Don’t bet on online gambling

The U.S. Congress has voted the Unlawful Internet Gambling Enforcement Act, the latest piece of legislation that attempts to put a leash on objectionable internet behaviour. As far as online regulation goes, this bill looks like the real thing. The Act makes sure that some existing criminal activities apply to ICTs, such as the internet and mobile device gambling. The problem as I understand with American gambling legislation is that it is strictly a state issue, but with the internet, the possibilities for inter-state online gambling increases. In short, this act tries to ban inter-state gambling through wireless devices.

While it has always been argued that it is difficult to regulate the international and inter-jurisdictional nature of the internet, the new Act tries some novel ways of achieving enforcement. If you cannot possibly attack the transactions as such, and if most providers are online, how can you stop the activity? Stop the payments! The Act prohibits “persons engaged in a gambling business from knowingly accepting credit, electronic fund transfers, checks, drafts, or similar financial instruments or the proceeds of any other financial transaction in connection with unlawful Internet gambling“. By placing this prohibition, banks and credit card facility suppliers can block unlawful transactions, and they are awarded civil immunity in cases they block such a transaction.

I wonder how will banks know which transactions to block. My guess is that online gambling sites will start trying to mask their names in some ways. While I’m sceptical of the efficacy of this legislation, I beleive that this is the next generation in Internet regulation. Goverments of the world will indeed take heed of this move.

However, I found some parts of the legislation quite telling. The new Act excludes from the gambling definition activities such as securities exchanges. Gambling with cards is not kosher, but gambling with the stock market is OK.