May 24, 2010

Poker's Terrible, Horrible, No Good,
Very Bad Year (Part 2 of 2)
Rousso v. State of Washington

WARNING & SYNOPSIS:  As you may recall, Part I of this post reviewed developments in poker litigation in New York, Massachusetts, Pennsylvania, and Colorado.  Let's now turn our focus to the Pacific Northwest, where this Thursday, May 27, 2010, the Washington supreme court will hear oral arguments in Rousso v. State of Washington.  The Poker Players Alliance (PPA) is even planning a rally outside the court to commemorate the event.  The PPA's rather overwrought press release announcing the rally invokes false claims that the state online poker ban is a crime equivalent to child pornography and drug dealing, not particularly effective rhetoric, at least to my ears.  But then again, the PPA has always been an ad hoc amateur-hour sort of outfit, so I guess I shouldn't be surprised.

This post will dive into the legal arguments being made in the constitutional challenge to Washington state's outright ban on online gambling.  Because I happen to be a lawyer who does a fair amount of appellate work (indeed, it may be the only thing in the world I'm good at, other than crAAKKing premium hands), this post will be rather lengthy and quite possibly boring.  Read on after the jump if you want to get a better feel for the legal arguments that the Washington supreme court will be considering.  If you want my detailed opinions about the case without the boring legal talk, you can jump to the "Analysis" section at the end of the post (also after the jump).  If you prefer that I just sum up, it's my opinion that the Washington supreme court will turn down Rousso's challenge and find that the state's ban on online gambling is constitutional, because the implication of Rousso's argument is that the state would be required to legalize and regulate not merely internet poker, but all forms of online gambling, and that's a result I can't see a state court endorsing.  Also, the Washington supreme court will likely accept the state's claims that the online gambling ban is necessary to protect against problem gamblers, underage gamblers, money laundering, and crooked games (much as I suggested might happen in a recent post about poker's association with some unsavory folks).  You're now excused from the remainder of this post.


* * * * *

BACKGROUND:  The Rousso case is different than the "poker is a game of skill" challenges seeking court rulings that poker is not covered by various states' gambling laws.  Instead, Rousso is a constitutional challenge to Washington's explicit ban on online gambling, grounded in a Commerce Clause argument.  Essentially, Rousso is challenging the state's online gambling ban by claiming the ban interferes with interstate commerce by unfairly favoring Washington state brick-and-mortar casinos over online gambling sites based in other states or overseas.  Although Rousso's argument is predicated on legalizing online poker sites, note that the statute and his argument really apply to all online gambling, not merely poker.  This is an important point for the analysis of this particular constitutional argument.


THE APPELLATE PROCESS:  Before analyzing the legal arguments, let's take a quick look under the hood at how the appellate process works.  A quick browsing through the Washington rules of appellate procedure reveals a fairly typical state appellate court system.  The Rousso appeal took a standard path to the state supreme court, beginning with a trial court ruling on summary judgmenti.e., a ruling by the trial court judge that the facts are undisputed and the dispute can be resolved merely by interpreting and applying the proper law.  In Rousso, the trial court ruled that the statutory ban on internet gambling was constitutionally valid.  The case was then appealed, and considered by a division of the state court of appeals, which affirmed the trial court decision.  Rousso again appealed to the state supreme court, which has the discretion to deny further review (leaving the court of appeals decision in force as the final decision), or to grant further review, which it did in this case.  In mundane legal appeals, the grant of further review is often a strong hint the supreme court intends to reverse the lower court in some fashion, or to resolve conflicts among different panels of the court of appeals.  In Rousso, however, the case raises a significant constitutional law issue, so the mere fact the state supreme court granted further review gives no insight into how the court views the case; the supreme court will generally issue a ruling in all significant constitutional law disputes, even if they agree with the court of appeals' decision.

The oral arguments this week in the Washington state supreme court are simply the final step in the appellate process. To this point, the parties have filed briefs (lengthy written arguments explaining their contentions as to the appropriate legal analysis of various issues) and engaged in oral arguments before the trial court and court of appeals.  The briefs and arguments at each stage remain fairly consistent, although the briefs and arguments at the appellate court level will generally be more detailed, and will also respond to the trial court's ruling.  The state supreme court will review the same briefs as submitted to the court of appeals, as well as supplemental briefs filed by the parties responding to the opinion issued by the court of appeals (in the next sections, I'll dive into the court of appeals' decision and the parties' supplemental briefs so you don't have to).

