Facebook is quickly expanding its real money gaming platform. Net Entertainments has signed a license agreement with Bonza Gaming, which is a joint venture between gaming publisher Plumbee and online gaming operator Sportingbet. Under the agreement Net Entertainment will offer a range of casino games to Bonza Gaming, which will create an app, Bonza Slots, that will be available on Facebook to users that want to participate in real money gaming.
Facebook is now the world’s largest social media outlet, with over a billion active users. Last summer, Facebook announced that it would expand its social gaming to real money gaming, beginning initially with users in the United Kingdom. Bonza Slots becomes the third real money gaming app on Facebook, joining Gamesys and 888 Holdings; all three companies have recently reached deals with Facebook to launch their real money gaming apps. With Facebook’s massive user base, it can accomplish what other online gaming sites could likely only achieve on a much smaller scale — the ability to reach a large and constantly growing base of players.
Facebook is no stranger to online gaming. For some time now, it has offered its users the option of playing online games for Facebook credits as an alternative to real money. In 2011, Facebook changed its advertising policies, allowing online gambling companies to advertise in jurisdictions where such services are permitted. In the past, Facebook has been extremely strict when it comes to advertising online gambling business on its website. Now, Facebook’s Advertising Guidelines web page has a specific online gambling clause under the Gambling and Lotteries subsection of the Ad Content section, which reads: “Ads that promote or facilitate online gambling, games of skill or lotteries, including online casino, sports books, bingo, or poker, are only allowed in specific countries with prior authorization from Facebook.”
It is not clear how much Facebook will charge real money gaming companies to operate on its platform. In general, Facebook charges other apps 30 percent of their revenue, and there is no indication that gaming will work any differently. After reviewing Facebook’s public filings, we still have some questions about this and we will report back as we find answers.
In any case, Facebook’s new online real gaming platform will immediately give it a strong position in the real money market in the United Kingdom and a great opportunity to monetize its very large user base. With legislative efforts for real money online gaming gaining momentum across the United States, Facebook could be well positioned to be a power in the U.S. market in the future if it chooses to do so.
New Jersey is poised to become the third state in the country to legalize online gaming. Today, Gov. Chris Christie (R) sent the state iGaming bill back to the legislature requesting some minor changes and indicated that he is prepared to move forward with the bill once those changes are made.
Gov. Christie’s statement said, “I have concluded that now is the time for our State to move forward, again leading the way for the nation, by becoming one of the first States to permit Internet gaming.” The statement goes on to say, “I authorize this step towards modernizing Atlantic City’s entertainment attractions cautiously, with carefully constructed limitations that will ensure the highest integrity and the most robust oversight.”
New Jersey’s online gaming bill allows for all casino games to be played online, not just poker.
On December 20, 2012, the New Jersey State Senate voted 33-3 to legalize online gaming in the state after the state General Assembly previously approved the bill by a vote of 48-25-3.
State legislators have indicated that they are prepared to make the changes suggested by the governor and could get a new bill back on his desk in a matter of weeks.
The sponsor of the bill, State Sen. Raymond Lesniak (D), called the governor’s decision “a huge win” and something that “can help keep Atlantic City from drowning in red ink.”
The changes requested by Gov. Christie today included an increase in the tax rate on revenues generated from online gaming, additional funding for problem gamblers, and tighter regulations on relationships between state employees and companies that hold an Internet gaming license. The bill also expires in 10 years, although there is nothing preventing the state from renewing the legislation in the future.
We are very happy to see New Jersey take a huge step toward bringing Internet gaming to the state and toward adding more jobs and revenue.
On Friday, February 1, 2013, the U.S. Department of Justice filed a brief in the U.S. District Court for the District of New Jersey defending the constitutionality of the Professional and Amateur Sports Protection Act of 1992 (PASPA), the hotly contested federal law that prohibits sports betting in most states. New Jersey is seeking to have the court find this law unconstitutional. A win for the state would have far-reaching ramifications by eliminating the primary hurdle that individual states have in implementing legal sports betting within their borders.
PASPA prohibits any state from offering sports betting unless that state had a sports betting scheme in place between 1976 and 1990. New Jersey had a one-year period to enact sports betting, but its legislature failed to act. Delaware, Oregon and Montana have limited sports betting schemes in place, and Nevada is the only state that is authorized to offer single-game sports betting under the law.
