Online gambling
OUT-LAW Radio, 14/09/2006
Hear from experts in online gambling, talking about the recent
arrests of executives from online gambling companies in the US.
Plus: a researcher talks about what she found when posing as a
14-year-old on a social networking site.
A text transcription follows.
This transcript is for anyone with a hearing impairment or who
for any other reason cannot listen to the MP3 audio file.
The following is the text spoken by OUT-LAW journalist Matthew
Magee.
Hello and welcome to OUT-LAW Radio, the weekly podcast that
keeps you up-to-date on all the twists and turns in the world of
technology law. Every week we bring you the latest news and in
depth features that help you to make sense of the ever-changing
laws that govern technology today. My name is Matthew Magee, and
coming up on this week's show we investigate online gambling in the
US. After two British businessmen were arrested at US airports, we
ask: is online gambling really illegal? Amidst confusion and with a
new bill outlawing it stalled in the US Senate, does anybody really
know? We also talk to the researchers who are giving parents
nightmares about what their kids are up to on social networking
sites.
But first, the news
- Hewlett Packard Chair resigns in board surveillance
scandal
- Microsoft sues spammer for £45,000, and
- European Court of Justice orders British Government to rewrite
workers' rules
Hewlett-Packard Chair Patricia Dunn will step down over her role
in the secret surveillance of board members' phone records. She
will retain her seat on the board. Dunn authorised the hiring of a
security firm to identify a board level leak. California's Attorney
General has said that he has enough information to bring a
prosecution against people inside the company as well as
contractors. The FBI is also investigating. "Crimes have been
committed", said the Attorney General.
Microsoft has won a case against a spammer resulting in a
£45,000 payout. The case did not involve anti-spam legislation,
though. Microsoft sued Paul Fox alleging a breach of the terms and
conditions of email service Hotmail, which Microsoft owns. The UK
does have anti-spam laws, but the Information Commissioner's Office
has said that its powers are limited, and that it is seeking
stronger powers.
The British Government will have to rewrite its guidance on
workers' breaks after losing a case at the European Court of
Justice (ECJ). The ECJ ruled that guidance issued to employers did
not meet the requirements of the EU's working time directive. The
guidance did not do enough to force workers to take breaks, the ECJ
said. Kirsty Ayre, an employment lawyer at Pinsent Masons, the law
firm behind OUT-LAW, said that the impact of the ruling will be
muted.
Kirsty Ayre: "The advice that I would be giving to clients is
that you probably don't have to change your practice as a result of
this decision because it was merely the government guidance that
was found faulty and not the actual regulations themselves. So as
long as employers have got in place systems whereby people are
entitled to take the breaks, and employers are not preventing
people taking those breaks, for example by giving them so much work
that they can't take the breaks, then there shouldn't be any
problems."
That was this week's OUT-LAW News.
Do you find yourself complaining about travelling on business,
about how inconvenient and tiresome it is? Well spare a thought for
David Carruthers and Peter Dicks. These two British businessmen
work for competing internet gambling companies and each has been
arrested in recent weeks on touching US soil. In what looks
increasingly like a clampdown on online gambling in America, Dicks
and Carruthers are awaiting their fates, Carruthers, of
Betonsports, at the hands of the Department of Justice and Dicks,
of Sportingbet, at the hands of Louisiana State Authorities.
Amidst tumbling share prices and rampant speculation, OUT-LAW
Radio investigated the still-fluctuating world of internet gambling
and the law. And when it came to the biggest market, the US, what
was most shocking was the confusion that reigns over just what is
legal and what isn't.
John Hagan is a lawyer with Harris Hagan, a law firm
specialising in gambling and internet gambling law.
John Hagan: "It is certainly very confused not least because
they are relying on statutes that date back to the '60s and then
you have the added complication of different States interpreting it
in different ways and certainly I am confused by it and no doubt
the online gambling operators are equally confused and when you are
talking about the risk of criminal penalties and being arrested in
transit through the States, then it is not a very satisfactory
state of affairs that the law is so confused."
They say that the law in question is the 1961 Wire Act. Designed
to outlaw telephone sports betting across state lines it was
drafted long before the internet age. Hagan says it is creaking at
the seams as the Department of Justice presses it into service
against all sorts of thoroughly modern practices.
"They are certainly taking a very strong
view of out-dated legislation and applying an interpretation which
suits their purposes. You would have to ask them why if the law is
so certain and they are pressing for a new law to go through."
We did, and they told OUT-LAW Radio that "The proposed
legislation will offer helpful tools to prosecute cases, but our
job is to enforce the law as it is now."
We don't think it is confusing, spokeswoman Jacqueline Lesch
told OUT-LAW. "We think it contravenes three statutes, the Wire
Act, the Travel Act and the Illegal Gambling Businesses Act. They
include language about a wire communication facility which we
believe includes the internet" she said. They are dated but they
cover online gambling.
