There should be laws to regulate online gambling

There is a new groundswell of opinion rising in the U.S. that there should be more direct government regulation of online gambling. The reason for this shift is the series of scandals currently roiling the world of online poker.

The most positive demand for federal regulation has come through the Poker Players Alliance (see http://pokerplayersalliance.org/press-releases/2008/07/22/press-release-statement-of-ppa-chairman-senator-alfonse-damato-in-response-to-online-poker-cheating-scandals/). The gory details of these scandals and all the allegations are too much to deal with here, so I'll just focus on this press release.

Former Senator D'Amato makes the obvious point that the game of poker depends on trust. The players need to know that managers of casinos and the organizers of tournaments are committed to policing both themselves and the players. When there are allegations of cheating in real world events, local regulators and, if appropriate, law enforcement officers will investigate and report.

The process is reasonably transparent and people are usually held accountable for breaking the rules or the relevant laws. When cheating may have occurred on the internet, there are serious problems of jurisdiction. Who exactly has the power to investigate and what powers of sanction does the investigator have? The former Senator argues with force that public trust can only be maintained if the same level of transparency applies to both real world and online gambling.

So, if anyone, whether manager, organiser or player is to be put at risk of punishment, what is due process? What court or tribunal can decide whether there is sufficient evidence of wrongdoing and make a proportionate response? As it stands, it is left to regulatory authorities in the country where the company running the internet site has its registered office. There is very little transparency with few details of the investigations or their findings ever made public.

In the history of the internet, there have been no prosecutions or formal judicial sanctions applied to any company or individual running online gambling. Players are therefore left with the quite natural feeling that there is no effective regulation. But the desire for federal intervention is not likely to meet with any new laws. The U.S. Government does not have extraterritorial jurisdiction to go and investigate a company in a foreign state. Its only sanction is to bar access to the site which is a sledgehammer to crack a nut.