© 1999 Joel Michael Schwarz.

Assistant Attorney General, State of New York. As a member of the Attorney General's Internet Bureau, the author successfully prosecuted and secured the first decision in the country holding that Internet gambling violates state and federal law. (People v. World Interactive Gaming Corp., 1999 WL 591995 (N.Y. Sup. Ct. July 22, 1999)). He also serves on the Subcommittee on Internet Gambling of the National Association of Attorneys General and has testified on Internet gambling before the Public Sector Gaming Commission. Any opinions and/or observations expressed herein as furnished by the author are his alone and are not to be construed in any fashion, either directly or indirectly, as the formal or informal opinions of the New York State Attorney General's Office or the New York State Attorney General, who will not be bound thereby. The author would gratefully like to acknowledge the assistance of Assistant Attorneys General Jean Marie Cho, William H. Mohr and Eric Wenger, as well as David Allweiss, Joshua Bauchner, Raymond Osterbye, Michelle Rice, and Irene Vomvolakis.


2. See Kenneth A. Freeling & Ronald E. Wiggins, Despite Tough Talk From Prosecutors, and Despite Indictments of Those Charged With Internet Gambling, No Court Has Held That U.S. Law Prohibits Such Betting, NAT'L L.J., Mar. 30, 1998, at B7; see also Elliott Almond, Borderless Betting, SAN JOSE MERCURY NEWS, Jan. 24, 1999, at D1; Ian Plumley, Visions of New Gaming, LA FLEUR'S LOTTERY WORLD, May 1998, at 15.

3. See Roger Dunstan, Gambling in California, CALIFORNIA RESEARCH BUREAU ch. II (Jan. 1997) <http://www.library.ca.gov/CRB/97/03/crb97003.html>.

4. See, e.g., Intercontinental Hotels Corp. v. Golden, 203 N.E.2d 210, 213 (N.Y. 1964) ("The New York constitutional provisions were adopted with a view toward protecting the family man of meager resources from his own imprudence at the gaming tables."); Roland v. United States, 838 F.2d 1400, 1402 (5th Cir. 1988); United States v. Martinez, 978 F. Supp. 1442, 1447-48 (D. N.M. 1997); see also Davan Maharaj, Web Bettors Push Odds With Credit Card Debt, L.A. TIMES, November 22, 1999, at A1, A7 (Fred Marino, a California man who has more than $100,000 in credit card gambling bills, said that he felt he "had to gamble to make [his] losses back up" and that he "ended up maxing out all [his] cards and losing [his] home.").

5. See, e.g., Intercontinental Hotels, 203 N.E.2d at 213 (noting that unsupervised, unregulated gambling "affords no protection to customers and no assurance of fairness or honesty in the operation of the gambling devices"); DeMarco v. Colorado Ltd. Gaming Control Comm., 855 P.2d 23, 26 (Colo. Ct. App. 1993) (explaining that the Gaming Act provides detailed regulation of those involved in the legalized gambling industry, in order "to assure that honest wagering actually takes place and to maintain public confidence that such is the case"); People v. Busco, 46 N.Y.S.2d 859, 871 (Ct. Spec. Sess. 1942) (holding that the Penal Law prohibition against gambling was enacted to completely eliminate professional gambling which is "injurious to the morals and welfare of the people").

6. See, e.g., Greater New Orleans Broadcasting Ass'n v. United States, 149 F.3d 334, 338 n.9 (5th Cir. 1998) ("The social problems encompass rises in organized crime, violence, embezzlement, fraud ... theft...."); Romualdo P. Eclavea, Annotation, Validity, Construction & Application of 18 U.S.C.A 1955 Prohibiting Illegal Gambling Businesses, 21 A.L.R. FED. 708 1[c] (1974) (setting forth the Congressional findings which led to passage of the Organized Crime Control Act of 1970, 18 U.S.C. 1955); Meg Vaillancourt, Cellucci Cool to Expansion of Gaming, But Gambling Issue May Heat Up Again, BOSTON GLOBE, Jan. 30, 1999, at E2 ("Reilly also expressed concerns that expanded gambling could lead to an influx of organized crime in the state.").

7. See, e.g., Carver, Inc. v. State, 672 So.2d 1141, 1143-44 (La. Ct. App. 1996) (affirming administrative revocation of a video gaming license based upon its finding that a young child was allowed to play or operate a video gaming device in violation of a statute prohibiting minors from playing such devices); Pando ex rel. Pando v. Fernandez, 485 N.Y.S.2d 162, 165 (Sup. Ct. 1984). See generally Greater New Orleans Broadcasting, 149 F.3d 334.

8. See Anthony Cabot, A Primer on the Legality of Gambling on the Internet, ANDREWS GAMING INDUSTRY LITIG. REP. 3, 4 (Sept. 1997) (noting that online gambling "is the equivalent to placing slot machines in millions of homes"); see also Stevie A. Kish, Betting on the Net: An Analysis of the Government's Role in Addressing Internet Gambling, 51 FED. COMM. L.J. 449, 453 (1999); John T. Fojut, Ace in the Hole: Regulation of Internet Service Providers Saves the Internet Gambling Prohibition Act of 1997, 8 DEPAUL-LCA J. ART & ENT. L. 155, 161-62 (1997).

9. See generally Wendy R. Leibowitz, Senate Bans Most 'Net Gambling; Many Bet on Poor Enforcement, NAT'L L.J., Aug. 10, 1998, at B6. See also Anthony Cabot, Internet Gambling in the Information Age, 7 NEV. LAW. 20, 21 (1999).

