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April-30-2009,
Minnesota Attempts To Block Online Gambling by Its Citizens...By Hartley Henderson

The state of Minnesota yesterday caused many heads to turn when the Department of Public Safety - Alcohol and Gambling Enforcement Division told internet service providers to block access to online gambling websites for Minnesota citizens. Documents cited the U.S. Wire Act of 1961 as the basis for its order. Written notice was served to AT&T Internet Services, Charter Communications, Comcast Cable, Direct TV, Dish Network, Embarq, Sprint/Nextel, Frontier Communications, Qwest, Verizon Wireless and Wildblue Communications. A spokesman for the department has also tried to scare Minnesota gamblers by telling them their funds are in peril if they don't withdraw them now.

The move came as quite a surprise to many, but particularly those who defend internet freedom. First Amendment attorney Larry Walters commented that a state has the right to try and block access to material it deems illegal, but was left wondering why the state chose to use the Wire Act as its basis rather than the UIGEA. "It's unusual for a state to try and enforce a federal law," Larry said. "If that was the state's desire, however, it would have made much more sense for the state to have utilized the website blocking provisions of the UIGEA and coordinate with the Department of Justice in that effort. There is a provision in the UIGEA which allows the Attorney General to block access to websites and the UIGEA is a more applicable law." Of course Larry also noted that if the state went this route the websites and ISPs should be entitled to due process, which appears to be lacking under the procedure set forth in the UIGEA - at least with respect to the sites targeted for elimination. More importantly, however, Mr. Walters noted that any attempt to block access to a website without judicial oversight and approval may constitute an unconstitutional prior restraint on speech, a violation of the First Amendment.

Joe Brennan Jr., the chairman of iMEGA, a trade association dedicated to defending freedom of the internet in entertainment and gaming issues, was far more vocal with his condemnation of the move:

"We're troubled at the shaky legal rationale that Minnesota's Department of Public Safety uses to justify this order", Joe stated. "There is no Federal law that prohibits individual US citizens from playing on the Internet. This is setting up to be a serious attack on First Amendment rights if Minnesota persists. iMEGA is going to be aggressive pursuing this. We already have excellent counsel in Minneapolis, and they are already working to resolve this situation. We've reached out to the other concerned groups, like PPA and IGC, and are in the process of connecting with our "friends of the court" in Kentucky - eBay, Electronic Frontier Foundation, Center for Democracy and Technology, Internet Commerce Association, and the ACLU - and we'll go further to bring this to the attention of other groups in the Net Neutrality and Save the Internet coalitions. We need to ensure that this attack on i-gaming sites does not snowball to include other content segments, as the Department of Public Safety's press release alludes to - using ISP blocking as a new form of censorship and enforcement."

What seems to have everyone the most perplexed is why Minnesota and why now? The state which elected Jesse Ventura as governor and came within a whisker of electing Al Franken in November is hardly known for its conservative tendencies. "It's very strange that Minnesota would be the state to champion this cause," Larry Walters commented. Some theories that have emerged (in the short time since the announcement was made) as to why Minnesota has taken this direction include the growing support in Congress of Barney Frank's bill and his plan to re-introduce it the near future, the move by other states to expand computer-based gambling and its impact on Minnesota, and the suggestion that this move is simply an effort to eliminate the competition before Minnesota offers intrastate online gambling itself.

There was some suggestion last week that Barney Frank was prepared to re-introduce his gambling bill before the end of April, although that has been put on hold. Frank calls the UIGEA regulations draconian and that trying to enforce them will harm the struggling banks. He also stated his concerns that the UIGEA puts the United States in violation of world trade agreements, particularly with the EU and Antigua. It's uncertain whether Frank has the support to pass his bill which would see online gambling regulated, licensed and taxed for bets made by American citizens. But he certainly has more support than he did in 2006 when the UIGEA was sneakily attached to the Safe Port Bill. It wouldn't be surprising if many who voted for the Safe Port Act weren't voting for this piece of legislation --- they would welcome a law that either repeals the legislation or at least waters it down. If Minnesota is indeed frightened that Frank does have enough support and doesn't want a new federal bill that legalizes online gambling, this could be a preventative tactic to ensure more Minnesota residents don't set up offshore accounts for online gambling purposes.

Another suggestion as to why Minnesota has taken this route is that Minnesota wants to make it clear to its citizens and the federal government that it will not be moving the direction of California and Nevada by introducing intrastate online gambling networks. The move to block online gambling companies could be a way of informing its citizens that the state finds online gambling immoral and that a condition for living in Minnesota is that you can't gamble online.

A last, and far more likely suggestion is that Minnesota is preparing to introduce intrastate online gambling and wants to block competition so that when it goes online Minnesota residents will have no other option but to bet with the state. "I'm quite certain that is their motis operandi", an attorney who asked to remain nameless told me. "Minnesota currently has 20 casinos all operating on native reserves and the government has been trying to get a piece of the action since [they opened]. They really have no way of infringing on land based casinos which the state has all but given to natives, but the government could certainly take revenues from alternate forms of gambling, including online wagering. Of course for that to be successful the state has to create a monopoly, cutting off links to gambling sites Minnesota residents are currently using is the easiest way to achieve this."

This move by Minnesota is clearly the biggest attack on first amendment rights associated with online gambling since Kentucky tried to steal 141 domain names of gambling websites last year. Fortunately in that situation the appellate court had the sense to put a stop to that effort thanks to the likes of iMEGA and others. Unfortunately, that case is currently before the Kentucky Supreme Court, where anything can happen. If Minnesota is successful they will join the likes of China, Iran, Cuba and Zimbabwe as jurisdictions that censor the internet. Nonetheless, one can be certain these same companies that lobby for freedom of the internet aren't going to let Minnesota win this without a fight.

04-30-2009
Hartley Henderson
MajorWager.com
henderson@majorwager.com

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