When Carruthers was arrested many speculated that the action was
specific to that company, which had a history of tussles with the
DOJ. Now that the individual states are making their own arrests,
is it safe for internet gambling executives to travel to the
US?
I asked Hagan what his advice to clients is.
"Our advice would remain the same as it's
always been which is that if you are taking bets from US residents,
and I mean sports bets rather than gaming in the form of poker or
casino, if you are promoting yourself in the US and actually
specifically targeting US citizens, the more of those boxes that
you tick, the safer it is to stay out of the States.
"I would be very surprised if from now on
that any executive from anybody who takes any bets from the US in
any shape or form would visit the US".
That was Lindsey Greig. He is the managing editor of the world
online Gambling Law Report. He says that trying to determine the
lie of the land with the DOJ is like being a spook back in the cold
war. Confusion, he says, reigns.
"Years ago people tried to talk about the
Kremlin and try to work out what the Kremlin was thinking and doing
and I think there is an element of that with regard to online
gambling in the states. Because it is not clear, then people
are sort of trying to work out signals and signs to see what is
going on."
US lawmakers are trying to clear up the confusion. A new law is
creeping towards the statute books which would give the DoJ a
crystal clear mandate by making all internet gambling illegal. The
trouble is, it has all been tried before and nobody really expects
it to make it through the Senate this autumn. That is certainly the
view of Wayne Brown, a stock market analyst who follows online
gambling firms for Altium Securities.
"Obviously there is a bill which is trying
to be passed through the Senate at the stage it passed through the
House of Representatives and now its going through the Senate. The
chances of it actually passing through the Senate are quite low, as
the same Bill has in various other forms been tried to pass over
the last few years."
It seems, at this point, a terrible muddle. Executives will
simply stay away from the US and a clarifying law will most likely
never materialise, while two UK citizens will face us trials on
complex foreign laws. But Greig, of the Online Gambling Law Report,
believes that those and any other trials could have some
interesting results.
"Part of the problem in the US is that the
way that the law is being interpreted at the Federal level and at
the State level, has hardly been tested and I imagine there will be
a substantial argument around whether they have any jurisdiction in
the case and actually the gambling took place wherever the server
was located. Wherever that is it certainly isn't in Louisiana and
therefore we have broken no laws in Louisiana. I think it is
probably an open and shut case that Louisiana will win this case,
but ultimately it may lead to more clarity in the law and that
clarification may actually not go in simply one direction."
Bad luck for the defendants, then, but possibly light at the end
of the tunnel for the rest of the industry. The coming months could
be groundbreaking for the online gambling world, and gambling law
expert Hagan is sure of one thing: despite these hard times it's a
business that is not going away.
"I think US citizens will continue to want
to gamble on the internet and for as long as they do, there will be
people who will want to take their bets."
Every social phenomenon has its scare stories, and the rise of
social networking sites has been accompanied by a legion of tales
about the dangers that they pose to children, from exposure to
predatory adults to participation in bullying from peers. But
research just conducted by respected consumer rights bible Which?
will confirm many parents' fears about what children can face on
social networking sites. Computing Which? researcher Kim Gilmour
explains what she found when she investigated the phenomenon. For a
start, she had no problem posing as a 14 year old.
"We decided to have a look and set up a 14
year old's account to see what kind of content that we encountered
and we did end up easily registering an account as a 14 year old,
so that was quite an easy thing to do and once we were a 14 year
old, we were able to encounter pornography and some unsavoury
content and things like that quite easily, without actively looking
out for it as well."
Gilmour said that parents should be particularly vigilant about
social networking sites, but that they should try not to be too
shocked and should talk to their children about their use of the
sites.
"Parents will be surprised to see some of
this content online, especially the discussions that teenagers are
having amongst themselves and they should try not to be alarmed or
shocked because they should simply think back to when they were a
teenager and realise that this is the type of discussions they were
probably having 20 years ago, it's just that now it's actually out
on the internet, and if they make their profiles readable by
everyone then you might be quite surprised by what kind of things
you are reading about."
So what can be done?
Gilmour says that legislation would be hard to implement, but
that a code of practice between operators is the best way
forward.
"They should have this kind of common code
of practice to make sure that they are measured in sensible
approaches to keep safe online. They are moving towards coming up
with something like that, so I think that if the websites are
leaning towards a code of practice that really puts the child at
the heart of what they are aiming to do, make sure their safety is
paramount, then that is a step in the right direction."
That's all we have time for this week, thanks for listening.
Why not get in touch with OUT-LAW Radio? Do you have a legal
problem you would like one of our lawyers to discuss? Do you know
of a technology law story? We'd love to hear from you on radio@out-law.com.
Make sure you tune in next week; for now, goodbye
OUT-LAW Radio was produced and presented by Matthew
Magee for international law firm Pinsent Masons