10. See Cabot, supra note , at 3 (noting that with the advent of Internet gambling, "the gambling industry is [essentially] left in the hands of every shyster or con artist who can afford a computer and a programmer").

11. See Brad Knickerbocker, For Many Teens, Gambling Starts at Home. First It's a Scratch of a Lotto Ticket. Eventually It Could be Stealing to Support An Addiction, CHRISTIAN SCI. MONITOR, Jan. 7, 1999, at 3; see also Fojut, supra note , at 161-62; Kish, supra note , at 451.

12. See Mark G. Tratos, Gaming on the Internet, 3 STAN. J.L. BUS. & FIN. 101, 114 (1997).

13. See, e.g., Jack Goldsmith, What Internet Gambling Legislation Teaches About Internet Regulation, 32 INT'L LAW. 1115, 1118-20 (1998).

14. See ACLU v. Reno (CDA I), 929 F. Supp. 824, 832 (E.D. Pa. 1996).

15. An interactive computer service is "any information service, system, or access software provider that uses a public communication infrastructure or operates in interstate or foreign commerce to provide or enable computer access by multiple users to a computer server, including specifically a service or system that provides access to the Internet." S. 692, 106th Cong. 2(a)(6) (1999).

16. See generally CDA I at 833. See also Peter Brown, Regulation of Cybercasinos and Internet Gambling, 547 PLI/PAT 9, 12-13 (1999).

17. See Jose Martinez, A Gambler in Boston Laid 45 Grand on This Weekend's Football Games, BOSTON HERALD, Nov. 2, 1998, at 3. See generally Freeling & Wiggins, supra note .

18. See generally Almond, supra note . See also James Rutherford, Special Report: Internet Gambling: The Newest Casinos, CASINO PLAYER, Dec. 1997, at 36, 36 ("Right now, somewhere out there in that wondrous global supermarket they call the World Wide Web-just a mouse click away on your home computer-the cards are snapping, the reels are spinning, the dice are rolling. About 60 'casinos' are up and running on the Internet, ready to take your bets for real money ....").

19. See, e.g., Martinez, supra note ; Almond, supra note .

20. See generally Freeling & Wiggins, supra note , at B7 ("The Internet can be much more effective than the telephone for interstate gambling. The Internet's reach makes possible practically unlimited simultaneous multi-channel communications. The potential number of bettors who can access a Web-based service is limited only by the number of connections to the Web and the service's ability to handle traffic."). See also People v. World Interactive Gaming Corp., 1999 WL 591995, at *5-6 (N.Y. Sup. Ct. July 22, 1999).

21. See Almond, supra note , at D1 ("Web surfers can wager on horse racing in Germany or place a bet in Australia, Antigua and a host of other countries without anyone being the wiser."). See also Fojut, supra note , at 169.

22. See Martinez, supra note .

23. See generally Martinez, supra note , at 3 ("From the security of his home computer, Mr. Surething logged onto a half-dozen sportsbook sites in England, Costa Rica, Jamaica and Antigua."); Freeling & Wiggins, supra note , at B7.

24. 18 U.S.C. 1084 (1994).

25. Id. 1952; see also World Interactive, 1999 WL 591995 at *6; Brown, supra note , at 21-23; Mark G. Tratos, supra note , at 104-05 (1997).

In addition to the Wire and Travel Acts, the Interstate Transportation of Wagering Paraphernalia Act (also known as the "Wagering Paraphernalia Act") prohibits the interstate or international transportation of wagering paraphernalia in furtherance of a gambling enterprise. 18 U.S.C. 1953(a) (1994). See also Brown, supra note , at 23-24; The Gambling Devices Transportation Act, 15 U.S.C. 1171-1178 (1994). For example, an Internet gambling enterprise might be said to have sent a gambling "device" in foreign commerce in violation of the Wagering Paraphernalia Act if the computer servers for the Internet casino are purchased domestically and then shipped offshore. See generally Rutherford, supra note . Courts have also found gambling enterprises vicariously liable under the Act. See United States v. Zambito, 315 F.2d 266, 267 (4th Cir. 1963), cert. denied, 373 U.S. 924 (1963). As such, the online casino which solicits United States residents to fund wagering accounts via the mailing of a check, or other such means, could arguably be said to be in violation of the Wagering Paraphernalia Act.

26. 18 U.S.C. 1084(a) (1994).

27. Id. 1081.

28. Id. 1952(a)-(b).

29. See United States v. Villano, 529 F.2d 1046, 1052 (10th Cir. 1976), cert. denied, 426 U.S. 953 (1976); United States v. Burke, 495 F.2d 1226, 1228-29 & n.4 (5th Cir. 1974), cert. denied, 419 U.S. 1079 (1974); United States v. Hanon, 428 F.2d 101, 108 (8th Cir. 1970), cert. denied, 402 U.S. 952 (1971); United States v. Smith, 209 F. Supp. 907, 916 (E.D. Ill. 1962).

30. United States v. Salsbury, 430 F.2d 1045, 1049 (4th Cir. 1970); see also Bass v. U.S., 324 F.2d 168 (8th Cir. 1963).

31. See, e.g., Fojut, supra note , at 157.

32. See H.R. REP. NO. 87-967, at 1 (1961), reprinted in 1961 U.S.C.C.A.N. 2631.

33. Id. at 2633.

34. 209 F. Supp. 907 (E.D. Ill. 1962).

