Islj 2009 3-4 - TMC Asser Instituut

Although Delaware discontinued its football lottery game after only 3. The Illegal Gambling Business Act of 1970
one year, Oregon initiated a similar game in 1989. Faced with the
growing popularity of sports gambling, in the early 1990s more and
more states began to consider legalizing some form of sports wagering.
Worried that a sudden proliferation of sports-based lotteries
would pose a significant threat to the integrity of their sports, the
major sports leagues petitioned Congress for assistance. 11
The following section examines some of attempts by Congress to
regulate gambling and sports betting in the United States.
1. The Gambling Devices Act of 1951
While Congress has generally left it to each state to regulate the gambling
activities within each state, the federal government has passed a
series of laws designed to assist the states regulate illegal gambling
within the state. The first such law passed by Congress at the federal
level was the Gambling Devices Act of 1951. The Act, which sought to
assist states in eliminating the role o the role of organized crime in the
gambling industry, made it a crime to transport gambling devices
across state lines to locations not specifically exempted by local or
state law. 12 While the law has little to do with sports gambling, it is
important, because it shows Congress’ willingness to regulate gambling
activities and get involved in something that up until then was
seen purely as a state matter.
2. The Wire Communications Act of 1961
The next legislation passed by Congress “to assist the various States,
territories, and possessions of the United States and the District of
Columbia in the enforcement of their laws pertaining to gambling,
bookmaking, and like offenses and to aid in the suppression of organized
gambling activities” 13 was the Wire Communications Act of 1961
Act). 25
(Wire Act). 14
The statute states that:
Whoever being engaged in the business of betting or wagering
knowingly uses a wire communication facility for the transmission in
interstate or foreign commerce of bets or wagers or information assisting
in the placing of bets or wagers on any sporting event or contest,
or for the transmission of a wire communication which entitles the
recipient to receive money or credit as a result of bets or wagers, or for
information assisting in the placing of bets or wagers, shall be fined
not more than $ 10,000 or imprisoned not more than two years, or
both. 15
The Wire Act, therefore, makes it illegal to transmit via the telephone
bets or wagers, use information assisting betting or wagering
on a sports event or contest, or to engage in any communication that
entitles the recipient to receive money or credit resulting from betting
or wagering. In order to be convicted of violating the Wire Act, the
government must show that an individual: (i) transmitted information
through interstate wire facilities (this would encompasses almost
all forms of communication, from telephones, to more modern forms
of communication like email and texting) that assisted in the placing
of wagers; and (ii) the defendant was involved in the business of
wagering or betting. 16
Federal prosecutions of gamblers under the Wire Act has been
somewhat limited, however, because of the court’s interpretation of
the business of wagering or betting. Before convicting someone, the
federal courts require that the defendant be a bookie (i.e. engaged in
the business of receiving or taking bets), and not such a gambler or
someone who simply bets on sports. 17
In 1970, as part of the Organized Crime Control Act, 18 Congress
passed the Illegal Gambling Business Act, a law prohibiting people
from running an illegal gambling business. 19 In order to establish
criminal activity under the Act, the government must establish the
existence of a gambling business that: (i) violates state or local law, (ii)
involves five or more people that conduct, finance, manage, supervise,
direct, or own all or part of the business, and (iii) remains in substantially
continuous operation for more than thirty days or has a gross
revenue of $ 2000 in any single day. 20
While Congress did not intend for individuals placing bets be
counted as part of the five or more persons requirement, Congress did
want to the courts to liberally count anyone engaged in the operation
of the illegal gambling business “regardless of how minor their
roles.” 21 The Act also does not require absolute or total continuity in
the gambling operations. Instead, the courts interpret the phrase substantially
continuous to mean an operation conducted with some
degree of regularity. 22
In addition, the Illegal Gambling Business Act was part of the
Organized Crime Control Act which included the Racketeer Influenced
and Corrupt Organizations Act (RICO). 23 RICO was designed to eradicate
organized crime by attacking the sources of its revenue, including
syndicated gambling and bookmaking. RICO subjects an individual
who engages in prohibited activities to criminal and civil penalty. 24
4. The Professional and Amateur Sports Protection Act of 1992
The next major piece of federal legislation passed by Congress is the
Professional and Amateur Sports Protection Act (Sports Protection
Passed in 1992 in response to the professional sports leagues’
concerns that Delaware and Oregon’s sports-based lotteries posed a
significant threat to the integrity of their sports, the Sports Protection
Act is designed to stop the spread of State-sponsored sports gambling.
26 This was significant since there were at least an additional
thirteen states considering some form of legalize state-sponsored
sports betting at the time the Act was passed. 27
The Sports Protection Act states that:
It shall be unlawful for-
1 a governmental entity to sponsor, operate, advertise, promote,
license, or authorize by law or compact, or
2 a person to sponsor, operate, advertise, promote, pursuant to the
law or compact of a governmental entity, a lottery, sweepstakes, or
other betting, gambling, or wagering scheme based, directly or
indirectly (through the use of geographical references or otherwise),
on one or more competitive games in which amateur or professional
athletes participate, or are intended to participate, or on one or
more performances of such athletes in such games. 28
Since at the time the law was passed, four states (Nevada, Oregon,
Montana, and Delaware) had or previously had state statutes allowing
sports betting, the four were exempt from the Act. Therefore, Nevada
was allowed to continue to offer legalized sports betting and Oregon
and Montana were allowed to continue their sports lotteries. As will
be discussed in the last section of this paper, it is this exemption that
Delaware bases its’ attempt to introduce a new sport betting game.
III. State Legislation Regulating Sports Betting
Before passage of the Sports Protection Act, Congress had traditionally
let individual states regulate gambling within their own jurisdictions.
In taking this hands-off approach, Congress cited the Tenth
11 Cabot, A.N. and Faiss, R.D., (Spring
2002). Gaming Law Symposium: Sports
Gambling in the Cyberspace Era, 5
Chapman Law Review 1.
12 Gambling Devices Transportation Act, 15
U.S.C. §1171, et. seq. (2009).
13 Martin v. United States, 389 F.2d 895 (5th
Cir. 1968)
14 18 U.S.C. §1084 (2009)
15 18 U.S.C. § 1084(a).
16 United States v.Alpirn, 307 F. Supp. 452
(S.D.N.Y. 1969)
17 United States v. Tomeo, 459 F.2d 445
(10th Cir. 1972)
18 Pub. L. 91-452, 84 Stat. 922 (1970).
19 Illegal Gambling Business Act, 18 U.S.C.
§1955 (2009).
20 United States v. Sacco, 491 F.2d 995 (9th
Cir. 1974).
21 United States v. Schullo, 363 F.Supp. 246
(D.Minn. 1973).
22 United States v. Trupiano, 11 F.3d 769,
773 (8th Cir. 1993).
23 Pub. L. No. 91-452, § 901(a), 84 Stat. 941
(1970).
24 18 U.S.C.§§1963, 1964 (2006).
25 Professional and Amateur Sports
Protection Act, 28 U.S.C. §3701, et. seq.,
(2009).
26 Cabot, A.N. and Faiss, R.D., (Spring
2002). Gaming Law Symposium: Sports
Gambling in the Cyberspace Era, 5
Chapman Law Review 1.
27 Bradley, B. (1992). The Professional and
Amateur Sports Protection Act - Policy
Concerns Behind Senate Bill 474, 2
Seton Hall Journal of Sport Law 5.
28 28 U.S.C. §3701, et. seq., (2009).
PA P E R S
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