Several internet gambling media outlets have picked up a story written by columnist Jack Sollum, who writes for Reason Online. It's always interesting to me when someone outside of the industry writes about it, so I went looking for the original article. For the life of me I can't seem to find it, so I'm working off what I've found from other news sources.

"Contrary to early press reports, Congress has not banned online gambling," Sollum writes. "Instead, it has opted to maintain an uncertain legal environment in which businesses that cater to Americans' taste for betting run the risk of harassment and prosecution by overzealous Justice Department officials who twist the law to fit their moral views."

He's actually right there. The 1961 Wire Act hasn't been touched by the new anti-internet gambling legislation. Congress skirted around this issue by blocking the ability to deposit from any American financial institution into an online gambling casino, poker room or sports book.

The columnist quotes Bodog CEO Calvin Ayre, who has correctly pointed out on a number of occasions that: "It will likely take months to fully understand what, if any, ramifications there are from this new law."

To be more specific, Congress has 270 days after the law was signed to iron out the details as to what is and is not legal.

Sollum goes on to describe how the Act, stalled in the Senate up to that point, was rammed through Congress in a late-night session hours before the recess to fight mid-term elections, attached to a totally unrelated primary bill on port security which it was imperative to pass.

We all already knew that… I've been fuming about that in articles for weeks now.

Sollum makes an intelligent and reasoned analysis of the new law and its implications for the industry. The UIGEA makes it a federal crime, punishable by up to five years in prison, to receive a payment in connection with "unlawful Internet gambling." It also mandates regulations requiring financial institutions to block such payments, he writes.

But - he points out - the act defines "unlawful Internet gambling" as online wagering that already is prohibited by state or federal law. It explicitly does not expand the category of forbidden gambling.

"The new law therefore leaves untouched the Wire Act of 1961, which prohibits using a 'wire communication facility' to help people place bets 'on any sporting event or contest.' Although the Justice Department maintains that the Wire Act covers all online gambling, the law's text and history indicate it applies only to sports betting, a reading the U.S. 5th Circuit Court of Appeals endorsed in 2002," the columnist explains.

"Perhaps recognizing that its broad interpretation of the Wire Act is legally shaky, the Justice Department has targeted online bookmakers, as opposed to casinos or poker parlors," Sollum claims, giving as example the arrest of David Carruthers.

"Even those arrests are questionable applications of the Wire Act, since they involve foreign companies with Web sites based in countries where online gambling is unambiguously legal," he points out.

Sollum refutes statements by politicians and certain sections of the media that the UIGEA constitutes a ban on Internet gambling.

"Although the Unlawful Internet Gambling Enforcement Act did not change the legal status of online gambling, two of its main sponsors, Rep. Jim Leach of Iowa and Sen. John Kyl of Arizona, both Republicans, called it a "ban," he remarks. "Perhaps taking a cue from these misleading descriptions, Forbes Magazine reported 'the new act now categorically outlaws online gambling,' while The Washington Post claimed 'placing bets over the Internet was effectively criminalized.'

"The Wire Act and the Unlawful Internet Gambling Enforcement Act do not apply to garden-variety gamblers 'placing bets over the Internet' but only to people 'engaged in the business of betting or wagering.' That business is no less legal now than it was before," Sollum asserts.

Sollum concludes with the observation that, to be on the safe side, financial institutions regulated by the U.S. government probably will shun gambling sites (if they weren't doing so already). But as a visit to any of the sites that continue to serve Americans confirms, there are several alternative payment methods the U.S. government will have a hard time blocking, including electronic checks, money orders, offshore based e-wallet systems and credit card transactions processed in other countries.

"As before, then, the [U.S.] government will pretend online gambling has been banned, and millions of Americans will give that position as much respect as it deserves," is his pungent closing comment.

Here's the thing, even if individual players don't respect it all of the good gambling sites do. The result of which is now all of the honest sites are blocking US players leaving less scrupulous sites for US players to gamble on. This isn't what the industry needs and it does no one any favors.

Posted on: November 6, 2006

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