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Liability of the Online Gambler

by Allyn Jaffrey Shulman

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Notwithstanding the fact that a few states have passed legislation prohibiting online gambling, no state has attempted to enforce such legislation. This article will explore the liability of the online gambler and the insurmountable obstacles the government would face prosecuting the online poker player.

DUE PROCESS

The Fifth and Fourteenth Amendments to the United States Constitution (and California Constitution Article I sections 7 and 15) provide that no person may be deprived of life, liberty, or property without due process of law. Every other state Constitution has a due process clause as well.

The concept of due process is the most comprehensive of our constitutionally protected rights and is also the most difficult to grasp. This is because due process is not susceptible to reduction into a formula or a static definition. People v. Martinez (1957) 154 Cal.App.2d 233. Due process basically means that the government guarantees that it will treat its citizens fairly.

"Due process is an elusive concept. Its exact boundaries are indefinable, and its content varies according to specific factual contexts... Whether the constitution requires that a particular right obtain in a specific proceeding depends upon a complexity of factors. The nature of the alleged right involved, the nature of the proceeding, and the possible burden on that proceeding, are all considerations which must be taken into account". ( Hannah v. Larche (1960) 363 U.S. 420, 442; In Re Tucker (1971) 5 Cal.3d 171, 179.) Whether a prosecution be state or federal, the concern of due process is with the fair administration of justice. ( Mayberry v. Madison (1971) 400 U.S. 462,465.)

In the context of a lawsuit, due process demands that people not be dragged into court to defend themselves unless it would be FAIR to do so. It would not be FAIR to force someone to defend himself in a state where he has minimal ties. This is known as the concept of jurisdiction.

JURISDICTION

A prerequisite to the successful initiation of a lawsuit is that a court have JURISDICTION to preside over a given case and its parties. A jurisdictional question may be broken down into three parts: 1) jurisdiction over the person ( in personam ), 2) jurisdiction over the subject matter, ( res) , and 3) jurisdiction to render the judgment sought.

Jurisdiction in personam refers to the court's power to compel a person or a business to personally appear in court in order to defend or prosecute a lawsuit. The seminal case on personal jurisdiction is International Shoe Co. v. Washington (1945) 326 US 310. International Shoe Co. established that a defendant who was not present within the territory of the forum must have certain minimum contacts with the forum such that maintaining a suit there does not offend traditional notions of fair play and substantial justice. Further, a state may not make a binding judgment in personam against a defendant where he has no contacts, ties, or relations therein. ( Id . at 319).

Hanson v. Denckla (1958) 357 US 235, 250-253 defines minimum contacts as "some act by which the defendant purposefully avails himself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws."

A few years back, the Minnesota Supreme Court grappled with the issue of whether advertising on the Internet would be sufficient grounds to assert personal jurisdiction over the parties who had no other contacts within the state. In Minnesota v. Granite Gate Resorts, the server for the online gaming site was in Belize but the advertiser was in Nevada claiming that they provided a LEGAL way to gamble from any where in the world 24 hours a day.

The lower court held that placing an advertisement on a web site accessible to Minnesota citizens was a sufficient contact with Minnesota to subject a Nevada web master to personal jurisdiction in Minnesota . The decision was affirmed by the Minnesota Supreme Court in 1999. Although a Supreme Court case from one state is not binding on any other state, Internet gaming sites took notice.

Because of the Granite Gate Resort case and the legal theory it embodies, you will NEVER find an Internet Gaming company asserting that it is legal to play poker on their site. Instead, every Internet Gambling Site places the onus on the player to know whether or not gambling is legal in the jurisdiction where the player is accessing the site.

As a matter of fact, players cannot set up an account unless and until they sign (or the Internet equivalent of clicking on) a disclaimer and agree not to participate in the real money games if they reside in a jurisdiction where it is not legal to do so.

