California Bill Would Have Brought Back Prohibition

The California State Legislature almost voted to reinstate Prohibition.

The last time we had Prohibition, 1919 to 1930, it was prohibiting “intoxicating
liquors for beverage purposes.” This time, California is going after gambling on the
Internet.

The proposed California laws would actually go further than the old Prohibition.
The 18th Amendment to the U.S. Constitution only attacked the business-end of the booze
trade. One bill, which passed the California Assembly 61-2. would have not only made it
a crime to have anything to do with the business of Internet gambling – it also would have
made mere betting a crime.

The bill, AB 1229, was introduced by Assemblyman Dario Frommer
(D-Glendale), so we might as well call it the Frommer Internet Gambling Prohibition Act,
or FIGPA. Bills like FIGPA are sure to be reintroduced.

Under FIGPA, you do not have to take bets from California to be a criminal.
Anyone who “causes to be opened,” whatever that means, or “offers for play” any
prohibited online gambling game is guilty of a misdemeanor. The potential punishment is
enormous: up to 90 days in jail is bad enough, but the fine is up to $1,000 per
transaction, and a transaction is defined as “each transfer of funds . . . in connection with
the making of a wager, series of wagers, or parlay wager.”

Under FIGPA, aiding and abetting a person in California to play or bet online is a
misdemeanor. Even having the Internet server in the state is illegal.

The scope is so large that FIGPA contains an limited exemption for advertising, to
avoid violating the First Amendment. But even here FIGPA would reach out and grab
anyone who merely directs online gambling ads to California. Worse, magazines would
be required to gather detailed information about their advertisers and turn that information
over to the Attorney General or any District Attorney who asks for it.

The bill’s only saving grace is that it does not try to arrest the world. Only an
operator (or anyone who helps them, including advertisers), who knows or “has reason to
know” that the game is being offered to someone in California would be guilty.

The most amazing provision of FIGPA is its attempt to make criminal what people
now do legally in their own homes. “Every person who plays or bets at or against any
prohibited online gambling game for money . . . while that person is physically located
within this state,” would be guilty of an infraction and fined up to $25 per transaction.

This means that a player who bets online commits a crime, even if the operator is
licensed by a foreign government and operating legally under FIGPA (for example, by not
knowingly accepting wagers from California).

This would open cans of worms for businesses. It is fairly well-established that
employees have no right of privacy when they use company computers. Management can
track everything done online. If a boss dislikes someone, all he or she has to do is tap
into the worker’s terminal. Employees have been fired for sending racy email and using
their company computers to download legal pornography. A worker caught repeatedly
violating the law, by making a few small-time bets online, could be fired on the spot.

But this sword has two edges. If a company routinely monitors its employees’
computer use, as many do, what happens when it discovers workers playing online casino
games for money and does not stop them?

Giving workers the means to make bets (the computer and access to the Internet)
and allowing them to continue, knowing exactly what they are doing, would be “aiding
and abetting a person in California to play or bet online.” With only a few workers, or
one worker who makes wagers on a number of different websites, we are talking serious
penalties for multiple misdemeanors.

How about office pools? Putting one together to buy a California Lottery ticket is
not only legal but encouraged by the State. There is no state law, today, preventing
workers from getting together to buy lottery tickets from another state – when PowerBall
hit $200 million, many Californians did exactly that.

Many state lotteries, particularly in Europe, are selling tickets online, and more
will join.

Under FIGPA, playing a lottery game on the Internet is a crime. In California,
making an agreement to violate the law can be a misdemeanor – or a felony!

In 1885, California passed a law, virtually never used, making it a crime to play an
illegal casino game for money. In 1909, the Legislature passed another law, prohibiting
making, recording or accepting a bet on a “contest of skill, speed or power of endurance
of man or beast.”

California’s licensed tracks are exempt, and Gov. Davis signed another bill
allowing allow online bets on horse races.

Maybe that is why FIGPA was endorsed by race tracks, but opposed by the
California Council on Alcohol Problems and other anti-gambling activists.

The State Senate Governmental Organization Committee killed FIGPA in its
present form. But it voted to send FIGPA’s subject matter to other committees for further
study.

The big losers, besides every licensed gaming website, would be the California
State Lottery and federally recognized Indian tribes.

The State Lottery has run telephone games and could take bets online from
residents of the state, unless FIGPA passes.

Tribes agreed in their compacts not to operate Internet lotteries. But tribes have
the right to demand that the state renegotiate. FIGPA would take that right away, forever.

The tribes understand this, and are using their considerable political power to
kill bills like FIGPA in committees. In fact, California’s gaming tribes have been
the only thing preventing a bill like FIGPA from becoming law.