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Perhaps Not a Safe Bet After All - Questions Raised About DC's i-Gaming Law

September 2011

As we recently noted, in April 2011, the District of Columbia became the first American jurisdiction to legalize Internet gaming, or "i-gaming."  The "Lottery Modernization Amendment Act of 2010," part of the District's fiscal year 2011 budget, re-defined "lottery" to enable the DC Lottery to run not only random-number "chance" games, but also skill-based games, such as poker.  Because the act envisions an entirely intrastate online poker system, proponents argue that it does not run afoul of federal anti-gambling laws, such as the Unlawful Internet Gambling Enforcement Act (UIGEA), which regulate inter-state gambling.  The District's plans to establish a private computer network run by the DC Lottery, however, have hit a snag.  Ethical issues have been raised about a potential conflict of interest that existed at the time of the law's passage between the DC council member who championed the legislation and his then-employer.  Some DC residents have also decried the lack of public input prior to the passage of the law.  As a result, public hearings have been scheduled (and subsequently rescheduled, to allow for greater community participation) and two council members have threatened to introduce legislation that would repeal and prohibit the i-gaming measure.     

The uproar in DC comes as regulators continue to crack down on gaming websites.  In June, a gaming commission in Alderney, one of Britain's Channel Islands, suspended the license and shut down operations at one of the "big three" i-gaming websites.  The commission stated that it was acting in response to the U.S. Department of Justice's (DOJ) indictment of top executives at that website and two other pay-to-play online poker sites, accusing them of illegal gambling, bank fraud and money laundering in violation of the UIGEA.  Given that the effects of the DOJ's indictments are still rippling through the i-gaming industry (both at home and abroad), broadcasters should continue to be wary of accepting advertisement buys from online gaming companies.