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Washington State Licenses Internet Gambling Operations
One of the many intriguing jurisdictional questions created by the Internet is how to deal with activities that are regulated differently in different places, yet accessible everywhere. Gambling is a good example - Internet gambling companies from one state can collect wagers from an individual in another state on the outcome of a horse race in a third state. Which state government in this scenario is able to regulate (and collect money for) such activities? Washington State has recently taken the position that it should be able to regulate gambling activities and collect money on bets made by its citizens regardless of the location of the race or the gambling company. An Internet gambling company from California, Youbet.com, has recently obtained a licence from Washington State to accept online bets on horse races from around the U.S.
Washington previously banned all types of Internet gambling, but has since decided to grant licences for "advanced deposit wagering" operations. Youbet.com has accepted bets from Washington residents which State officials claim were illegal, although Youbet.com argued that the State government did not have the jurisdiction to regulate interstate Internet gambling. In return for its licence, Youbet.com will pay Washington's horse racing industry a portion of each bet, and pay a lump sum for the wagers collected last year. Investigators believe Youbet.com has been collecting about $12 million per year in bets from Washington State.
Although Washington State has now licensed three Internet companies that have been collecting the most horse racing debts from the state (the other two being TVG of Oregon and XpressBet, a subsidiary of Magna Entertainment Corp. of Ontario), there is little doubt that other Internet gambling companies continue to operate without licences. The State's actions, however, demonstrate how governments are still grappling with new challenges created by the Internet. Whether this solution is ultimately a workable one remains to be seen. For example, what would happen if Youbet.com challenged Washington's authority to collect the licensing fees?
For additional information, visit:
http://seattlepi.nwsource.com/local/224274_onlinebetting14.html