On January 22, DOJ announced that it planned to intervene in the lawsuit brought by the four major professional sports leagues and the NCAA challenging the New Jersey state law. DOJ could have brought a case when the law was initially passed, but chose not to.
The DOJ brief raises three main constitutional issues: the anti-commandeering principles of the Tenth Amendment, Congress’s power to regulate sports wagering under the Commerce Clause and the applicability of the uniformity and equal sovereignty principles under the Commerce Clause, and due process and equal protection clause issues under the Fifth Amendment.
DOJ argues in its brief that the anti-commandeering principle applies only when a federal statute requires specific, affirmative action by a state and that since PASPA does not require New Jersey to take any action but merely to refrain from starting a betting program, the principle is inapplicable.
New Jersey replies that the anti-commandeering principle does apply because a federal law is imposing constraints on the state. PASPA’s stated purpose is “to require States to govern according to Congress’ instructions.” The Supreme Court case that established the anti-commandeering principle, New York v. United States (1992), states that “the Constitution has never been understood to confer upon Congress the ability to require the States to govern according to Congress’ instructions.”
Additionally, under the Tenth Amendment, the power of the federal government is limited. Courts have typically viewed the ability to raise revenue, such as through gambling, as one of those rights reserved to the states. New Jersey has successfully regulated gambling for decades but has been prohibited from regulating sports betting simply because it did not have a betting scheme in place before enactment of PASPA over 20 years ago.
DOJ argues that PASPA is a valid exercise of federal power under the Commerce Clause because sports gambling has an effect on interstate commerce and PASPA is a rational method of achieving regulation of it. DOJ also does not give any credence to the argument that the law violates the principle of equal sovereignty.
New Jersey argues that the principle of equal sovereignty does apply under the Commerce Clause. The plain text of the Commerce Clause does not make clear that all states must be treated uniformly, but the state believes that the case law makes it applicable.
New Jersey argues that contrary cases cited by DOJ deal with regulations that fell unevenly on the states because of circumstances that were not spread through the country, largely based on geography. However, the rationale for allowing some states to authorize sports betting and not others was the pre-existing scheme in place before PASPA and nothing else. The grandfathering clause of PASPA has served to grant a monopoly to Nevada while discriminating against all other states. This federal government-sponsored monopoly denies to the states the equal sovereignty that they are guaranteed under the Constitution.
The DOJ brief states that the arguments that PASPA violates the due process and equal protection guarantees of the Fifth Amendment are inapplicable because they protect only “persons” and not states from actions of the federal government. New Jersey argues that the discrimination between the states that PASPA has produced, by essentially granting Nevada a monopoly on single games sports betting, rises to the level of “injurious character” as to violate due process. This is likely the weakest argument that the state is making, and the court will likely rule in favor of DOJ on this point.
When PASPA was being debated in Congress, DOJ sent a letter to then Senator Joseph Biden (D-Del.), then the Judiciary Committee chairman, discussing the views of DOJ on PASPA. The letter noted that determinations of how to raise revenue are typically left to the states and since PASPA was seeking to regulate how states generate revenue, “it raises federalism issues.” DOJ chose not to address that letter in its brief.
New Jersey and the New Jersey Thoroughbred Horseman’s Association will have an opportunity to file a reply brief with the court by February 8. Oral arguments on the constitutionality of PASPA will be held on February 14.
The arguments made in the DOJ brief, for the most part, have already been made by counsel for the sports leagues. However, it remains to be seen if the court will give the arguments more weight because they were made by the U.S. government.
If the court accepts any of the arguments made by New Jersey that PASPA is unconstitutional, then New Jersey will prevail. It remains to be seen how the court will rule, but the constitutionality of PASPA will surely be tested and the consequences of this ruling will be very far-reaching. Whichever side loses the battle in the district court will likely appeal, meaning it may be some time before it is settled whether New Jersey can proceed with its plan to implement sports betting.
