines which government gets to do what, especially for supervising and taxing. Let’s say Joe Gambler, resident of New Orleans goes online and visits the webpage of Gimmebucks.com, a gaming site in the Caribbean. He sets up an account and plays a few hands of poker. Without more, does that establish Louisiana jurisdiction over Gimmebucks? While such jurisdiction is often proclaimed, it has not yet been really adjudicated, analyzed according to law and precedent. New solution While such questions present difficult choices, the difficulties are not insurmountable. There is already a smoothly operating and lucrative model that is available to all. The horseracing industry, particularly in the United States, has relied on interstate, electronically transmitted bets for decades. Depending on the Internet service a given bettor chooses, he can place bets at race tracks across the United States, as well as in Europe, Asia, and even Australia. The jurisdictions involved have all agreed on percentages, and the amount of control each particular jurisdiction will have over its own racing programs. And, perhaps most important of all, who gets how much money under which circumstances. At the end of the day, that’s what it’s all about. It’s clear that mobile, Internet and interactive platforms and games are going to play an increasingly important role in gaming worldwide as we sort ourselves out from the pandemic. Procedures and arrangements to handle the flow of money and information can be readily developed, mainly because the outline of such systems is already known and proven. It’s up to the various authorities and the gaming public they serve. There is a fight here, if they want one. But there is also a solution, if they want one. Mr. Owens is a California attorney based in Sacramento, specializing in Internet and interactive gaming law since 1998. Co-author of INTERNET GAMING LAW with Professor Nelson Rose, (Mary Ann Liebert Publishers 2005) ; Editorial board, Gaming Law Review 2005-2019; frequent contributor to other trade publications. Comments/inquiries welcome at email@example.com.