By the time oral arguments begin, the justices will have read the parties' briefs and likely formed an impression of which side has the stronger position, as well as the weaknesses or concerns raised by each side's arguments.  During the arguments, the attorneys take turns making presentations of their view of the case to the justices, but are frequently interrupted by questions from the justices.  In fact, as an appellate attorney, I welcome as many questions as possible, as a "hot bench" indicates the court is interested in your case, and the questions posed give an opportunity to read the court's concerns with your position and enable you to focus your argument on those points.  General categories of questions attorneys get from the court include:
  • Fact questions—Clarifying an important factual point; e.g., "Have any online gambling sites been charged with violating this statute?"  There probably won't be many, if any, of these questions.
  • Procedural questions—Clarifying whether the proper objections were lodged, motions made, etc. to allow the court to consider the appeal; e.g., "Did Rousso abandon alternative arguments asserted in his petition?"  There likely will be none of these questions.
  • Analytical questions—Clarifying how a party thinks a particular constitutional provision, statute, regulation, common law rule, or prior case decision should apply to the pending appeal; e.g., "Has Congress preempted the regulation of internet commerce in general, in the particular case of gambling, or neither?"  There will be many questions of this type.
  • Policy questions—Clarifying how adopting one result or another, or applying one line of analysis over another, will have practical effects for law enforcement, businesses, or the public at large; e.g., "If we find this law is unconstitutional, will foreign-based online sites be able to offer unregulated sports wagering or blackjack in addition to poker?"  There will be many questions of this type.
  • Rhetorical (softball / hardball) questions—Questions designed primarily to make a point to the other judges on the panel, whether in favor of or against your position; e.g., "Counsel, doesn't the state have a compelling interest in preventing gamblers from being cheated?"  The correct answer for both sides is, "Durrr, yes, your honor."  But, note how a softball question for the state is a hardball question for Rousso; the state gets a chance to wax poetic about the evils of online gambling, while Rousso gets knocked back on his heels and has to defend some of the ugly truths about online gambling.  The prevalence of these types of questions depends a lot on the nature of the issues in dispute as well as the temperaments of the judges.  As an attorney, you absolutely must be ready for these questions, looking to knock the softballs out of the park, while at least trying to turn the hard pitches into something positive for your case.  In our example here, Rousso could use the question to pivot to a point about the benefits of the state regulating online gambling rather than allowing it to be a Wild West atmosphere.

In my experience, oral argument really only tips the scales in close cases.  A brilliant oral argument can't save a bad case, while a terrible argument will only rarely sink a strong case.  But in close cases, oral argument lets an attorney get a sense of the court's concerns about his position, and gives him/her an opportunity to address those concerns head on (while taking a few shots at the other side when possible).  Frankly, a good oral argument is the most exciting 30 minutes of my job.


THE COURT OF APPEALS DECISION:  The court of appeals decision is really the starting point for this case, with the state having an edge with that decision in its pocket.  Technically, the supreme court reviews a constitutional law claim de novo (without deference to the court of appeals decision), but in reality, a well-written court of appeals decision can add some persuasive weight to the prevailing party's argument.

The court of appeals started by analyzing the threshold question of whether Congress has explicitly or implicitly regulated online gambling.  If so, then a state can only limit or regulate online gambling to the extent such regulations are consistent with and do not interfere with federal law.  However, Congress can also explicitly authorize states to regulate certain types of commercial activities.  The court rejected the state's argument that Congress had authorized states to regulate online gambling by passing the Wire Act and the UIGEA.  The court noted that the Wire Act had been passed well prior to the advent of the internet, and thus could hardly be an explicit and unambiguous authorization by Congress of the state's right to regulate inline gambling.  As for the UIGEA, the court noted that the statute merely regulated use of internet payments in conjunction with gambling deemed illegal under state law; the gambling violation itself need not occur on the internet to serve as a predicate act for a UIGEA violation (the court used the example of using a PayPal account to pay off a wager made with a traditional sports bookmaker).