In a January 23, 2013, ruling, the U.S. Court of Appeals for the 7th Circuit held that an Indiana law that prohibited most registered sex offenders from using social media websites was unconstitutional because it was “not narrowly tailored to protect the state’s interest.” The decision was restricted to the Indiana statute on sex offenders and did not extend its reasoning to another, related issue – whether courts can permissibly, as a condition of probation or supervised release, restrict white-collar criminals from using the Internet.
The fatal flaw of the Indiana law, the appeals court held, was that it was overbroad because it targeted substantial protected speech, rather than retaining a narrow focus on the specific evil of improper communication to minors.
The 7th Circuit noted that the Indiana statute affected First Amendment rights because it controlled expression via social media and limited the ability to receive information and ideas.
In recent cases of various sorts, including e-commerce cases, federal courts have proved all too willing to imposed Internet bans that trample on various constitutional rights. We focused on this problem in a National Law Journal article a couple of years ago that argued that courts go too far when they impose a broad ban on the use of the Internet against a defendant who had committed online fraud.
In the sex-offender case, Doe v. Marion County Prosecutor, the 7th Circuit acknowledged the strong state interest in protecting minors from harmful online communication, but explained that the ban must be narrowly tailored to target only the appropriate evil. All parties agreed that there is nothing inherently dangerous about using social media – except when a sex offender communicates with minors, which is only a “minuscule subset of the universe of social network activity.”
The same principle ought to be applied to restrictions on Internet use placed upon those who have been found guilty of fraud in e-commerce. Not all Internet usage should be treated as suspect.
Towards the end of its opinion, the court discussed Internet restrictions in the context of conditions of probation or supervised release. The court distinguished between a criminal statute, as in Indiana, that governs the protected speech of the general populace (including registered sex offenders) and the sentences imposed by district courts that may govern Internet usage.
The court said its opinion “should not be read to affect district courts’ latitude in fashioning terms of supervised release.” It elaborated that “Our penal system necessarily implicates various constitutional rights . . . a court could conceivably limit a defendant’s Internet access if full access posed too high a risk of recidivism.”
Somewhat ironically, the court noted that “The alternative to limited Internet access may be additional time in prison, which is surely more restrictive of speech than a limitation on electronics.” Although the 7th Circuit was not willing to expand its protection of Internet usage to the sentencing and probation context, we still think that its strong protection of Internet usage in the First Amendment context bodes well for future challenges in that context.
The U.S. Department of Justice announced on January 22, 2013, that it plans to intervene in the lawsuit brought by the four major professional sports leagues and the NCAA challenging a New Jersey state law that legalized sports betting in the state.
The leagues have argued in court papers that the New Jersey law is invalid because it directly contravenes a 1992 federal law, the Professional and Amateur Sports Protection Act (PASPA) that imposes a ban on sports betting unless the individual state had its own sports betting scheme in place between 1976 and 1990. New Jersey was given a one year window to put in place a sports betting scheme, but the legislature failed to act.
The DOJ has requested that it have until February 1 to respond to the two briefs that challenge the constitutionality of PASPA. The DOJ has also requested the opportunity to participate in oral argument on the constitutionality of PASPA on February 14.
A year ago, New Jersey Governor Chris Christie signed legislation allowing sports betting in New Jersey after it was approved by a 2-1 margin in a nonbinding voter referendum in November 2011.
The DOJ could have brought this lawsuit when the law was initially passed, but chose not to. Instead, the case was brought by the four major professional sports leagues and the NCAA. New Jersey has argued that the leagues lacked standing to bring the suit. However, last month, after briefs were filed an oral arguments were held, a district court judge in New Jersey ruled that the leagues do have standing to bring the suit.
When PASPA was being debated in Congress, the DOJ sent a letter to then Senator Joseph Biden (D-Del.), then the Judiciary Committee chairman, discussing the views of the DOJ on PASPA. The letter noted that determinations of how to raise revenue are typically left to the states and since PASPA was seeking to regulate how states generate revenue “it raises federalism issues.”
A successful outcome for New Jersey in this case would allow for other states to pursue legalized sports betting. We support New Jersey’s efforts to legalize sports betting and generate needed revenue and jobs for the state.