35. See id. at 916 (citing Brooks v. United States, 267 U.S. 432 (1925)); see also Kish, supra note . As the Smith Court noted in dicta, Congress' power to regulate interstate commerce is not in any way limited to only certain forms of media. 209 F. Supp. at 916.

36. 235 F. Supp. 286 (S.D.N.Y. 1964).

37. Id. at 296-97. This rationale was likewise adopted by the court in World Interactive when it ruled that "the Interstate Commerce Clause gives Congress the plenary power to regulate illegal gambling conducted between a U.S. and a foreign location" and as such "[g]ambling conducted via the Internet ... is indistinguishable from any other form of gambling." People v. World Interactive Gaming Corp., 1999 WL 591995, at *6 (N.Y. Sup. Ct. July 22, 1999).

38. 799 F.2d 225 (5th Cir. 1986).

39. Id. at 229; see also Martin v. United States, 389 F.2d 895, 899 (5th Cir. 1968); Borgese, 235 F. Supp. at 297-98.

40. 1999 WL 591995 (N.Y. Sup. Ct. July 22, 1999).

41. Id. at *7.

42. Since the website in World Interactive, as well as many other gambling websites, required the user to download software to a computer prior to entering into and registering with the casino, the court reasoned that this created a "virtual casino within the user's computer terminal." Id. at *6.

43. Id.

44. Id.

45. N.Y. CONST. art. I, 9 (amended 1966).

46. Id.

47. See N.Y. PENAL LAW 225.05-225.20 & 225.30 (McKinney 1999).

48. See People v. Kim, 585 N.Y.S.2d 310, 313 (Crim. Ct. 1992).

49. See People v. World Interactive Gaming Corp., 1999 WL 591995, at *6 (N.Y. Sup. Ct. July 22, 1999); see also Brown, supra note , at 20.

50. See generally N.Y. CONST. art. I.

51. N.Y. CONST. art. I, 9.

52. Id.

53. WIS. CONST. art. IV, 24(1) (amended 1993).

54. See id. 24 (3)-(6).

55. WIS. STAT. ANN. 945.02 (West 1996).

56. Id. 945.03.

57. See IND. CODE ANN. 4-30-1-1 (West 1991).

58. See id. 4-31-1-2.

59. Id. 4-32-1-2.

60. See id. 4-33-1-1 & 4-33-9-1 (permitting riverboat gambling only in certain areas).

61. See IND. CODE ANN. 35-45-5-1 to -10 (West 1991).

62. Id. 35-45-5-1 to -2.

63. See id. 35-45-5-3 to -4.

64. See 98-8 Op. Att'y Gen. 1, 3 (1998); Brown, supra note 16, at 19-20; see also IND. CODE ANN. 35-45-5-1 to -4.

65. See 98-8 Op. Att'y Gen. at 3.

66. N.J. CONST. art. IV, 7, para. 2 (1998).

67. See id. para. 2(A)-(E).

68. Id. at para. 2D (emphasis added).

69. See N.J. STAT. ANN. 2C:37-1 (West 1995).

70. See id. 2C:37-2-4, 7.

71. See NEV. REV. STAT. ANN. 463.010-463.720 (Michie 1997 Cumulative Supp.) (providing that gambling is authorized in the state, but only upon the issuance of a license, and is subject to "strict" regulations and any restrictions provided for by the legislature).

72. Id. 464.010.

73. See id. 463.0152.

74. NEV. CONST. art. IV, 24; NEV. REV. STAT. ANN. 462.125 & 462.140 (Michie 1997).

75. NEV. REV. STAT. ANN. 202.450 (Michie 1997).

76. Id. 465.091; see also Brown, supra note 16, at 15.

77. Id. 465.092 & 465.094.

78. Even with regard to activities on Native American reservations, traditionally an area where great deference has been granted since the reservations are considered to be sovereign entities within the United States, federal regulations still require explicit state statutory approval before a given type of gambling may be conducted. See The Indian Gaming Regulation Act, (hereinafter "IGRA"), 25 U.S.C. 2701-2721 (1994). According to IGRA, before a Native American tribe may host casino gambling on the reservation, the tribe must first enter a state compact permitting said activity. See id. 2703 & 2710(d)(1). Thus, even though the gambling operations are considered to occur on sovereign soil, explicit state authorization is still required. It would be quite sophistic to permit a private Internet gambling business to operate online without explicit state statutory authorization, while a sovereign entity, such as a Native American tribe, is required to seek explicit state approval and statutory authority before engaging in the exact same activity on its own reservation. Similarly, it would be irrational to subject a privately-owned Internet gambling business to gambling regulations which are less stringent than those enforced against Native American tribes.

79. See Brown, supra note 16, at 18-21 ("In three of these states, California, Indiana and Kansas, the Attorneys General have expressly held that any gambling activity not otherwise allowed by law would, if conducted over the Internet, fall within the ambit of their state's existing statutory framework and therefore be illegal.").