The court then turned to what is known in constitutional law as the "Dormant Commerce Clause" analysis.  The Dormant Commerce Clause refers to state regulations made pursuant to their inherent "police powers" which might infringe on interstate commerce even in the absence of Congressional regulation.  In this context, "police powers" is not necessarily a reference to criminal law, but rather is a broad reference to a state's authority to enact regulations for the "general security, health, safety, morals, and welfare" of its residents.  Classic Dormant Commerce Clause violations occur when a state enacts a law purportedly for safety reasons, but with the intent or the effect of favoring in-state over out-of-state businesses.  For example, a state regulation requiring all meat to be inspected by a state inspector prior to sale appears to have food safety as a goal, but in reality the law discriminates against out-of-state meat processors. 

In this case, Rousso argued that the purpose of the internet gambling ban was a barely disguised attempt by the legislature to protect Washington's in-state brick-and-mortar poker rooms from online competition.  The court rejected this argument, noting that the Washington online gambling ban is "neutral in its application", meaning that the law would apply equally to ban online gambling services offered by Washington-based gambling sites:
There are various problems with Rousso's proposed analysis. The first, and most obvious, is that the gambling act amendments are facially neutral--they apply equally to gambling information transmitted over the Internet whether such transmission occurs solely between Washington residents or businesses, or instead occurs between Washington residents or businesses and residents or businesses located in other states or countries. In other words, Rousso would be equally guilty of violating RCW 9.46.240 were he caught playing Internet poker with Spokane residents on a web site owned by a Seattle business and hosted on a Tacoma server as he would be were he caught playing poker on Pokerstars (a non-U.S. corporation) with residents of Minnesota, Montana, and Moldova.

This is an important point for Commerce Clause cases, as it makes it substantially more difficult to argue that there is a hidden agenda to benefit in-state businesses.  In cases where the challenged law is truly neutral in application, the law will only be found unconstitutional if the law is found to be an excessive burden on interstate commerce when balanced against the state's legitimate interests.  In this particular case then, the court has to weigh the state's interests in regulating online gambling against the negative effect those regulations have on interstate commerce.

At the outset, Rousso tried a version of the PPA's "poker is a game of skill" argument, contending that poker was never intended to be part of Washington's historical antipathy for gambling.  The court rejected this argument, finding (unsurprisingly) that Washington has long regulated gambling. In fact, the court specifically noted in its analysis that Washington's gambling laws define "gambling" to include any game where chance affects the outcome to a "material degree", even if skill plays a role in the outcome.

Further, the court noted that the legislature's stated purposes for enacting the ban included updating the state's general anti-gambling laws to include advances in technology, and to better protect the public from the evils associated with gambling, including its association with organized crime.  The court found that these interests were legitimate, and that regulation of the Internet was necessary for the state to accomplish its goals:
Put simply, Washington has a longstanding and legitimate interest in tightly controlling gambling. That interest is a pure exercise of the traditional police power and is justified by the State's desire to safeguard its citizens both from the harms of gambling itself and from professional gambling's historically close relationship with organized crime. The next two questions, then, are (1) whether, given the significance of this interest, the addition of the term "internet" to the gambling act creates a burden on interstate commerce that is "clearly excessive" and (2) whether the State's interest can be equally well accommodated by less restrictive regulations.

Addressing the second question first, it is doubtful that the State can effectively address the problems associated with Internet-based gambling without regulating the Internet itself. For example, it is questionable whether the State has the ability to effectively prevent underage Washington residents from Internet gambling without directly regulating the transmission of gambling information; to do so would require the State to discern when residents are engaged in gambling over the Internet (likely from within their homes), and further discern the age of the gambler--all without violating residents' privacy rights. Similarly, it is doubtful that the State can effectively monitor Internet-based criminal behaviors that are traditionally associated with gambling--for example, money laundering--if it is precluded from enacting any regulation that touches upon the Internet.

Thus, the court determined that the case turned on the question of whether the ban on online gambling placed an excessive burden on interstate commerce.  Here the court noted that the state had banned certain forms of email spamming activities, and that the law had been found to be constitutional against a Commerce Clause challenge.  Further, the court found that companies involved in internet commerce are able to identify the state where a computer is geographically located from its IP address, and are already required to comply with different laws in all 50 states.  Thus, requiring online gambling sites to identify computers in Washington and blocking them from participating in gambling activities is not particularly difficult and imposes only minor costs.