Domain-name registrants who sit on their rights rather than go after trademark infringers do so at their peril. In a case decided last July, an arbitrator for the World Intellectual Property Organization (WIPO) held that a foreign registrant’s bad-faith registration and continued use of an infringing domain name, at some point, transformed into legitimate use. As a result, the trademark holder, Victoria’s Secret, was denied any relief under Australia’s version of the Uniform Domain Name Dispute Resolution Policy (auDRP).
In May 2012, lingerie retailer Victoria’s Secret filed a complaint with WIPO seeking cancellation or transfer of the domain name “victoriassecrets.com.au,” which allegedly had been routing Victoria’s Secret customers to an escort service based in Sydney, Australia. As required under the auDRP, Victoria’s Secret alleged all three prongs required for relief: (i) a domain name that is identical or confusingly similar to a valid trademark; (ii) illegitimate use; and (iii) bad faith.
First, Victoria’s Secret alleged that the infringing domain name was confusingly similar to the company’s trademark, which had been registered in the United States since 1977 and in Australia since 1990. Indeed, the infringing domain name incorporated Victoria’s Secret’s entire trademark, simply adding an “s” at the end. The company further alleged that the Australian women who registered the domain name had intentionally used Victoria’s Secret’s brand and image to promote prostitution.
Second, Victoria’s Secret claimed that the Australian escort service had no rights or legitimate interests in the domain name: the escort service was not known by the name “Victoria’s Secret,” the service was not authorized to use the trademark, the registrants were not using the name in connection with a bona fide offering of services, and they were not putting the name to legitimate non-commercial or fair use.
With respect to the “bad faith” prong, Victoria’s Secret alleged that the respondents had registered and used the name to deceive Internet users into believing the lingerie company was a source, sponsor or affiliate of the escort service. Victoria’s Secret further alleged that given its previous registration and worldwide customer base, the registrants knew their domain name would cause confusion.
What’s more, the registrants intended to trade on the confusion and, in the process, tarnished the lingerie company’s reputation.
The WIPO arbitrator agreed — for the most part. With seemingly no hesitation, he found for the complainant on the first and third prongs. He stated that the disputed domain was “confusingly similar” to Victoria’s Secret’s trademark. Moreover, he found that the registrants “knew of the Victoria’s Secret trademark at the time they registered and began using the domain name” and that they “deliberately chose” the domain so that their escort business would benefit from the resulting confusion. Nonetheless, the arbitrator held that Victoria’s Secret was not entitled to relief.
In his view, Victoria’s Secret had failed to show that the escort service had no legitimate interest in the domain. According to the arbitrator, evidence submitted by the parties showed that the registrants had been using the disputed domain name for almost 10 years and, more importantly, that Victoria’s Secret had been aware of the infringing use for seven years prior to filing the complaint. Although Victoria’s Secret had issued a couple of cease-and-desist letters in 2005, the company ultimately decided not to pursue the matter. At some point after that, the escort service obtained a legitimate interest in using the domain. In the arbitrator’s words:
[Victoria’s Secret’s] failure to press the allegations of infringement led the Respondent to understand that the Complainant no longer objected to the Respondent’s behavior. The effect of this subsequent bona fide use of the disputed domain name was that, by the time the Complaint was filed, the Respondent had acquired a right or legitimate interest in the disputed domain name.
The arbitrator added that if the Australian registrants were to change their use of the domain name following the decision, their legitimate interest in the domain would very likely be lost.
It will be interesting to see if other arbitration panels follow suit. Whatever the case, Victoria’s Secret is probably keeping a close watch on the domain while considering potential alternatives for relief.
Bitcoin – it sounds like a token you might use to play skeeball at a beachside arcade. It is actually a relatively new, virtual online “currency” being used for payments across the Internet. While some observers have noted that the Bitcoin has been utilized primarily for purchases in the Internet “underworld,” the Bitcoin actually has gained traction more recently as a legitimate payment exchange. The Bitcoin might just be the surprise of the next generation of e-commerce and its progeny, mobile commerce.
The Bitcoin originated in 2009 with the issuance of the first Bitcoins by Satoshi Nakamoto, the pseudonymous person or group of people who designed the original protocol and created the peer-to-peer network. Users connect with other users rather than with a central issuer or server. This makes the Bitcoin attractive for illegal activities – authorities can’t pounce on a central office or simply seize one organization’s assets. The Bitcoin has no central issuing bank. Prices fluctuate a great deal; this past summer one Bitcoin traded at around $10. It is estimated that the monetary base of the Bitcoin is around $110 million.