You may wonder why every gambling site has play money games. There is a legal reason and a business reason for play-money games. The legal reason is to insulate the site and its operators from liability because they can invite everyone to visit their site with the caveat that the player is ONLY invited to play in the play-money games if they reside in a jurisdiction where gambling is prohibited. Therefore, the site can, in good conscience, offer gambling on the Internet, knowing the site reaches everyone from every jurisdiction, without worrying that they will be sued for offering gambling in a jurisdiction where it is illegal. The site's defense is that they certainly do NOT offer gambling where it is illegal as every player has specifically agreed to enjoy play-games but not real money games in jurisdictions where such is prohibited.

A few states have passed statutes making it unlawful to participate in Internet gambling. For example, Illinois passed legislation that criminalized the activity of the individual bettor, making it a Class A misdemeanor (720 ILCS 5/28-1 (2001)(a)(c)). The legislation was ridiculed by District Attorneys, causing The Chicago Sun Times to conclude that the legislation "has bark and no bite" and that "without cybercops monitoring households and their computers, the law will be difficult to enforce."

A criminal case must be pled and proved with specificity. What this means is that a crime must be alleged to have occurred on a specific date in a specific place, in order that the accused can lodge a defense. I invite you to consider just HOW the state could prove that you were playing poker in their jurisdiction.

First, a county prosecutor would have to have sufficient information to file a lawsuit against an individual and then prove that the crime occurred within that county. With the advent of the Internet and laptop computers, it is almost impossible to prove that someone was playing poker in a certain jurisdiction. I recently vacationed in Jamaica and the government would have an extraordinarily difficult time proving whether I accessed a poker site from Jamaica , my stopovers, or Orange County (where I reside). If a prosecutor cannot prove jurisdiction, the case gets thrown out of court at its inception.

PROVING IDENTITY

In a criminal case, the state must prove that the defendant is in fact, the person who committed the crime. How can the state prove who is sitting at the computer playing poker?

Many years ago when I was still skeptical about online gaming, David Sklansky was kind enough to introduce me to the world of on-line poker. He turned on his computer and went to a popular site. I will never forget what happened! Right there, plain as could be, there was a player using the name Dsklansky, pontificating, but saying some really dumb things! Our mouths dropped open; we did a double take, and then laughed hysterically! Now I was standing there with David and I watched him log in using his anonymous online name as he sat next to the fellow calling himself dsklansky. People were asking the phony DSklansky questions and David grimaced as the impersonator gave some really terrible answers.

This brings to mind the question regarding how a government would ever be able to prove WHO was sitting at the computer playing poker. Certainly, the name the person uses and their persona would not be proof of a person's identity.

Next, the usual method of proving up this kind of case would be to subpoena the records of the business. However, all gambling sites are located outside the US jurisdiction and foreign jurisdictions do not honor US subpoenas, nor does our government have the power to ENFORCE our subpoenas outside the US .

Without records, it would be nearly impossible to prove WHO was playing poker at a site. Would a cybercop watch the game and then record it? Would a witness testify that he played with someone using a certain name and then the state would somehow try to prove that this handle belonged to a certain person? Even if the handle belonged to a certain person, was it that person sitting at the computer playing poker at the specific time of the allegation?

Let's try a different angle. Suppose the state subpoenas records from Visa that show your credit card was used on the site. The government does not have access to the business records of the site in order to connect up the fact that your money is being used by you to play poker. If the site has an on-line store selling tee-shirts, hats and other items, there is no way of knowing for what purpose the money was used. Even if Visa records prove that money from your account was put on the site, this still does not prove that you are the person sitting at the other end of the computer playing poker.

If we add to this the fact that prosecutors have the responsibility of prosecuting every crime in their jurisdiction, it becomes clear that not only is prosecuting an online poker player very low on the priority list of a DA's office even where such activity is prohibited, but also an extremely arduous task to accomplish.

Going after illegal gambling has never been a high priority with prosecutors, unless it appears that organized crime is involved. Given the fact that the US Attorney General's office has stated that they "strongly oppose any legislation that would seek to make the activity of mere bettors - - those not in the business of betting or wagering - a violation of federal law," prosecuting the individual bettor in state or federal court is highly unlikely.

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