Finally, the court rejected Rousso's contention that the online gambling ban was somehow a novel or unique development in the law:
Here, the regulation is not excessive. Indeed, it is worth giving special attention to the fact that the prohibited conduct here at issue--the transmission of professional gambling information--has been forbidden since the initial passage of the gambling act in 1973. The initial act listed various technologies through which the transmission of gambling information was then prohibited, including "telephone, telegraph, radio, [and] semaphore." RCW 9.46.240. Rousso does not contend that transmission of gambling information through these media unconstitutionally impairs Congress's ability to regulate commerce.

Instead, he bases his case on the idea that the Internet, as a technological medium for transmitting information, is so novel that special rules apply to it, rendering unconstitutional any state law that subjects it to regulation. Put bluntly, this is a simplistic understanding of the technology at issue, which, at its core, performs precisely the same functions as the "telephone, telegraph, radio, [or] semaphore"--the transmission of information over distance--only does so more quickly, cheaply, and efficiently.

In other words, if it was acceptable for the state to ban gambling via phone prior to the advent of the internet without running afoul of the Commerce Clause, it is no big leap of logic to conclude it is acceptable to extend state gambling restrictions to the internet.  Thus, it is hardly surprising that the court ultimately concluded that the state ban on internet gambling was constitutional.


ROUSSO'S ARGUMENT & SUPPLEMENTAL BRIEF:   Rousso filed a supplemental brief with the Washington supreme court, which reiterated many of his points raised with the court of appeals, but also responds to points made by the court of appeals in its decision.  Rousso really makes two significant arguments.  First, Rousso asserts that the court of appeals' analysis was flawed because the court analyzed whether the ban on online gambling applied equally to both interstate and intrastate internet gambling, when the proper analysis in his view is whether the state's ban on online gambling favored in-state brick-and-mortar gambling over online gambling based outside the state (even outside the country):
While a number of issues were litigated below, the lower courts gave surprisingly scant attention to the one issue that towers above all others: does Washington's law benefit in-state business interests at the expense of out-of-state business interests or, more simply, is the statute protectionist in intent or effect? If this Court answers this question in the affirmative, as the petitioner believes it must, then all of the other issues litigated fall by the wayside and the statute must be stricken down.

The court below fundamentally erred by failing to consider the similarities between Internet card rooms and brick-and-mortar card rooms. This error led the court of appeals to address the wrong question: Rather than ask whether RCW 9.46.240 equally burdens brick-and-mortar card rooms (necessarily in Washington) and functionally equivalent Internet card rooms (predominantly operating in interstate commerce), the court of appeals instead asked whether the law would apply equally to in-state Internet card rooms and out-of-state Internet card rooms. By asking the second, inapposite, question, the court of appeals reached an incorrect conclusion.

Rousso's point here is that the ban on online gambling operates as a legislative tool to force Washington residents to gamble only in Washington-based casinos, or not at all.  If this legislative policy in fact functions primarily as a tactic for economic protectionism, then the statute violates the Commerce Clause and no further analysis or balancing tests are required.  As Rousso prefers to frame the protectionism debate:
[The court of appeals’] analysis completely sidesteps the question of protectionism and is premised on the assumption, unstated, that internet poker does not compete with brick-and-mortar poker, a proposition that every poker player in the world knows to be untrue. Put another way, Division I merely asked whether the statute favors in-state internet poker interests at the expense of out-of-state internet poker interests, which is on its face an irrelevant inquiry.

A more effective analysis would have asked the following four questions in sequence:

Question 1: Does Washington have an in-state poker industry?

Question 2: Do Washington residents have access out-of-state poker facilities?

Question 3: Do Washington poker players make a choice between patronizing the in-state poker facilities or their out-of-state competitors?

Question 4: Is this choice forced by the Legislature?

If all four questions are answered in the affirmative, the State is engaged in protectionism. As Division I [of the court of appeals] acknowledges, protectionist statutes are per se invalid under the Commerce Clause.

As an alternative argument, Rousso also addresses the balancing test analysis conducted by the court of appeals.  Rousso's primary argument here is that many of the purported social ills the state asserts will arise with legalized online gambling are speculative or not grounded in fact:
With respect to the "problems associated with Internet-based gambling," the State has not shown that any of these problems actually exist. FN25 The State has not, for example, shown that internet gambling exacerbates the rate of problem gambling, nor has the State shown that internet gambling preys on children. FN26 However, even if these problems did exist, a complete ban on internet gambling is not the least restrictive means of addressing the problems. To state the obvious, a scheme of regulation and taxation would protect the State's interest as effectively (indeed, far more effectively) as prohibition does. Likewise, if the State's interest is keeping minors from gambling on the internet, barring adults from gambling on the internet can hardly be considered the least restrictive means of obtaining the objective.