80. See, e.g., People v. Kim, 585 N.Y.S.2d 310, 312 (Crim. Ct. 1992) (holding that the use of a computer system to transmit orders for out-of-state lottery tickets was illegal since "[a]ll forms of gambling are illegal in New York except those expressly authorized by the New York Constitution"); Seaside Futures, Inc. v. State, No. W-62930-88 slip op. at 5 (N.J. Super. Ct. Feb. 10, 1989) aff'd, A-3320-88T3 (N.J. Super. Ct. App. Div. Nov. 2, 1989) (holding that an injunction was warranted against the computer transmission of requests for out-of-state lottery tickets because "[g]ambling activity in this state by the terms of our state constitution and by our common law is illegal unless it is authorized by constitutional amendment"); State v. Fiola, 576 A.2d 338, 340 (N.J. Super. Ct. App. Div. 1990) (holding that the defendants' business constituted gambling activity within the state of New Jersey, and thus violated the state's gambling laws, since the New Jersey Constitution prohibits any type of gambling unless the constitution has been amended to explicitly permit the specific type of gambling); United States v. McDonough, 835 F.2d 1103, 1104-05 (5th Cir. 1988) (rejecting defendant's argument that the Wire Act did not apply to him because gambling information had been transmitted to him in Massachusetts, and there were apparently no laws in Massachusetts which explicitly forbade the transmission of wagers into the state, instead holding that although 1084(b) permits the transmission of gambling-related information when gambling is explicitly authorized in both the sending and receiving states, it was never intended to authorize gambling when only one of the two locales permits gambling).

81. See Almond, supra note , at D1 ("Cohen's attorneys argued in court documents that World Sports Exchange (www.wsex.com) is fully licensed and legal in Antigua and the defendant never hid his operation."); Fojut, supra note , at 169.

82. See Rutherford, supra note , at 40 ("Proponents of unfettered Internet communication maintain that these laws are obsolete. They say the nature of the technology is such that global computer gambling takes place not in the country where the gambler resides but on the host computer, which is located in a country where, presumably, the gambling is licensed and legal.").

83. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980).

84. See Galvin v. Press, 347 U.S. 522, 530 (1954).

85. Int'l Shoe v. Washington, 326 U.S. 310, 316 (1945).

86. Id. at 316-19; see also Brown, supra note , at 36-37.

87. World Wide Volkswagen Corp., 444 U.S. at 297.

88. Bross Utils. Serv. Corp. v. Aboubshait, 489 F. Supp. 1366, 1371-72 (D. Conn. 1980), aff'd, 646 F.2d 559 (2nd Cir. 1980); see also Scherr v. Abrahams, 1998 WL 299678 (N.D. Ill. May 29, 1998) (denying jurisdiction although the defendant's website allowed users to contact him via e-mail, and he sent his publication to users via e-mail).

89. See Hearst v. Goldberger, No. 96 Civ. 3620 (PKL)(AJP), 1997 WL 97097, at *16 (S.D.N.Y. Feb. 26, 1997); Bensusan Restaurant Corp. v. King, 937 F. Supp. 295, 300 (S.D.N.Y. 1996), aff'd, 126 F.3d 25 (2d Cir. 1997). Over time, a "sliding scale" test has developed for purposes of assessing jurisdiction based upon activities that occur over the Internet. See American Homecare Federation, Inc. v. Paragon Scientific Corp., 27 F. Supp. 2d 109, 113 (D. Conn. 1998). In essence, there are three points on this "sliding scale" spectrum. See id. At one end of the scale is the passive website which contains only information and offers no interaction with the visitor. See id. At this end of the scale, the assertion of jurisdiction will likely be declined. See id. In the middle of the scale are websites where information is exchanged between the site operator and the visitors, including downloadable files or links to other websites. See id. It is in the middle of this scale where the circumstances which will lead a court to assert jurisdiction are most ambiguous. At the other end of the spectrum are the sites that engage in substantial activity within a forum state, such as: 1) sales; 2) solicitations; 3) acceptance of orders; 4) links to other sites; 5) product lists; or 6) the transmission of files. See id. at 113-14. It is these sites that will most likely provide a court with ample reason to assert jurisdiction.

90. See, e.g., Mieczkowski v. Masco Corp., 997 F. Supp. 782, 788 (E.D. Tex. 1998) (conferring general jurisdiction over the company, which in addition to hosting an Internet website within the state, also conducted business there).

91. 568 N.W.2d 715 (Minn. Ct. App. 1997), aff'd by an equally divided court, 576 N.W.2d 747 (Minn. 1998).

92. Specifically, the court asserted jurisdiction based upon proof that at least 248 computers located in Minnesota accessed and received transmissions from the website, Minnesota computers were among the 500 computers that most often accessed the website, and persons from throughout the United States, including Minnesota, called the phone numbers advertised on its Internet gambling website. Id. at 718-19.

93. See id. at 721.

94. See id.

95. 998 F. Supp. 738 (W.D. Tex. 1998).

96. See id. at 743-44.

97. See Fojut, supra note , at 169.

98. See infra Part IV.B.

99. See N.Y. CRIM. PROC. LAW 20.10(4) & 20.20 (McKinney 1992).

100. See RESTATEMENT (THIRD) OF FOREIGN RELATIONS LAW OF THE UNITED STATES 402(1) (1987) ("subject to 403, a state has jurisdiction to prescribe law with respect to ... (c) conduct outside its territory that has or is intended to have substantial effect within its territory....").

101. See Commonwealth v. Bertels, 394 A.2d 1036, 1039 n.9 (Pa. Super. Ct. 1978).

102. See generally Cynthia R. Janower, Gambling on the Internet, 2 J. COMPUTER-MEDIATED COMM. (1996), available at <http://jcmc.huji.ac.il/vol2/issue2/janower.html>.