There are several advantages to Bitcoins. They are largely unregulated. Also, payments can be made anonymously, leaving a minimal or no paper trail. Unlike credit cards, merchants do not face the hassle and uncertainty of “charge backs.” However, because of its past “underground” use, the Bitcoin lacks a reputation and general acceptance by mainstream merchants. For instance, the website “Silk Road” allowed users to buy and sell heroin and other illegal drugs provided they paid for their purchases using Bitcoins. Online gambling services have utilized Bitcoins with relative success.
While the past use of the Bitcoin has been limited, the new currency is picking up steam. Just a few days ago, BitPay, a payment solutions company, announced a large investment by a group of well-known tech investors. They see the Bitcoin as the next “PayPal” offering a fast payment method without the exchange of sensitive personal information that goes along with traditional credit card payments. Investors also see the benefits for small businesses, which can much more easily take payments from overseas using Bitcoins. Today, we can use Bitcoins to buy a wide array of products and services. This website provides links where we can purchase, for instance, jewelry, electronic cigarettes, natural cosmetics, and even survival products and dry cleaning, just to name a few offerings.
Just last month, the Bitcoin gained further acceptance when the Bitcoin-Central exchange owned by Paymium announced that it is partnering with registered PSP Aqoba and Frank Bank Credit Mutuel Arkea in order to legally hold balances in payment accounts within the European regulatory framework. However, as Bitcoins have not to date been backed by a governmental entity and several users have reported losses from fraud and hacking into their computers where they stored Bitcoins, continued use and acceptance will be affected by the reliability of the payment network, as well as any attempts to regulate it.
As use of the Bitcoin expands, regulators (particularly in the United States) may seek to regulate the currency. U.S. prosecutors tend to view anonymous payments with skepticism and suspicion.
Our view is that use of the Bitcoin network has expanded in large part as a natural reaction to overly zealous authorities enforcing anti-money laundering rules and policies against banks and individuals. Parties facing onerous reporting obligations and over-the-top fines have been seeking alternative payment methods. The FBI has shown some interest in Bitcoin (in an April 2012 report the FBI expressed concern about cyber criminals using Bitcoins). Last year, a spokesman for FinCEN stated that “The anonymous transfer of significant wealth is obviously a money-laundering risk, and at some level we are aware of Bitcoin and other similar operations, and we are studying the mechanism behind Bitcoin.”
However, we think the law will take some significant time to catch up with the fast-moving network. It remains to be seen whether current U.S. law can be applied to cover Bitcoins, or if specific legislation would be needed. Further, even if U.S. authorities seek to regulate Bitcoins, actual enforcement would be difficult as there are no stationary “assets” to be seized (not even a domain name or website). Bitcoins are typically stored in a “wallet” on a user’s computer. Authorities would in many instances be required to pursue each “peer” in the peer to peer network, which does not seem terribly practicable. In the interim, Bitcoins appear to be growing in use across industries and geographic locations.
There can be no dispute that the death of Aaron Swartz – the Internet activist who took his own life on Friday, January 11 – is tragic. There can also be no dispute that the grief and anger his family feel is very real. The question is what the appropriate focus for that anger should be in order to give meaning to Swartz’s life – and death.
Swartz, who had blogged about his own battles with depression, was a leading activist involved with the movement to make information freely available on the internet, and is credited with helping to lead the protests that ultimately defeated the Stop Online Piracy Act (SOPA) – a statute that would have significantly broadened law enforcement powers in policing internet content that may violate U.S. copyright laws. Swartz’s suicide came as he faced federal charges of wire fraud and computer fraud arising from his alleged efforts to make freely available an enormous archive of research articles and similar documents offered by JSTOR, an online academic database, through computers at the Massachusetts Institute of Technology. The allegations in the indictment he faced were a tribute to Swartz’s computer acumen, describing the technological means that Swartz had used to access and download approximately 2 million documents from the JSTOR subscription archive by unauthorized access to the computers at MIT.