FN25 In the dozens of countries that have legalized internet poker, the social impact has been immeasurably small. The argument that states can rely on generalized claims of harm to avoid Commerce Clause restrictions was reject [sic] in Granholm v. Heald, 544 U.S. 460, 492 (2005), "In summary, the States provide little concrete evidence for the sweeping assertion that they cannot police direct shipments by out-of-state wineries. Our Commerce Clause cases demand more than mere speculation to support discrimination against out-of-state goods."

FN26 The State, and perhaps the Court, might be surprised to learn that virtually all internet poker sites bar players under 18 years of age and require that account holders provide government issued identification (driver's license and social security number) for age verification purposes. It is reasonable to believe that the number of minors in this state playing poker on the internet is approximately zero.

I would note that the Granholm decision cited by Rousso was a case near and dear to my heart, as the U.S. Supreme Court ruled that states which allow in-state wineries to ship directly to state residents must also allow out-of-state wineries to do direct shipments on the same terms.  The Granholm court rejected state arguments that the differences in rules were required to enforce age limits on purchasers and to enable more efficient tax collection.

Although Rousso's brief makes a number of additional points, I believe these two issues are the strongest arguments he has raised, and are two significant issues the Washington supreme court will need to address in its decision.  If Rousso loses on both of these points, it seems unlikely any of the remaining points he raised can save his overall argument about the constitutionality of the online gambling ban.


THE STATE'S ARGUMENT & SUPPLEMENTAL BRIEF:   The state also filed a supplemental brief, which spends some time trying to assert that Congress has explicitly authorized states to regulate online gambling, an argument rejected by the trial court and the court of appeals, and an argument I think is an uphill battle for the state.  So, we'll move on to the state's arguments on the issue it ultimately prevailed upon—the online gambling ban is a permissible use of the state's police power to regulate gambling, and does not impermissibly infringe on interstate commerce.

The state first argues that the online gambling ban is constitutional because it does not discriminate in favor of in-state brick-and-mortar casinos:
Washington specifically prohibits individuals and entities within this state from knowingly using electronic means of communication, including the Internet, to conduct gambling activities. RCW 9.46.240. It does so through an even-handed, non-discriminatory prohibition that applies to all electronic gambling communications, regardless of whether the communications are intrastate, interstate, or international in nature. Accordingly, as the courts below correctly held, Washington's prohibition on Internet gambling does not violate the dormant Commerce Clause.
....

The Court of Appeals also correctly rejected Rousso's argument that RCW 9.46.240 favors local businesses by protecting Washington's licensed card rooms from competition on the Internet. [cite]. Rousso's argument fails because, as the court observed below, the legislative history of the statute contradicts it. [cite]. In addition, it also fails because licensed, heavily-regulated brick-and-mortar card rooms are not similarly situated to unregulated, illegal Internet casinos.

The state then makes an argument that jumps off from this point about the regulation of its in-state brick-and-mortar casinos and pivots into a discussion of the evils the state is attempting to address with its ban on internet gambling.  After discussing the social costs borne by the state and its residents as the result of underage and problem / pathological gambling, the state turns to discussion of other issues justifying the online gambling ban:
Moreover, Internet gambling poses many regulatory challenges and risks that are not-present in the strictly regulated and controlled "brick and mortar" gambling operations that are legal in Washington State. Washington's gambling laws are based on a licensing model that requires all entities operating gambling businesses and, in many instances, their individual employees, to subject themselves to close state scrutiny and ongoing regulation. None of the normal regulatory safeguards can be effectively enforced against off-shore Internet gambling operations. [cite]. In addition, Internet gambling, like other forms of unregulated gambling, also provides fertile grounds for criminal activity, including organized crime. [cite].
….

