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New DOJ opinion on web gambling would protect consumers, rule of law

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By Blanche Lincoln

I'm certain that A.G. Burnett has a robust understanding of regulatory structures for gaming at the state level given his prior service at the Nevada Gaming Control Board (NGCB). But his recent op-ed in The Nevada Independent misses the mark on the critical need for the Department of Justice's (DOJ) recent restoration of federal laws that had for many years banned Internet gambling at the federal level.

DOJ's decision should be viewed as a victory for the vulnerable – and for the rule of law. In effect, DOJ has corrected the Office of Legal Counsel's (OLC) 2011 mistaken Opinion – an Opinion that had reversed decades of interpretation of the Federal Wire Act and effectively nullified a law we passed while I was in the Senate to give law enforcement tools to shut down all forms of internet gambling.

Mr. Burnett's argument that the Internet is somehow intrastate and outside the reach of federal law defies common sense – and is not supported by law. While in the Senate, I was proud to sponsor the Internet Safety and Child Protection Act – legislation to curb the ability of minors to access adult websites. In crafting this bill my colleagues and I were aware that, as it relates to the enforcement of U.S. laws, the Internet is an inherently interstate technology, even when it involves transmissions that originate and are received in the same state.

Just weeks after I proposed this bill back in 2005, DOJ's appellate brief in the United States v. MacEwan – which concerned the use of the Internet to acquire child pornography – concluded that "the Internet, by its very nature, is interstate." Months later, the United States Court of Appeals for the Third Circuit, whose jurisdiction includes two of the four states that legalized online gambling, agreed: the Internet is "both a channel and instrumentality of interstate commerce."

Mr. Burnett's claim that DOJ's new opinion "runs contrary to recent legal precedent," is similarly misplaced.

As a certain past chairman of the Nevada Gaming Commission put it just months before release of the OLC's 2011 mistaken Opinion: DOJ's "longstanding position has been that all forms of Internet gambling are illegal – including intra-state Internet gambling, because activity over the Internet crosses state lines, implicating federal anti-gambling laws such as the Wire Act." That certain past chairman is, of course, my friend, former colleague and former Senate Majority Leader Harry Reid.

Just as the Internet very clearly has no borders when it comes to federal jurisdiction over its transactions, it is equally as evident that the online gambling industry has no limits when it comes to preying on its vulnerable victims, namely kids and individuals with gaming addictions.

As such, the best way to anticipate where the United States would have been headed prior to DOJ's January decision to restore federal laws banning all forms of Internet gambling is to analyze how the industry has failed, indeed preyed upon, the most vulnerable in the United Kingdom – home of the "largest regulated online gambling market in the world."

The industry currently has a presence on the smartphones of over half of all 16-year-olds in the UK, where two in three teens also say they "feel bombarded by betting firms." From the malicious use of cartoon and storybook characters to the deliberate placement of links on youth soccer fan pages, the biggest online casino behemoths rely on predatory practices to turn the littlest of kids into customers.

Meanwhile, a nonpartisan think tank revealed over the summer that the UK's online gambling industry "obtains more than half of its profits from at risk and problem gamblers" – who, as The Guardian reports, are "plied with targeted ads attempting to lure them back." The "damning conclusion…echoes reports from Canada, Australia, New Zealand...the list goes on."

A recent investigation by the BBC helps explain how that number is so staggeringly high: The virtual verification system set up by the industry to purportedly help problem gamblers self-exclude can be easily bypassed. Addicts, per the report, can "still place bets online by simply changing their user details" – an edit as small as either misspelling or adjusting the capitalization of a name. Similarly, in Ireland, where the activity is also legal, "37 of the 39 most popular gambling sites" – nearly 95 percent – allow kids to place bets without any age verification.

As another A.G. – Nebraska's Jon Bruning – recently explained at a House Judiciary Committee hearing on the subject, while the Nevada Gaming Control Board is "excellent at identifying somebody that walks into a facility" – excellent at training staff and utilizing facial recognition to determine whether a gambler at a facility is an addict, impaired by drugs or alcohol, or someone who has asked to be banned – "online is a whole different animal…kids push a button and say 'I'm 18.' They might be 14."

Indeed, they are even younger, as Bruning noted in a recent column – ranging from the three-year-old boy who pushed a button on his father's phone for a grand total of £50,000 to the thirteen-year-old who lamented that "it was just far too easy" to sign up for an online account, steal the details of his dad's credit card, and subsequently lose £80,000 on his own device. Given the "growing number of young people for whom the combination of online gambling innovation and smartphone usage is proving increasingly toxic," London's Financial Times dubs the activity "the hidden epidemic."

As I alluded to in my initial response to DOJ's new opinion, that epidemic – together with the tactics responsible for it – started to spread to our country as a direct result of its old opinion; "licensed operators began emulating their overseas counterparts in the worst possible way here in the United States."

Once New Jersey became the third state in America to legalize the Internet gambling industry, for instance, ads for some of the most prominent online operators were detected on websites for kids, as well as on web-based resources to help problem gamblers curb their addictions. In one exceptionally egregious example, a "claim your bonus" ad – which included $20 in "free" bonus money – appeared alongside an online article entitled "Twelve Ways to Stop Gambling Addiction Forever."

Last month's unfortunate news that an officially authorized operator in New Jersey allowed "underage gamblers to place bets online for more than a year" – yet another reminder that the industry is either unwilling or unable to prevent the vulnerable from accessing its platform – only underscores the necessity for federal guardrails.

Concerned parents should be pleased by DOJ's landmark decision to restore those guardrails – as well as by the Department's urgency in enforcing them.

Blanche Lincoln, a former U.S. senator from Arkansas, is the founder of Lincoln Policy Group and works as a leading advocate for the Coalition to Stop Internet Gambling, a group bankrolled by Las Vegas Sands Chairman Sheldon Adelson.

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