Swartz’s family has released a statement in which they blame his death on the decision by federal prosecutors in the District of Massachusetts to pursue “an exceptionally harsh array of charges, carrying potentially over 30 years in prison, to punish an alleged crime that had no victims.” Contrary to the family’s assertion that the prosecution caused Swartz to take his own life, we suggest that the appropriate focus here is not on prosecutorial overreaching, but rather on Congress’s decision to criminalize certain conduct and to set sentencing guidelines that would likely have led to imprisonment if Swartz were convicted.
It is true that the maximum statutory sentence of imprisonment for the wire fraud charge in the indictment against Swartz is 30 years. But there is no question that the likely sentence that Swartz would have faced if convicted of wire fraud and/or the other charges in the indictment would have been far less than that. The advisory range under the U.S. Sentencing Guidelines would have depended on the loss (or intended loss) suffered, among other things, but Swartz likely faced (based on back of the envelope calculations) a sentence of no more than two to four years in prison – a fact that he almost certainly knew from the lawyer who represented him. While four years in federal prison is significant, it is much less than the 30-year sentence mentioned by the family.
It is also not entirely clear that the prosecutors’ decision to pursue charges against Swartz was unreasonable. This is not just a case alleging the distribution of materials protected by copyright law – an issue on which there is fair debate as to whether conduct should be criminalized. Rather, in this case, Swartz was accused of having accessed the MIT computer systems and the JSTOR subscription (for which MIT paid approximately $50,000) through illicit means. There were also allegations that Swartz’s computer intrusions crashed some computers and caused some legitimate subscribers to the JSTOR service to lose access for a period of time. Thus, assuming the truth of the allegations in the indictment, the alleged crime here was not entirely victimless. Moreover, everyone agrees that illegally accessing a computer system is not conduct that should be condoned. For these reasons, Swartz’s family’s attacks on the prosecutors as overreaching – while understandable given their grief and anger – may actually be misplaced.
On the other hand, there is a fair question whether the conduct with which Swartz was charged is really the kind of conduct for which we need to send a person with no other criminal record to prison for a period of years. That, however, is not an issue of decision-making by the prosecutor’s office. Rather, that is a question for Congress, both in terms of establishing criminal liability and in terms of setting astronomical maximum statutory sentences (which increased the base offense level for this crime). And it is a question for the U.S. Sentencing Commission, which has raised Guidelines levels over the years. It is also a question for Congress in terms of setting Guidelines scoring that increasingly fails to reflect any expertise of the Sentencing Commission, but rather reflects only a congressional mandate to support increasingly harsh advisory sentences under the Guidelines for white-collar offenses.
Prosecutors may have been justified in seeking charges against Swartz for his conduct. But if his family, friends and supporters wish Swartz’s death to have as much meaning as his life, they should focus instead on the decisions that created the harsh potential penalties that Swartz faced.
Andrew Strempler, a Canadian citizen who helped to pioneer the cross-border online pharmacy industry, was sentenced on January 9, 2013, to four years in prison in connection with allegations that his former company sold fake and misbranded drugs to U.S. citizens.
The sentence follows Strempler’s guilty plea in October in federal court in Miami to a charge of conspiracy to commit mail fraud. Strempler also agreed to forfeit $300,000 and pay a $25,000 fine. A hearing will be held to determine if Strempler will also need to pay restitution.
Strempler operated companies that sold foreign pharmaceuticals to consumers in the United States, where drug costs are significantly higher than in other countries. The drugs were obtained in markets with lower prices on drugs, but the U.S. government has long taken the stance that selling these drugs is illegal because the sources of the drugs could not be assured.
Under the plea agreement, the guidelines range for Strempler’s sentence would be 46 to 57 months, on a charge that carries no mandatory minimum sentence. The government recommended a sentence of 57 months. Prosecutors had originally sought up to 20 years in prison and the forfeiture of $95 million.
Counsel for Strempler asked the court for a downward variance and a sentence of 24 months. Strempler’s attorneys argued that since he is a Canadian citizen, any sentence imposed on him would be more difficult and onerous than an identical sentence imposed on an American citizen. They contended that he would likely not be assigned to a minimum security prison, even though he would likely otherwise qualify based on the nature of the offense and his lack of criminal history. Additionally, as a Canadian citizen Strempler would not be allowed to participate in an early release to a community corrections facility. After he serves his sentence he will be sent to immigration custody, where he will likely be held until his removal from the country.