In sum, Internet gambling, like other types of unregulated gambling activities, poses a significant risk to the health, welfare and morals of residents of the State of Washington. The solitary nature of Internet gambling exacerbates many of the problems traditionally associated with face-to-face gambling activities. The "virtual" nature of Internet casinos allows casino operators to escape financial accountability to their patrons and allows problem gamblers and other vulnerable individuals unlimited access to gambling activities without any restraint or limit, or possibility of intervention. Internet gambling, like other illegal gambling, is a magnet for organized crime, including traditional crime families and international terrorists. For all of these reasons, Washington State has a substantial local public interest in prohibiting gambling on the Internet. Given the foregoing, Rousso's assertion that RCW 9.46.240 impermissibly impairs the ability of individuals to engage in interstate commerce is without merit. [cite].

For the Washington supreme court to rule the online gambling ban is an unconstitutional restriction on interstate commerce, the court will need to find a way to address these policy concerns raised by the state.  In other words, the court will need to answer a very difficult question:  "How can you say the state has no right to prevent kids and addicts from gambling, and no right to prevent organized crime and international terrorists from using internet gambling to run crooked games and engage in money laundering?"  In essence, the state has pulled out its version of the famous, "If you do X, the terrorists win" argument. (As an aside, my favorite version of this argument was given by Ellen DeGeneres at the 2001 post-9/11 Emmy awards:  "We're told to go on living our lives as usual, because to do otherwise is to let the terrorists win, and really, what would upset the Taliban more than a gay woman wearing a suit in front of a room full of Jews?").


ANALYSIS & PREDICTED RESULT:  So let's cut to the chase—what are the chances the Washington supreme court will find that the internet gambling ban is unconstitutional?  If I were a gambling man—and I am—I would put the odds of Rousso winning at 45:1 against, the same odds posted by the Mirage on the Mike Tyson-Buster Douglas fight.  So, although Rousso has a puncher's chance of knocking out the state's online gambling ban, I think the state is a prohibitive favorite to prevail for four main reasons.

First, despite all the "activist judges" rhetoric surrounding U.S. Supreme Court nominations, courts are actually quite reluctant to strike down laws on constitutional grounds.  Instead, courts tend to defer to elected legislators.  A law has to be clearly out of bounds before most state supreme courts will step in to curb the legislature's actions.

Second, the court will almost certainly be aware of the news of potential federal legislation legalizing and regulating poker.  If the court feels the federal government will "solve" the online poker dilemma within a few years, the court may be reluctant to jump out ahead of the poker legalization train.  Also, the court may be reluctant to influence the poker legalization debate in Congress by issuing a precipitous ruling finding that online gambling is legal in Washington.  Such a decision would likely inflame both sides of the online gambling debate, and courts rightly are reluctant to be drawn into or used in a political dispute.

Third, Rousso's primary argument, that the online gambling ban is an unfair protectionistic statute, has two significant analytical flaws.  The first flaw in Rousso's argument is that the Granholm wine-shipping case cited by Rousso permitted states to ban direct shipping to customers altogether—whether the winery was in-state or out-of-state wasn't important, only that they were treated equally in terms of how they delivered their product to residents of the state in question.  Here, Washington allows only in-person gambling in brick-and-mortar casinos licensed by the state.  This law applies equally to residents of Washington, other states, and other countries.  If you want to gamble in Washington, it must be done in-person.  Similarly, if you want to offer gambling as a business, you must do it in a physical casino regulated by Washington.  This restriction applies equally to would-be Steve Wynns and Sheldon Adelsons who live in Washington, some other state, or some other country.  Rousso's argument essentially implies that, if a state allows alcohol to be purchased in liquor stores or prescription medications to be purchased in pharmacies, the state is required to allow direct shipping of alcohol or prescription drugs to consumers.  That argument doesn't hold water under Granholm, and frankly is illogical.

The second problem with Rousso's argument that the online gambling ban is unconstitutional protectionism is that his argument necessarily advocates for a broad-based legalization of all online gambling, not just online poker.  Rousso asserts that, because the state allows brick-and-mortar poker rooms, the state must permit online poker sites.  But, that exact same logic extends to all forms of gambling authorized by the state, because the statute is a generic ban on online gambling.  If the state is required to permit online poker sites to operate in the state because the state has brick-and-mortar poker rooms, where—and how—does the state draw the line?  By Rousso's logic, online versions of blackjack, craps, keno, and slots would all be beyond the state's ability to ban so long as they were authorized for brick-and-mortar casinos (Rousso does recognize exceptions for online sports wagering and lotteries as those games are explicitly regulated by federal law).  I find it highly unlikely the Washington supreme court will want to open this big of a can of gambling worms, no matter how sympathetic the court might be to online poker specifically.

