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100% Legal Gambling On The Internet? January 13, 2003

Over the past six years, the number of websites, which will accept money bets, has grown from zero to more than 250.

You can bet on baseball, basketball and bowling; play blackjack, baccarat and bingo; buy lottery tickets from an Indian tribe. Whether it is a horse race or impeaching the president, someone somewhere is willing to give you odds over the Internet.

Many on-line bookies and casinos claim to be licensed by foreign countries. Most sites warn potential bettors that it is up to players to determine whether their local laws make the game illegal.

How, exactly, is a player supposed to know if a game is legal? The answer is two-fold:

1) First, the player analyzes the particular game or wager under all laws that might apply to both the operator and the bettor; and

2) Second, the player makes a wild guess whether laws, written before the telephone was invented, apply to 21st century technology. Two states, Nevada and Louisiana, have passed statutes outlawing most forms of Internet gambling. For example, if an unlicensed operator in Nevada takes a wager on-line, that operator has committed a crime in Nevada.

About the only defense would be to claim that Nevada does not have the right to outlaw activity on the Internet. This is pretty weak, but not frivolous. A federal judge in New York did rule in a pornography case that it would be too much of a burden on interstate commerce to have 50 different state laws apply to the Internet.

Most Internet operations have much stronger defenses, because they do not fall neatly under any criminal statute. Discussions about on-line gaming usually focus on issues like sovereignty and where-does-a-bet-take-place. But, every criminal case starts with a more fundamental question: Is there a law making this particular activity illegal?

Gambling consists of three elements: Consideration, Prize and Chance. If any one of those three elements is missing, the game is simply not gambling.

Consideration is a legal term, most commonly found in the law of contracts. Usually it means each side puts up something of value, such as cash for a car. However, for non-gambling contracts, consideration can be any expenditure of effort by one side or any benefit to the other side.

A very few states follow this rule for gambling contracts. The Washington State Legislature had to pass a law after a supermarket chain was busted for running a free promotion. The state Supreme Court had found consideration because players filled out forms and the store benefited by having more customers.

Most jurisdictions today find there is no consideration for gambling unless players are required to spend money. The U.S. Supreme Court ruled in a case involving T.V. game shows, that even if players are required to spend some time and money, filling out forms and buying postage, there is still no consideration.

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