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Internet Wagering Becomes A Felony in Washington State

7 June 2006

Effective today, June 7, 2006, placing a bet over the Internet on an on-line casino is a felony in Washington State, with penalties potentially including a prison term of up to five years and a $10,000 fine. The State of Washington is the first U.S. state to make such wagering a felony, although several states make such activities a misdemeanor. The new law applies to all online gambling except horse racing, which has been allowed through Web sites specially approved by the Horse Racing Commission.

Prior to enactment of the new law, Washington State officials took the position that such wagering was considered a misdemeanor. However, notably, even when the activity was only considered to be a misdemeanor, there were no prosecutions of individual bettors. It will be interesting to see how Washington State goes about trying to enforce the new law. Gambling Commission Director Rick Day was quoted by the Seattle Post-Intelligencer, stating that jailing small-time online gamblers is "not the focus of our work." Day told the publication that their priority is to go after national and international promoters or operators based in Washington State.

The Washington State Gambling Commission Web site, in a section entitled "Internet Gambling", provides the following question and answer, which ends with a warning:

"What enforcement action will be taken against Internet gamblers?

Washington State is part of a multi-state and federal task force that is looking into education, awareness, and coordinating enforcement activities, in order to deter Internet gambling.

It is anticipated enforcement will focus on larger, higher level Internet gambling activities, such as service providers and gambling sites, rather than individual gamblers. However, bettors are breaking the law and are at risk."

This development at the state level occurred rather quietly, with most of the industry focused on pending federal legislation. Approximately two weeks ago, the U.S. House Judiciary Committee approved two pending federal bills which will now proceed to the full U.S. House of Representatives. Speculation in the industry is that the two pending bills will be consolidated into a single bill before a vote is taken. It is also unclear whether this vote will take place during the current Congressional session.

As Washington State demonstrates, it is easy to enact laws prohibiting Internet gambling, but it is much harder to enforce such laws. A careful study of the issue on a national level might find better means of enforcement through proper regulation, or through legalization and regulation.

In the meantime, the American Gaming Association has urged congress to appoint a commission to study this topic and to investigate the possibility of legalizing, regulating and taxing such wagering. This is a reasonable approach given the difficulty that is sure to arise in seeking to truly enforce any ban on Internet wagering.

In Michigan, it is the position of the Michigan Gaming Control Board and the Michigan Attorney General's Criminal Division that Internet wagering is illegal. The Michigan Gaming Control Board's Web site states:

"Is it legal to gamble over the Internet in Michigan?

No. All forms of gaming are illegal in Michigan except those specifically permitted under Michigan law. Contact the Michigan Attorney General's Criminal Division (517/334-6010) for more information.

According to US Attorney General Janet Reno (3/4/98), "It's a federal crime to use the Internet to conduct betting operations." She cites a 1961 Federal law making it a crime to use interstate telephone lines for gambling."

Similar positions have been taken by authorities in numerous other state, therefore, before seeking to place a wager in any jurisdiction, it is important for consumers to know the laws that govern wagering activities.

David Waddell
David Waddell is an attorney for Regulatory Management Counselors, P.C. (RMC), which assists businesses in navigating the legislative, regulatory and licensing systems governing Michigan’s commercial and tribal casino industries. He is the co-author of The State of Michigan Gaming Law Legal Resource Book and one of the founders of The Michigan Gaming Newsletter.

David Waddell Websites:

www.michigangaming.com
David Waddell
David Waddell is an attorney for Regulatory Management Counselors, P.C. (RMC), which assists businesses in navigating the legislative, regulatory and licensing systems governing Michigan’s commercial and tribal casino industries. He is the co-author of The State of Michigan Gaming Law Legal Resource Book and one of the founders of The Michigan Gaming Newsletter.

David Waddell Websites:

www.michigangaming.com