The fourth and final reason I feel Rousso's challenge will lose is that his attack against a generic anti-gambling statute (even couched in terms of online poker) will run smack into the brick wall of the state's morality and social welfare argument.  Consider the difficulty Rousso will have in responding to questions from the court related to these topics:
  • Underage gambling—Rousso's suggestion in his brief that "It is reasonable to believe that the number of minors in this state playing poker on the internet is approximately zero", is laughable on its face.  Every year, ESPN's WSOP coverage seems to focus on the newest "young guns" to contend for bracelets.  A fair number of poker players just past their 21st birthdays have won WSOP bracelets or WPT tournaments (Joe Cada, Jeff Madsen, Gavin Griffin, Eric Froehlich, and Steve Billirakis leap to mind), and a greater number of other online wunderkinds (including notably Tom "durrrr" Dwan and Justin "ZeeJustin" Bonomo) also gained fame from playing at a young age.  Raise your hand if you truly think none of these "young guns" played poker online while legally underage.
  • Pathological gambling—Of course, there are always plenty of anecdotal accounts of devastating crimes, ruined families, and suicides associated with online gambling to rebut claims that online gambling poses no real risk for the state to be concerned about.
  • Crooked games & cheats—"Superuser" accounts, misappropriating player funds, multi-accounting, and collusion, ...  How many of these issues do you see in regulated brick-and-mortar casinos?
  • Organized crime & terrorism—Given all of the high-profile arrests for money laundering over the past year or so, who thinks a state court wants to be the institution that legalizes online gambling without any regulatory structure in place to prevent abuses by organized crime or terrorists?
The Poker Players Alliance (PPA) filed an amicus curiae ("friend of the court") brief in support of Rousso's position (hardly a shock since Rousso is also a high-profile member of the PPA).  Although the PPA parroted many of Rousso's arguments, the PPA did spend a significant amount of time arguing that Washington state could adequately respond to all of its morality and general welfare concerns about online gambling by merely legalizing and regulating online gambling rather than barring it altogether.  To me, this argument fails for two reasons.  First, states have long had great leeway to regulate and even prohibit gambling under their police powers.  I doubt a court will find any legal principle that requires states to legalize and regulate gambling, and as discussed previously, there does not seem to be any legal reason why the legalization of some forms and manners of gambling requires legalization of all forms and manners of gambling. Second, and perhaps a key point, the PPA fails to explain why many online gambling sites—including most of the major online poker sites—have seen fit to base their operations out of countries or in jurisdictions with notoriously lax regulatory oversight.  I think a state like Washington could express valid concerns about their ability to adequately regulate online gambling sites based in such overseas jurisdictions, while also noting that issues such as underage gamblers, cheating, money laundering, etc. are much easier to regulate in a brick-and-mortar casino context.

As I close, let me be clear that I personally believe online poker should be legalized and regulated.  I think a compelling case can be made that online poker is different than other forms of online gambling, and that a regulatory approach makes more sense than the current de facto prohibition that is widely ignored.  But, I think poker players need to realize that mounting legal challenges to gambling laws in court is a strategy doomed to failure. Court challenges might be a sexy way to generate publicity and whip the online poker community into a frenzy, but repeatedly losing court challenges at the appellate level—where it matters—only creates bad publicity and bad legal precedents. Regardless of the intellectual merits of the legal arguments being made, the pragmatic reality is that these cases are asking the courts to make a bold stand against gambling laws, and there is simply little political motivation for courts to make that big of a lift.  Poker players need to stop making bad case law, and start focusing their attention on lobbying legislators to explicitly legalize online poker and implement a reasonable system of regulation (and yes, taxation) to permit poker to grow as a legitimate business.

3 comments:

  1. Yeah, yeah, but poker players are a class worthy of strict scrutiny. Just ask us.

    ReplyDelete
  2. CrAAKKer, How have I NOT noticed you before? Just read your Gold in Dirt post and LOVED it. Gotta play a little poker soon but I'll be back.

    AND I'm on your blogroll!!!

    ReplyDelete
  3. @ Jugweed: We don't do Con Law jokes here at crAAKKer. #taserlist

    @ Josie: Welcome! Been following your blog for 2-3 months now, very entertaining. If you liked "Gold in the Dirt", you may like "Whine & Wine: The cAAKKer in the Rye".

    ReplyDelete