Do not miss the exclusive interview with Ron Paul about the UIGEA posted a short time ago at Card Player's web site, here.
Obviously, I agree with nearly everything he has to say on the subject. But I did have one significant difference of opinion, regarding this portion of the interview:
CP: What should be done about Internet gambling in America?
RP: I think we should just take a hands-off position. I don’t think the
government should be involved in any way at all. If I take a personal viewpoint
that gambling is bad and I don’t like it, the way I should attack that is that I
personally should avoid doing it and teach my kids the way I think they should
act. But I don’t want the government coming in and doing this.
CP: Not even at a state level?
RP: Well, at a state level there are no prohibitions to [regulate] it. If I
were a state legislator, I would probably argue against just about all that
regulation, and taxing, as well. But as a federal official, I have to no
authority to prohibit states from being involved.
I'm glad that he is a respector of states' rights, but I think he's dead wrong that Congress couldn't stop states from regulating and/or taxing Internet gaming. Isn't that pretty clearly within congressional authority to regulate interstate commerce and international trade? In fact, Congress has previously acted in exactly this way, prohibiting states from imposing Internet-specific taxes. The primary purpose of the interstate commerce clause in the Constitution is to prevent states from meddling in and gumming up commerce that transpires between states, which surely encompasses money trading hands over the Internet. In my view, Congress could flatly prohibit states from interfering in any way with Internet gaming, and be fully within its rightful constitutional boundaries--and it should do so. (Not that I'm holding my breath expecting it to happen....)
Many thanks to Bob Pajich at Card Player for getting Rep. Paul to open up on this topic.
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6 comments:
"The primary purpose of the interstate commerce clause in the Constitution is to prevent states from meddling in and gumming up commerce that transpires between states, which surely encompasses money trading hands over the Internet."
The premise is not that Congress can't regulate the interstate portion of the transaction. But clearly the state has the authority to regulate the activity which takes place in the state. So while Congress could prevent a state from trying to impose a tax on the interstate transaction, Congress does not have the constitutional authority to prevent a state from making it illegal for a person in that state to gamble online.
I disagree. I don't claim expertise in this area, but a couple of years ago the Supreme Court invalidated state laws that prevented consumers from ordering wine from wineries in other states. I would think that state laws prohibiting citizens from engaging in gambling being offered by a company/server in another state would similarly be violative of the commerce clause, or at least that the courts would deem Congress capable of preventing states from enacting/enforcing any such prohibitions.
The difference is that the Court said the states could not discriminate against interstate sales of an itme legal to purchase within the state. The situation was that NY and MI had laws that prohibited out of state wineries from making direct sales within the state of NY and/or MI. However in state wineries were free to make these sales.
But if NY made the sale or possession of alcohol illegal, the Supreme Court decision would not permit out of state wineries to sell there wines to NYers and ship them into the State.
So if the state prohibits gambling on poker this case does not support the idea that Congress can force the states to allow online gambling within the state.
The Commerce Clause probably limits the ability of states to impose regulations and taxes on interstate gambling, even without an actual act of Congress. The so-called "dormant Commerce Clause" doctrine essentially prohibits states from favoring local interests (the basis for striking down the wine shipping laws) or from imposing regulations or taxes that burden interstate commerce (e.g., stricter safety regulations on trucks than other states).
Now, the states certainly have the power to regulate gambling within their boundaries, and to tax intra-state gambling. This includes the power to bar gambling altogether. But, it seems unlikely a state could legally regulate online gambling based outside the state without demonstrating a compelling state interest. This becomes even more difficult if another state permits online gambling, so that another state's ban or more oppressive regulations adversely affect what is otherwise legal commerce.
As for Congress, the active Commerce Clause power would almost certainly permit Congress, if it wanted, to step in and affirmatively bar states from regulating internet gambling, or limit the ways in which states can regulate internet gambling. Essentially, Congress can preempt entire areas of commerce from any state regulation. This would include the power to prevent a state from prohibiting internet gambling within its borders.
Pete wrote:
"But if NY made the sale or possession of alcohol illegal, the Supreme Court decision would not permit out of state wineries to sell there wines to NYers and ship them into the State.
So if the state prohibits gambling on poker this case does not support the idea that Congress can force the states to allow online gambling within the state."
The wine shipping case involved a balance between the Commerce Clause and the 21st Amendment which specifically gave the states the power to regulate intoxicating beverages. The wine shipping decision essentially said that, if a state allowed wine whipping direct to consumers (under the 21st Amend.), the Commerce Clause requires the state to do so without favoring in-state businesses over out of state businesses.
In the case of internet gambling, by contrast, there is no Constitutional provision delegating authority to the states to regulate gambling specifically or online commerce in general. Thus, Congress has full authority under the Commerce Clause to preempt, in whole or in part, state regulation of internet gambling, if it should choose to do so.
Grange95 wrote: But, it seems unlikely a state could legally regulate online gambling based outside the state without demonstrating a compelling state interest. This becomes even more difficult if another state permits online gambling, so that another state's ban or more oppressive regulations adversely affect what is otherwise legal commerce.
Grange, I think you are mistaken here. Besides the forty-five year history of the original 1961 Wire Act, more recently interstate horserace wagering via the internet has been regulated (allowed from within those states that explicitly choose to permit it and prohibited in those that don't)for about fifteen years now in precisely the way that you seem to feel is unlikely or difficult.
As a purely practical matter, not trying speak of broad constitutional principle or philosophy of federalism, I do not think there is a lot of new legal and regulatory territory involved here. If you live in California you can use Xpressbet to transmit a wager into the Belmont Park track pool in New York for example, but if you live in Nevada you cannot, and never could. Up until the end of last year you could use an online advance deposit account to wager on New York or California or Florida or Kentucky racing from a home computer within Arizona, betting directly into out of state track parimutual pools using one of the national internet hubs offering that service to residents of any of the states permitting it, but due to a recent change in policy by the AZ state legislature you can no longer do so from within that state, and if my ex-girlfriend working at the national YouBet network hub in Oregon accepted a wager from me originating in Arizona or Nevada now she would go to federal prison. But not if I made that bet on a New York horse from California; she could go ahead and book that bet without getting fitted for an orange jumpsuit and plastic sandals.
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