Number AGO 95-70
Date: October 18, 1995
Subject: Internet/ wire communications gambling; cruise ships

The Honorable Steven A. Geller
Representative, District 101
1250 East Hallendale Beach Boulevard
Suite 604
Hallendale, Florida 32309

RE: GAMBLING--WIRE COMMUNICATIONS--LOTTERIES--use of Internet or wire communications to conduct
gambling; cruises to nowhere. Ch. 849, Fla. Stat.

Dear Representative Geller:

You ask the following questions:

QUESTION ONE

Under Florida law it is illegal to participate in any game of chance for money or other thing of value.[1] Moreover, section 849.14, Florida Statutes, provides in pertinent part:

     Whoever stakes, bets or wagers any money or other thing of value upon the result of any trial or contest of skill,
     speed or power or endurance of man or beast . . . or whoever knowingly becomes the custodian or depositary of any
     money or other thing of value so staked, bet, or wagered upon any such result, . . . shall be guilty of a misdemeanor
     of the second degree, punishable as provided in section 775.082 or section 775.083.

Federal law currently provides:

     Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the
     transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or
     wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient
     to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers,
     shall be fined not more than $10,000 or imprisoned not more than two years, or both.[2]

In order for a violation of this federal provision to occur, the transmitted information must have assisted in the placement of bets or wagers and the individual charged must have been engaged in the business of wagering or betting at the time of the offense.[3] While 18 U.S.C. section 1084(b) allows for the transmission in interstate or foreign commerce of information assisting in the placement of bets or wagers on a sporting event or contest from a state or foreign country where such betting is legal into a state or foreign country in which such betting is legal, in light of Florida's prohibition against gambling, the exception would not be applicable to gambling activities in Florida, including those taking place by wire communications or via the Internet.[4]

Thus, federal law would prohibit a bookmaker from transmitting betting or wagering information by wire communication to persons in Florida, while state law would prohibit an individual in Florida from placing a bet or wager by wire communication. Rapid changes in technology, however, appear to be outstripping both the law and law enforcement's ability to effectively regulate this activity. Due to the changes in technology and the increasing accessibility of the Internet to private individuals via personal computers, it is now possible to use a personal computer to gamble or place bets around the globe.

The Internet is an unregulated world-wide network of computer systems, connected by high-speed wire communications and
sharing a common protocol that enables them to communicate with one another. Originally conceived to serve government and
educational purposes, the Internet has burgeoned in the last few years as more and more private citizens have obtained access
through public employers and commercial service providers. Popularity of the Internet has grown dramatically with the advent of so-called web browser programs designed to allow users to more easily navigate the Internet and its graphical component, the World Wide Web. These programs offer users the opportunity to view pictures and hear sounds from around the world, and to move from one location to another simply by highlighting and selecting the destination they wish to visit.

The potential benefits of the Internet and World Wide Web are profound, particularly in the areas of education, commerce, and
public access to government records.  However, the explosion of Internet usage also carries certain risks, including the means for Floridians to gamble or place bets at "virtual casinos located in other jurisdictions and accessible only via the Internet. For example, one company located on the Caribbean island of Antigua offers full-service sports betting via an individual's personal computer or telephone; an individual sends the company a deposit and then may place a bet on sporting events by contacting the company by telephone or through the World Wide Web.

Regulation of Internet activity presents an enormous problem. The Internet since inception has been a self-policing operation, but this approach has been severely tested as the Internet has grown to its current size, which is estimated at between 20 and 30 million users,[5] and the unbridled proliferation of subjects available on-line. As Internet technology continues to evolve, the
number of users increases exponentially, making it extraordinarily difficult to adopt and implement durable and effective
enforcement mechanisms.  Without question, technology has jumped ahead of the law and law enforcement.

For example, complex techniques for scrambling or "encrypting" information without providing law enforcement court-authorized access to electronic keys to unlock such information presents a potentially insurmountable obstacle to detection of unlawful activities on the Internet. This rapidly developing encryption technology has surpassed the technology readily available for detection by law enforcement. The federal government continues to struggle, as it has for more than two years, to develop a system guaranteeing law enforcement access to encrypted information with proper court authorization.[6]

Despite the prohibitions against gambling provided by federal and state law, at present the structure and operations of the Internet pose an extraordinary challenge. In fact, determining the actual number of Internet users has proven to be "a daunting challenge given the amorphous nature of cyberspace, with its lack of borders and its culture of anonymity."[7] Although some World Wide Web destination host computers have the capability to record the Internet "address" of users who connect to the site, the ability to retrieve and interpret this data is extremely limited, especially where the host computer is located in a foreign jurisdiction. The technology is such that there may not be a traceable trail; it may therefore be impossible to detect all the wire communication relays that were used to transmit the information.

The Internet is the first truly global communications network, utilizing both interstate and international wire communications to link users around the world. Therefore, any effort to regulate use of the Internet is better suited to federal regulation than to patchwork attention by the individual states. Evolving technology appears to be far outstripping the ability of government to regulate gambling activities on the Internet and of law enforcement to enforce such regulations. Thus, resolution of these matters must be addressed at the national, if not international, level.
 

FOOTNOTES:

[1] See, section 849.08, Fla. Stat. (1995), providing that whoever plays or engages in any game at cards, keno, roulette, faro or other game of chance, at any place, by any device whatever, for money or other thing of value, shall be guilty of a misdemeanor of
the second degree. See also, Art. X, sections 7 and 15, Fla. Const., and section 849.09, Fla. Stat. (1995),  prohibiting the operation
or conduct of any lottery except the state-run lottery.

[2] 18 U.S.C. section 1084(a).

[3] See, Truchinski v. United States, 393 F.2d 627 (8th Cir.1968), cert. denied, 393 U.S. 831 (1968); United States v. Alpirn,
307 F. Supp. 452 (S.D.N.Y. 1969). And see, Cohen v. United States, 378 F.2d 751 (9th Cir. 1967), cert. denied, 389 U.S. 897
(1967) (federal act not intended to be applicable to isolated acts of individuals not engaged in the business of wagering since its
purpose is to curb the activities of the professional gamblers).

[4] See, 18 U.S.C. section 1084(c), stating that nothing in the section shall create immunity from criminal prosecution under any
laws ofany state.

[5] See, Liu, Peek, Jones, Buus, Nye, Managing Internet Information Services (O'Reilly & Associates, Inc., December 1994),
estimating approximately 24 million users of the Internet worldwide; and Lohr, Steve, Who Uses Internet? 5.8 Million Are Said to
Be Linked in U.S., The New York Times, September 27, 1995, estimating the number of users in the United States, which is
believed to comprise approximately half of the worldwide users, to be 5.8 million direct users of the Internet with another 3.9
million users through commercial on-line services.

[6] Corcoran, Elizabeth, White House to Unveil Data Encryption Plan Export of Scrambling' Technologies Allowed, The
Washington Post, August 17, 1995.

[7] Lohr, Steve, Who Uses Internet?  5.8 Million Are Said to Be Linked in U.S., supra.