103. 509 U.S. 764 (1993).

104. See id. at 798.

105. Jack Goldsmith, Against Cyberanarchy, 65 U. CHI. L. REV. 1199, 1208 (1998).

106. Champion v. Ames, 188 U.S. 321, 333 (1903) (Argument of William D. Guthrie for appellant). See, e.g, United States v. Baker, 364 F.2d 107, 110 (3rd Cir. 1966).

107. See Brown, supra note 16, at 21-27; Tratos, supra note , at 104-07.

108. 364 F.2d 107 (3d Cir. 1966), cert. denied, 385 U.S. 986 (1966).

109. See id. at 109-10.

110. See id. at 108.

111. Id.

112. Id., (citing United States ex rel. Champion v. Ames, 95 F. 453 (C.C.N.D. Ill. 1899)).

113. See Tratos, supra note , at 107.

114. 585 N.Y.S.2d 310 (Crim. Ct. 1992).

115. See id. at 315.

116. See id.

117. People v. World Interactive Gaming Corp., 1999 WL 591995, at *2 (N.Y. Sup. Ct. July 22, 1999).

118. Id. at *4.

119. No. W-62930-88 (N.J. Super. Ct. Feb. 10, 1989), aff'd, No. A-3320-88T3 (N.J. Super. Ct. App. Div. Nov. 2, 1989).

120. See id. at 2-3.

121. See id. at 3.

122. See id. at 7.

123. See id. at 5-6.

124. See id.

125. 646 N.E.2d 334 (Ind. Ct. App. 1995).

126. See id. at 338-39.

127. See id.

128. See id. at 341-42.

129. See id. at 342.

130. See id.

131. See 98-8 Op. Att'y Gen. 8 (1998); see also Brown, supra note 16, at 19-20.

132. People v. World Interactive Gaming Corp., 1999 WL 591995, at *4 (N.Y. Sup. Ct. July 22, 1999).

133. See id.

134. See Tratos, supra note , at 107.

135. 18 U.S.C. 1084(b) (1994).

136. World Interactive, 1999 WL 591995, at *4.

137. People v. Lipsitz, 663 N.Y.S.2d 468, 475 (Sup. Ct. 1997).

138. This bill passed the United States Senate by an overwhelming 90 to 10 majority when it was voted upon on July 23, 1998. See Kyl's Latest Bill Revives Assault on Internet Gambling, CONG. Q. DAILY MONITOR, Mar. 4, 1999, at 1. Although that bill died in the United States House of Representatives due to disputes over enforcement, as well as the House's preoccupation with President Clinton's impeachment, the bill has been reintroduced into the 106th Congress. See S. 692, 106th Cong. (1999); H.R. 3125, 106th Cong. (1999). The bill was approved by the Senate Judiciary Committee on July 26, 1999 and the House version was forwarded by the House Subcommittee on Crime to the full Committee on the Judiciary on November 3, 1999. For current status on these bills, see David Carney, Summary: Internet Gambling Prohibition Bills in the 106th Congress (last modified November 5, 1999) <http://www.techlawjournal.com/cong106/gambling/Default.htm>.

139. S. 692, 106th Cong. (1999).

140. Id.

141. See Andrew Beyer, Racing Industry Gambling on Internet Legislation, WASH. POST, March 31, 1999, at D1; Tom Bell, Internet Gambling Ban Faces Losing Odds, ALBANY TIMES UNION, January 6, 1998, at A7; Kish, supra note , at 463.

142. See, e.g., Beyer, supra note ; Janower, supra note , at 9-10; Internet Gambling: Prohibition v. Legalization, Hearing Before the Nat'l Gambling Impact Study Comm., May 21, 1998 (Testimony of Thomas W. Bell, Cato Institute), available at <http://www.cato.org/testimony/ct-tb052198.html> [hereinafter Bell]. Another potential method of enforcement might be to seize any assets of the Internet gambling operation found within the enforcing jurisdiction. See Goldsmith, supra note , at 1216. The effectiveness of asset seizure is questionable, however, since "[t]he large majority of persons who transact in cyberspace have no presence or assets in the jurisdictions that wish to regulate their information flows in cyberspace." Id. at 1217.

143. Goldsmith, supra note , at 1204.

144. See id. at 1220; Fojut, supra note , at 170.

145. Fojut, supra note , at 170; see also Goldsmith, supra note , at 1220.

146. See generally Martinez, supra note .

147. Fojut, supra note , at 170 (quoting Hall, Int'l Comity and U.S. Federal Common Law, 84 AM. SOC'Y INT'L L. PROC. 326 (1990)). See also Brown, supra note 16, at 34-35.

148. See Fojut, supra note , at 170.

149. See Cabot, supra note , at 22.

150. See Fojut, supra note , at 170.

151. See Cabot, supra note ; Andrew Beyer, Internet Gambling Bill: All Bets Are Off, WASH. POST, July 25, 1998, at E1, E6.

152. It should also be borne in mind that many of the individuals who have been prosecuted for offering Internet gambling to United States citizens have themselves been United States citizens. See People v. World Interactive Gaming Corp., 1999 WL 591995 (N.Y. Sup. Ct. July 22, 1999); Goldsmith, supra note , at 1118. As such, the necessity of effectuating extradition of Internet gambling operators may not be as paramount an issue as many Internet gambling proponents assert.