Strempler’s attorneys also noted that the pre-sentence investigation report states that “there is no evidence that any victim sustained an actual loss or physical injury as a result of this offense.” Additionally, the forfeiture judgment of $300,000 to the government that Strempler agreed to pay prior to sentencing was nearly doubled the agreed-to loss amount.
According to court papers, Strempler believed that the drugs his company was selling were “safe and effective,” and his attorneys noted that he purchased the same drugs for his family and had sample drugs tested by a lab in Canada. His attorneys argued that he did not act with malice and had no actual belief that the drugs were fake and ineffective. He believed that the drugs were safe because they were purchased in accordance with the regulations of foreign countries.
The court essentially rejected the arguments by Strempler for a more lenient sentence and went along with the government’s request for a lengthy sentence. It appears to us that Strempler received a long sentence for a first-time nonviolent offender who did not act with malice. It seems that this is more of a regulatory violation parading in the clothing of a criminal case.
By asking for such a significant sentence, the government may have been trying to serve notice that this type of case will not be taken lightly. Given the stance taken by the prosecution in this case, it will be interesting to see if this leads to further prosecutions for related offenses.
A bill has been introduced in the Nevada General Assembly, on behalf of the state’s State Gaming Control Board, that would allow for the state governor to enter into interstate gaming compacts with other states. This legislation sets up Nevada to potentially be at the forefront of a compact in which individual states that have passed online gaming bills can work together to offer online gaming without federal legislation.
The bill, titled Assembly Bill 5, would remove language in the previously enacted online gaming bill that stated that an online gaming license does not become effective until a federal law was passed authorizing online gaming or the U.S. Department of Justice (DOJ) provided notice that interactive gaming activities are permissible under federal law. The bill would add language that allows for the governor, on behalf of the state, to enter into agreements with other states.
Assembly Bill 5 has been referred to the Nevada General Assembly Committee on the Judiciary. The upcoming legislative session does not begin until February 4, 2013.
The possibility of gaming compacts became a reality after the DOJ released an opinion in December 2011 stating that the Wire Act applies only to sports betting.
This opinion by DOJ eased fears among state lawmakers that money involved in online gaming could not be sent across state lines without incurring a violation of federal law. With that hurdle removed, the possibility of states entering into online gaming compacts became a reality.
Thus far two states, Delaware and Nevada, have enacted laws legalizing intrastate online gaming. Last month, the New Jersey state legislature passed a law legalizing online gaming and the bill is currently waiting for action to be taken on it by Gov. Chris Christie. Other states have publicly stated that they will consider online gaming legislation in sessions this year.
One potential problem with interstate gaming compacts is the potential for a hodgepodge of different laws and regulations for players and operators. States that lack experience in regulating gambling activities may look to the states that do have such experience, like Nevada and New Jersey, to regulate for them as an alternative to establishing their own regulations for online gaming. Thus far, Nevada is the only state to implement regulations governing online poker.
Nevada may want something in return for helping regulate gaming activities in other states, and it is not clear from the bill what that may be. Compacts like this have the potential to entrust a significant amount of power in a state agency, such as the Nevada Gaming Commission, and it is unclear whether it would be in the best interests of players and operators for that to occur. The concern over one state agency having so much power may serve as an impetus for states that do not currently have regulatory bodies for gaming to decide to establish them.
One other potential problem that gaming compacts address is the size of player pools. While there may not be enough players online at one time in one state for games to be big enough, gaming compacts allow for states to share their player pools, allowing for the possibility of many more players to be online at one time.
Not all states would need to pass a law similar to this Nevada law in order to participate in an interstate gaming compact. Depending on the state law or the powers granted to the state executive based on the state constitution, a state may be able to participate in gaming compacts without any legislative action.
Interstate gaming compacts have the potential to be a good development for gamers, but at this point there are too many unanswered questions about how they would operate. The idea of one state-level agency wielding enormous power over online gaming throughout the country is something that should be studied carefully before it is implemented.