Public Gaming International • September/October 2014
32
states clearly: an Act that empowers agents of law enforce-
ment to enforce the law. It prohibits Internet Gaming that is
“unlawful.” It does not prohibit internet gaming that is in fact
lawful.
•
Regulatory and taxation policy as applies to gambling and lot-
tery has always been a matter for individual states to decide for
themselves. The big-picture problem is that the intrusion of the
federal government into matters of gaming regulation of any
kind is a slippery slope. There is no way for the federal govern-
ment to get involved in regulating without it getting into the
business of deciding which games should be regulated, how
they should be regulated, and how they should be taxed.
•
The federal government is actively involved in the regulation
of inter-state commerce. That is as it should be. However, the
fact that the internet involves the transmission of signals across
state lines does not make it “interstate” gambling. When the
player and the operator are both located within the borders of a
jurisdiction, when the transmission both begins and terminates
within the borders of the state, then the transaction is intra-
state and the regulation and taxation should be determined by
the state legislature. Advocates for prohibition of internet gam-
bling are attempting to twist this basic concept to mean that the
law potentially prohibits transactions in which both buyer and
seller are located within the same state.
•
The implications for Lottery of federal intrusion into the busi-
ness of regulating gambling could be profound—and it is not
limited to i-gaming and i-lottery. Some of the basic function-
ality with regard to self-service terminals and ITVMs could
end up being regulated at the federal level if these bills actu-
ally pass. Adversaries insist that is not their intent. First, I am
not so sure they are being honest about their intent. Second,
regardless of their intent, it’s the outcome that matters. And
the outcome of any federal intervention into the regulation of
gambling is potentially disastrous for lotteries. Currently, apart
from sports-betting, the federal government defers completely
to states’ rights to regulate and tax gambling and it is vital that
it remain that way.
•
The legal interpretation of any legislative act can create a Pan-
dora’s Box of confusion. States that control the legislation can
fix it as needed. Federal legislation that is intended to apply
to all 50 states would be extremely difficult to fine-tune to ad-
dress all the questions that come up. For instance, the language
in these bills bring considered right now refers to lotteries be-
ing allowed to conduct only “in-person transactions” in a store.
Does that mean a sales clerk must be involved? And if it does
mean that, does that mean that ITVM’s and other forms of self-
serve devices will not be allowed? Further, VLT’s and ITVM’s
often communicate with a central-server that is not located in
the same state. Does that constitute “interstate” gaming? Pro-
ponents of the bill say “that’s not the intent.” Regardless of the
intent, it could well be the outcome. Too, seemingly innocuous
language like that referring to the infrastructure that is cur-
rently in place at the time the bill passes can have profound
effects. For one, it means that states that do not currently have
a lottery are prohibited from starting one. Two, it prevents lot-
teries from evolving their current infrastructure as technology
changes. The strictest interpretation of the language of these
bills could even mean that data packs of any kind could not
travel across state lines even if the point of transmission and
destination are both within the state. That would cripple the
entire lottery industry. These things can happen. The one thing
we can know for sure is that if the federal government becomes
a part of the regulatory system, the outcomes will be decidedly
negative for Lottery.
•
There are states that already have i-gaming, and states that
sell lottery products over the internet. Some of the bills be-
ing considered by the U.S. Congress do not have a “grandfa-
ther” clause that would allow them to continue. They would
be forced to terminate their i-lottery and i-gaming operations.
More to the point, if the federal government gets involved at
all, states will forever be subject to the lobbying efforts of
commercial interests which will impinge on lottery operations
in ways that we can’t even predict right now.
•
I think there are two prongs to an effective agenda. First, I agree
that there is no such thing as a good federal bill from a lot-
tery perspective. Regulation has always been determined by the
states and it should stay that way. And two, it continues to be-
fuddle me as to why internet distribution is feared. From a pub-
lic policy and responsible gaming point of view, internet-based
gaming has many benefits over land-based gaming. Look at the
typical scratch-ticket consumer experience now. You walk into a
retailer. They don’t know who you are. They don’t know how old
you are. They don’t know what types of games you like to play.
They don’t know how many games you played today, this week,
this month, or this year. The sales clerk who serves as your first
line of defense for all responsible gaming and integrity issues is
typically a low-skilled employee with little training or impulse
to implement a player-friendly and consumer-protection agen-
da. Compare that process to the process that takes place on the
internet. On the internet, I know exactly who you are, where you
are, how old you are. I know what types of games you like to
play. I know how many games you’ve played today, this week,
this month, this year. I can now offer you controls to set your
own limits as to how much you want to spend on this activity.
And I can now offer you a more interesting game that’s more
socially engaging and one that is ongoing, so that the playing
experience becomes genuinely recreational and fun as opposed
to a simple wager for the opportunity to win money. Internet
gaming offers a far more fertile basis for gamifying the whole
consumer experience. From a responsible gaming and sustain-
able growth point of view, the internet is the vehicle to evolve
the entire consumer experience over to one that is more focused
on fun and games as opposed to simply buying the chance to
win a jackpot. Why is that a bad thing?
•
Who likes this argument? I hear this one all the time. It makes
sense. I just wonder if it’s a winning argument. Opponents to
internet gaming insist that it can’t be adequately controlled
for age and location. Does talking about Responsible Gaming