153. It is also interesting to consider that even without extradition, the mere issuance of a warrant for the arrest of the operators of an Internet gambling enterprise, coupled with the possibility of having all domestic assets frozen, may in itself provide an adequate deterrent to the offering of Internet gambling to U.S. citizens.

154. See generally Goldsmith, supra note , at 1118.

155. See, e.g., 18 U.S.C. 1084 & 1952 (1994); N.Y. Penal Law 225.00(4)-(5) (McKinney 1999); Tratos, supra note , at 105-06. Indeed, the resistance to criminalizing the activity of the gambler was recently demonstrated when a challenge was raised to a provision in the 1998 version of the IGPA which would have created criminal liability for individuals who engage in gambling over the Internet. See S. 2260, 105th Cong. 1085(b) (1998). In apparent response to this criticism, this provision is noticeably absent from the 1999 version of the IGPA. See S. 692, 106th Cong. (1999). Nonetheless, creating individual criminal liability for placing bets or wagers over the Internet remains a viable means of deterring gamblers from patronizing Internet gambling websites. See Goldsmith, supra note , at 1118-19.

156. Although the primary goal of the enforcement mechanisms discussed in this section focuses on making it difficult for a potential gambler to engage in Internet gambling on a particular website, these very same mechanisms will, at the same time, frustrate an Internet gambling operation's attempts to do business in the United States, thus potentially causing the operation to cease offering these services to United States residents entirely.

157. Goldsmith, supra note , at 1228.

158. See id. at 1227.

159. See id.

160. See Goldsmith, supra note , at 1119.

161. Id. at 1119 n.16.

162. See James De Tar, Net Enemies List, INVESTOR'S BUS. DAILY, Aug. 19, 1999, at A6; see also Goldsmith, supra note , at 1228; Andy Kennedy, For China, the Tighter the Grip, the Weaker the Hand, WASH. POST, Jan. 17, 1999, at B02.

163. S. 692, 106th Cong. (1999).

164. Id. 3(b)(4).

165. Id.

166. Id. 3(b)(5).

167. See id. 3(b)(6)(B).

168. Id. 3(b)(1).

169. See Goldsmith, supra note , at 1119.

170. See Robert A. Fashler, The International Internet Address and Domain System 1.2 (last revised Sept. 10, 1997) <http://www.davis.ca/topart/domainam.htm>; see also Al Berg, DNS Demystified-Take The Magic Out of Mapping, LAN TIMES (June 9, 1997) <http://www.lantimes.com/handson/97/706a107a.html>. IP addresses are currently 32-bit numbers, notated as four numbers (ranging from zero to 255) separated by periods. For example, a typical IP address may read as: ""

171. See Fashler, supra note .

172. Letter from James E. Doyle, Attorney General, State of Wisconsin, to Jon Kyl & Dianne Feinstein, Senators, U.S. Senate 2 (Apr. 7, 1999) (on file with Berkeley Technology Law Journal) (addressing the "feasibility and effectiveness of blocking Internet gambling sites as an enforcement mechanism").

173. Id.

174. See id.

175. Id. A user could, however, still access the machine if she knew the computer's 32-bit IP address.

176. See id.

177. Berg, supra note .

178. Letter from Attorney General Doyle, supra note .

179. See Kristin Windbigler, Exploring the Domain Name Space (last modified Jan. 24, 1997) <http://www.hotwired.com/webmonkey/geektalk/97/03/index4a_page2.html>.

180. Id.

181. For a list of these registrars, see ICANN, List of Accredited and Accreditation-Qualified Registrars (visited Nov. 18, 1999) <http://www.icann.org/registrars/accredited-list.html>.

182. See supra Part V.A.1.

183. See Letter From Attorney General Doyle, supra note , at 3; see also Fashler, supra note , 1.3, at 2. Another way to circumvent this type of enforcement would be to provide users with IP numbers. However, these numbers would be difficult to remember and consumers may be reluctant to do business with such a site.

184. See generally Goldsmith, supra note , at 1119.

185. Letter From Attorney General Doyle, supra note , at 3; see also Goldsmith, supra note , at 1119; Tratos, supra note , at 116.

186. See Goldsmith, supra note , at 1240.

187. See id.

188. Id. at 1224.

189. See id.

190. See id.

191. Id. at 1242.

192. Id.

193. See id.

194. People v. World Interactive Gaming Corp., 1999 WL 591995, at *6 (N.Y. Sup. Ct. July 22, 1999).

195. Id.

196. Goldsmith, supra note , at 1242.

197. Network Solutions Inc., the company that provides registry services for the <.com> domain, is headquartered in Herndon, Virginia.

198. 18 U.S.C. 1084(d) (1994). See also Tollin v. Diamond State Tel. Co., 286 F. Supp. 86, 89 (D. Del. 1968) ("The Section calls for no specific form of notice and no particular language need be employed so long as, under the circumstances of the case, it seems reasonably clear that the notice of termination from the Telephone Company to the subscriber was predicated upon a written communication from a law enforcement agency to the effect that the utility's wires were being used or will be used for the purpose of transmitting or receiving gambling information in interstate commerce in violation of law.").

199. See Letter from Robert A. Butterworth, Attorney General, State of Florida & James T. Moore, Commissioner, Florida Department of Law Enforcement, to Sprint (Oct. 25, 1996) (on file with Berkeley Technology Law Journal) (serving a 1084(d) notice "that there is a possibility that [Sprint's] facilities are being used for the unlawful purpose of transmitting or receiving gambling information in interstate or foreign commerce in direct violation of both state and federal law").

