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Interview with Jorge Van: legal expert on online gambling

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Attorney Jorge Van is a legal export on Internet gaming in the US. In this reprint of an interview with him he discusses recent events, and throws in a few predictions for the future of Internet gaming.

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How are you doing Jorge?

I have testified before the US Senate and the National Gambling Impact Study Commission on Internet gambling. I have chaired conferences on the subject in New Orleans, Chicago and Sydney. I have been a conference speaker on the subject before the World Gaming Congress, the American Gaming Summit and, most recently, the National Association of Attorneys General.

What do you think was the main reason that the Kyl Bill did not become law all the way back in 1999?

"The new Kyl Bill should be renamed The Interactive Gambling Promotion Act" The Kyl Bill continues to go through an evolution as politics have overtaken policy. This evolutionary process has taken longer than I initially estimated. As you know, the Kyl Bill slipped passed the Senate just before the close of the 106th Congress.

How do you view the latest version of the bill?

The new Kyl Bill should be renamed "The Interactive Gambling Promotion Act." Senator Kyl obviously could not garner enough support for his original bill. To overcome the opposition, he conceded to exceptions that have basically consumed the ruled. The major exceptions are for the horse and dog race industries and state lotteries. The latter exception is especially significant because state lotteries can offer a variety of games under the guise of a lottery including slot machines. While these exceptions are for closed-looped subscriber systems, they still permit interactive home wagering. As you know, the Kyl Bill slipped passed the Senate just before the close of the 106th Congress.

No bill that attempts to regulate Internet content will achieve the objective of removing that content from the Internet. All US lawmakers can hope for is to impact the size of the industry. A US prohibition, which the Kyl Bill is not, would impact the size of the industry for three principal reasons. First, strong US brands (i.e. traditional casinos or media companies) will not enter the industry. Second, US institutional money will be readily available to build strong brands. Third, some percentage of US bettors will not gamble over the Internet if it is unlawful. The Kyl Bill, if passed in its current form, will result in an increase in interactive wagering as those fortunate to be granted exceptions will work to exploit their good fortune. "I disagree with the notion that Government should interfere with a person's freedom to gamble online or anywhere else." Surprisingly, this is the first time that anyone has asked my personal opinion of the law. I have always given both sides of the argument, which both are logically supportable. I am fundamentally a civil libertarian in the spirit of John Stuart Mill. Therefore, I disagree with the notion that Government should interfere with a person's freedom to gamble online or anywhere else.

But, I recognize also that no one has any natural rights to cheat or steal from any other person and, if they do they should be punished. The Internet and Internet gambling scare me because of the lack of accountability. This is the problem that the lawmakers should be most concerned about. Unfortunately, I am not sure there is a good solution.

Can you make another prediction as to if and when it will become law? The great Yogi Berra allegedly once said, "It is difficult to make predictions especially about the future." But, I will go out on a limb and say sometime before June 2000 or else sometime later in the millennium.

How do you think a law based on the latest version of the bill would affect the online gambling industry?

I would seriously consider investing in those companies that provide support to state lotteries because their revenues are going to soar. The players in the online racing industries will be interesting to watch, although I think in time only one or two of these companies will survive and prosper.

What would prohibition mean to the social online player in the US?

For most players, not much. The current bill does not make it illegal for a social bettor to place a wager over the Internet.

Considering the fact that other countries are legalizing and regulating online gambling, do you think US lawmakers will take on a regulatory model somewhere down the line?

I am not sure what type of model that the Kyl Bill espouses. It is schizophrenic. Regarding online lotteries, it adopts a government-run model. Regarding online racing, it adopts a state-controlled regulatory model. Regarding online sports wagering and most casino gaming, it adopts a prohibitory model.

Will US lawmakers change their position regarding casino and sports wagering?

My thoughts are that the answer is negative regarding sports wagering. The US government made a broad policy statement some years ago that sports wagering generally should be prohibited (with a limited exemption for Nevada and two other states). Today, despite that illegal sports wagering is quite widespread and substantially tolerated by law enforcement, the US lawmakers are not considering the regulatory model. Just the opposite is occurring as Congress is considering revoking a part of Nevada's exemption for amateur sports.

With regard to casino wagering, any exemption would have to come before passage of the Kyl Bill. If not, I do not see future support for liberalization of any Federal gambling laws in the near term.

Let's talk about a different issue. What are your comments on the Cynthia Haines settlement?

It should be apparent that the profit margins in the online gaming industry are large enough to absorb loses due to refusals of some customers to pay their bills. You need to remember that gaming debts were not enforceable in Nevada until 1981 and the state gaming industry did quite well. Simply put, most players pay their debts. It has long been part of the Gambler's Code. Nor do I believe that the case will scare off most credit card companies. They will simple shift the burden of loss back to the Internet gambling operator.

What do you think about Ira Rothken (Cynthia Haines's lawyer) now taking on the similar case of Fred Marino?

I do not know Mr. Rothken's motivation for taking on this case or his fee arrangement with his client. But, most often lawyers are simply representing their clients' interest for a fee. I am sure that the credit card companies will hire good attorneys for a fee to represent their interests. This is simply the American way.

Are we seeing the beginning of a trend?

Sure. Gambling debts are not enforceable in most states. So the online operators better begin factoring bad debts into their business models. In a decision on July 26th, New York State Supreme Court Justice Charles Edward Ramos ruled that a foreign-based Internet casino web site was subject to New York State gambling laws.

What consequences could this ruling have on Internet gambling?

"The New York decision was not unique, nor particularly well-thought- out or written." The ultimate ruling in that case is that an out-of-state operator that accepts online wagers from a resident of a state is subject to the criminal laws of that state. This ruling, I believe, will withstand the test of time. The New York decision was not unique, nor particularly well-thought- out or written. The cases from Wisconsin, Minnesota & Missouri are better specimens of the legal principle.

These decisions collectively are bad news for persons within the reach of state governments, e.g. Americans, that want to get into the online industry. These people could, and many will, face prosecution all across the United States.

Non-US operators (who are not planning to visit Disneyworld) will likely ignore the ruling unless a U.S. law suit could impact their licenses in their place of operation. A non-U.S. operator cannot be adjudicate to be in violation of the law unless the court obtains physical custody of the person charged. If the person is outside the US, no practical method of obtaining physical custody is available because no current extradition treaty covers gambling violations.

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