A look at the “Internet Poker Ban”

On January 4, 2007, in General, by Neil Stevens

I am no lawyer, but I’m no subscriber of the legalism that has swept this country since the advent of the modern judicial activist, so that won’t deter me from analyzing Title VIII of the SAFE Port Act: the Unlawful Internet Gambling Enforcement Act of 2006, better known in some circles as “the dastardy Internet Poker Ban that cost Republicans the Congress.”

All quotes are from H.R.4954.ENR as supplied to me by Thomas.

This act is nice and easy to read. Some bills passed by the Congress are tough to decode, because they are a lengthy series of one-word or one-sentence changes to existing portions of the US Code. This one starts off this way though:

(a) In General- Chapter 53 of title 31, United States Code, is amended by adding at the end the following:


So undersanding this Act is a matter of just reading it, for the most part. And by reading Section 5361, Congressional findings and purpose, we get off to a bad start:

(4) New mechanisms for enforcing gambling laws on the Internet are necessary because traditional law enforcement mechanisms are often inadequate for enforcing gambling prohibitions or regulations on the Internet, especially where such gambling crosses State or national borders.

(Emphasis added) When the Congress flatly admits it’s trying to pass global legislation, we know we’re in for a bad law. The Congress here is no better than those western European courts that routinely claim universal jurisdiction for themselves, or otherwise find the flimsiest of excuses to reach beyond their own national boundaries.

Section 5362, Definitions, illustrates the fact that this act, even if implemented as the Congress hopes, would not prevent dumb Americans from throwing money away in an attempt for easy money. For it claims that the definition of wagering specifically excludes:

any activity governed by the securities laws (as that term is defined in section 3(a)(47) of the Securities Exchange Act of 1934 for the purchase or sale of securities (as that term is defined in section 3(a)(10) of that Act );

Because nobody ever went broke day trading stocks on margin!

Oh yes, and it also specifically excludes fantasy sports, as long as the prize pool is fixed. So if I offer a $11 fantasy baseball league for 10 players, where the winner gets $50, second place gets $30, and third place gets $20, i’m fine. Because after all, it’s not a bet at all, not like a $10+1 “Sit’n’go” at Full Tilt Poker. It’s not because the Congress says it’s not.

Futher down we even get a lengthy definition of “unlawful gambling,” that starts off like so:

(A) IN GENERAL- The term `unlawful Internet gambling’ means to place, receive, or otherwise knowingly transmit a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is unlawful under any applicable Federal or State law in the State or Tribal lands in which the bet or wager is initiated, received, or otherwise made.

Right here we see that the Libertarians claiming that this act was reason enough for their voters to defect, are working off of false information. Right here, the act specifically claims to be dealing with forms of ‘wagering’ that were already banned under state or federal law!

It’s that simple, folks. It really is. In the next section of the act, 5363, we get the meat of the matter:

No person engaged in the business of betting or wagering may knowingly accept, in connection with the participation of another person in unlawful Internet gambling–

(1) credit, or the proceeds of credit, extended to or on behalf of such other person (including credit extended through the use of a credit card)

(2) an electronic fund transfer, or funds transmitted by or through a money transmitting business, or the proceeds of an electronic fund transfer or money transmitting service, from or on behalf of such other person;

(3) any check, draft, or similar instrument which is drawn by or on behalf of such other person and is drawn on or payable at or through any financial institution; or

(4) the proceeds of any other form of financial transaction, as the Secretary and the Board of Governors of the Federal Reserve System may jointly prescribe by regulation, which involves a financial institution as a payor or financial intermediary on behalf of or for the benefit of such other person.

Modulo some more exceptions, including some related to tribal compacts, it really is that simple. This law only affects those enterprises that are engaged in already-illegal activities, and prohibits them from taking in money. Individuals are not affected; as I read this, you can’t go to jail for trying to put money into Poker Stars using your Visa card, nor for writing a check to Party Poker. And even all those online cardrooms are in the clear from this act unless their activities were already banned.

And let’s note: in defining wagering, section 5362 only once refers to another portion of the US Code: “any scheme of a type described in section 3702 of title 28.” And guess what: this referenced section has nothing at all to do with poker, blackjack, or any traditional casino game!

It shall be unlawful for—

(1) a governmental entity to sponsor, operate, advertise, promote, license, or authorize by law or compact, or

(2) a person to sponsor, operate, advertise, or promote, pursuant to the law or compact of a governmental entity,

a lottery, sweepstakes, or other betting, gambling, or wagering scheme based, directly or indirectly (through the use of geographical references or otherwise), on one or more competitive games in which amateur or professional athletes participate, or are intended to participate, or on one or more performances of such athletes in such games.

This only influences sports gambling and it, itself, is of suspect legality. Here the Congress, as I read this, claims the authority to prohibit governmental entities from authorizing laws cover wagering systems. And, sure enough, most any dedicated sports fan is aware of the betting lines set by the top sports books in Las Vegas, aren’t we?

So look guys. I obviously think this was a bad bill, too, but we need to be serious. If you’re looking for an excuse to bash conservatives, this so-called ban is not it. That is, unless you’re a bank or other regulated institution, and you’re fearing bad regulations coming out of the Fed or the FTC, because section 5364 directs those agencies to create regulations aiding enforcement of this law. And even then, shouldn’t you have complained before now?


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