200. See Tollin, 286 F. Supp. at 92; Telephone News Sys., Inc. v. Illinois Bell Tel. Co., 220 F. Supp. 621, 628 (N.D. Ill. 1963).

201. See People v. World Interactive Gaming Corp., 1999 WL 591995 (N.Y. Sup. Ct. July 22, 1999). See also Tratos, supra note , at 107.

202. See Goldsmith, supra note , at 1120.

203. See id.; see also S. 692, 106th Cong. (1999); Fojut, supra note , at 166 (pursuant to a proposed provision in the Internet Gambling Prohibition Act, a law enforcement agency may "acquire an injunction against a common carrier who refuses to terminate access after being notified of an offending site"); Goldsmith, supra note , at 1119.

204. See 18 U.S.C. 1084(d) (1994).


206. See ICANN, ICANN Names Competitive Domain-Name Registrars (Apr. 21, 1999) <http://www.icann.org/announcements/icann-pr21apr99.htm>.

207. See generally Goldsmith, supra note , at 1223.

208. See, e.g., Rutherford, supra note , at 40 ("U.S. banks, along with VISA and MasterCard and Western Union and all the other providers of ... financial services are essential for online gambling"); Martinez, supra note (stating that a U.S. resident may choose to gamble on an Internet gambling website through "the account he set up with either Federal Expressed cashiers check or his VISA through a server in the Caribbean"); Fojut, supra note , at 159.

209. See generally Goldsmith, supra note , at 1120.

210. See G. JAY FRANCIS, PRINCIPLES OF BANKING 110 (American Banking Association 6th ed. 1998).

211. See JAMES M. KOLTVEIT, CPA, ACCOUNTING FOR BANKS 5.01[6], at 5-13, 5-14 (Matthew Bender 1999).

212. THOMAS P. FITCH, DICTIONARY OF BANKING TERMS 153 (Barron's 2d ed. 1993).

213. See FRANCIS, supra note , at 110; KOLTVEIT, supra note , at 5-13, 5-14.


215. See KOLTVEIT, supra note , at 5-13, 5-14.

216. See supra Part V.A.3. There is ample precedent in this nation's history which demonstrates the feasibility of severing access to our banking system. For example, after Iraq invaded Kuwait in 1990, President Bush assessed sanctions against Iraq, including the freezing of Iraq's bank accounts. See Moran, Where are the Regs: Ad-Hoc Sanctions Against Iraq Give Advocates Room to Wiggle, LEGAL TIMES, Nov. 12, 1990, at 1. Through the oversight of the United States Treasury Office's Office of Foreign Asset Control, the United States managed to control the flow of funds through the domestic banking system. See id. at 11. In addition to preventing Iraqi companies from utilizing our banking system, the sanctions also "placed 94 Kuwaiti banks and companies under various categories of control." Id at 11-12. The controls that would need to be implemented in order to effectuate the use of the "bank notice" would probably be much more rudimentary than those used for implementing the Iraqi sanctions. Nonetheless, the implementation of such controls appears to be feasible.

217. The name and location of the correspondent bank that is being used to clear funds for the foreign bank will be readily available to a prosecutor, either on the Internet site itself, or on the back of a canceled check or money order used to fund a gambling account.

218. See 18 U.S.C. 1084(d) (1994); see also supra Part V.A.3.

219. See supra Part V.A.2.

220. See supra Part V.A.3.

221. See News Release of Robert A. Butterworth, Attorney General, State of Florida, Western Union Cuts Off Sports Betting Account (Dec. 23, 1997), available at <http://legal1.firn.edu/newsrel.nsf/b57e80b88fcebfad85256403005cbc7a/06268a62eb5817ba852565b50046b857?OpenDocument>.

222. Western Union agreed to the following operational changes: 1) "to implement procedures designed to prevent funds from being transferred from Florida through Western Union's Quick Pay service to any of the Western Union Quick Pay subscribers set out in [an] Appendix..."; 2) "to enter into agreements with the ... Quick Pay subscribers [set forth in the agreement] prohibiting the Quick Pay subscribers from accepting payments from Florida for or on behalf of [the gambling businesses in question]"; 3) "to advise its money transfer outlets in the State of Florida that the Florida Office of the Attorney General has advised that it is a violation of Florida law to place bets on sporting events and that they cannot use Western Union facilities in Florida to transfer money to pay for the placement of bets or wagers"; 4) "to notify the entities set out in [an] Appendix ... that ... it is a violation of Florida law to transfer money for the purpose of placing sports wagers in Florida and that they must cease receiving funds through Western Union money transfer services from Florida ..."; 5) "to implement procedures designed to prevent credit card money transfers from Florida to ... recipients outside the United States set out in [an] Appendix ..."; and 6) "to take reasonable steps to monitor periodically the transactions of its Quick Pay subscribers and regular money transfer agents in Florida and in the jurisdictions set out in [an] Appendix." See Agreement of Voluntary Cooperation, between Gary L. Betz, Special Counsel to Robert A. Butterworth, Attorney General, State of Florida, & Lawrence S. Fogelson, Chief Operating Officer-International, Western Union Financial Services, Inc. 2-5 (Dec. 22, 1997) (on file with Berkeley Technology Law Journal). This agreement was subsequently amended to update the lists provided in the initial agreement Appendices and to "provide a more effective mechanism for updating these lists in the future." See Amended Agreement of Voluntary Cooperation, between Gary L. Betz, Special Counsel to Robert A. Butterworth, Attorney General, State of Florida & David L. Schlapbach, General Counsel-International, Western Union Financial Services International (Apr. 19, 1999) (on file with Berkeley Technology Law Journal).

223. See Lawsuit Could Kill Online Gambling, AP, Aug. 18, 1998, available at <http://www.wcco.com/news/stories/news-980818-103333.html>.

224. See id.

225. MasterCard Sets Rules For Online Gambling to Settle Lawsuit, AP Newswires, July 12, 1999, available in Westlaw, APWIRESPLUS Database.

226. See id. (stating that among the rules adopted by MasterCard was a rule that it "will now require Internet casinos that use its cards to ask gamblers where they live and keep a record of the information. The company will also require the sites to post notices stating that Internet gambling is illegal in California and other states."); see also Maharaj, supra note , at A1.

227. See Maharaj, supra note , at A7 ("Providian National Bank in San Francisco, one of the nation's largest Visa card issuers, says it will no longer process gambling transactions for its 11 million customers. Other card issuers are expected to follow suit. If enough of them do, that could effectively kill online gambling, observers say, by eliminating the only convenient way to pay.").

228. See id.; see also Metropolitan Creditors Service of Sacramento v. Sadri, 19 Cal. Rptr. 2d 646, 651 (Ct. App. 1993) ("The cornerstone of the Hamilton rule against enforcement of gaming house debts is not simply that the game played is unlawful, but that the judiciary should not encourage gambling on credit by enforcing gambling debts, whether the game is lawful or not."); King Int'l. Corp. v. Voloshin, 366 A.2d 1172, 1175 (Conn. Super. Ct. 1976) ("It is the conclusion of this court that the legalization of gambling in a limited and regulated manner, while constituting a change to some degree in this state's ancient and deep-rooted public policy prohibiting gambling, has had no effect on the long-established policy of this state condemning gambling on credit and prohibiting the enforcement of any claimed obligation relating thereto."); Nelson Rose, Gambling and the Law-Update 1993, 15 HASTINGS COMM. & ENT. L.J. 93, 95 (1992) ("Even while legal gambling spreads throughout the country, the public policy of virtually every state makes legal gambling debts unenforceable, treating a casino marker the same as a contract for prostitution.").

229. Which, as noted by the World Interactive court, is an essential element in determining where the gambling takes place, and, whether state or federal law is being violated. See People v. World Interactive Gaming Corp., 1999 WL 591995, at *5 (N.Y. Sup. Ct. July 22, 1999).

230. See Tratos, supra note , at 108-111.

231. See John L. Douglas, Electronic Money, in ELECTRONIC COMMERCE LAW 111, 112 (William A. Tanenbaum & Allen R. Grogan, 1998).

232. See Tratos, supra note , at 110-11.

233. See supra Section V.B.2.

234. See supra Section V.B.3.

235. See Freeling & Wiggins, supra note ; see also Kish, supra note , at 462.

236. See Rebecca Quick, U.S. May Face Enforcement Hurdles In Crackdown on Internet Gambling, WALL ST. J., Mar. 6, 1998 at B2, col. 1 ("[O]n Wednesday, the federal government began its first-ever crackdown on Internet gambling, charging 14 Web-site owners and managers with illegally using interstate phone lines to take wagers and vowing to bring down a big business that started just a few years ago."); Cabot, supra note ; see also Michael Grebb, The Players, Gambling, BUSINESS 2.0, Feb. 1999, at 47 (quoting Assistant Attorney General Alan Kessner as saying, "[i]f you're going to choose between imperfect regulation or imperfect prohibition, it's better to have prohibition").

237. See Cabot, supra note at 22.

238. See State Tries To Protect Against Internet Gambling Abuses, AAP NEWSFEED, Mar. 18, 1998, available in LEXIS, AAP Newsfeed File.

239. See Fojut, supra note , at 169. See generally Cabot, supra note , at 22.

240. Compare Bell, supra note ("Powerful lobbies favor a ban on Internet gambling. The established, off-line gambling industry has huge overhead costs and a corresponding fear of new competitors. It also brings very deep pockets to the debate.") with Plumley, supra note , at 15 ("That's right, not to shut down Internet gaming - to capitalize on it. How? By accepting Internet gaming and each other's role in it, with a regulator providing standards of certification to assess the lottery and any other Internet gaming competitors and the lottery delivering strong products to the market.").

241. See Plumley, supra note , at 16.

242. See id.; see also Grebb, supra note , at 49.

243. See supra Part V.

244. See NAAG Adopts Resolution on Internet Gambling, NATIONAL ASSOCIATION OF ATTORNEYS GENERAL GAMING DEVELOPMENT BULLETIN, July/Aug., 1996; see also Brown, supra note 16, at 22.

245. See, e.g., United States v. Cohen, sealed complaint, Buchwald, J. (S.D.N.Y. filed Mar. 9, 1998); People v. World Interactive Gaming Corp., 1999 WL 591995, at *6 (N.Y. Sup. Ct. July 22, 1999).; Brown, supra note 16, at 16-20; Cabot, supra note , at 21-22.

246. See World Interactive, 1999 WL 591995.

247. See id. at *4.

248. See Dunstan, supra note . The second wave was spurred by the expansion of the western frontier in the mid-1800s to the early 1900s. The third wave began during the Great Depression and led to a greater legalization of gambling. Id.