# Internet Gambling: An Overview of Federal Criminal Law > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/crs%3A97-619 ## Record - **Collection:** Congressional research report - **Document type:** CRS Report - **Published:** January 24, 2012 - **Citation:** 97-619 ## Text Internet Gambling: An Overview of Federal Criminal Law (name redacted) Senior Specialist in American Public Law January 24, 2012 Congressional Research Service 7-.... www.crs.gov 97-619 CRS Report for Congress Prepared for Members and Committees of Congress Internet Gambling: Overview of Federal Criminal Law Summary This is a summary of the federal criminal statutes implicated by conducting illegal gambling using the Internet. Gambling is primarily a matter of state law, reinforced by federal law in instances where the presence of an interstate or foreign element might otherwise frustrate the enforcement policies of state law. State officials and others have expressed concern that the Internet may be used to bring illegal gambling into their jurisdictions. Illicit Internet gambling implicates at least seven federal criminal statutes. It is a federal crime (1) to conduct an illegal gambling business under the Illegal Gambling Business Act, 18 U.S.C. 1955; (2) to use the telephone or telecommunications to conduct an illegal gambling business involving sporting events or contests under the Wire Act, 18 U.S.C. 1084; (3) to use the facilities of interstate commerce to conduct an illegal gambling business under the Travel Act, 18 U.S.C. 1952; (4) to conduct the activities of an illegal gambling business involving either the collection of an unlawful debt or a pattern of gambling offenses, the Racketeer Influenced and Corrupt Organizations (RICO) provisions, 18 U.S.C. 1962; (5) to launder the proceeds from an illegal gambling business or to plow them back into such a business under money laundering provisions of 18 U.S.C. 1956; (6) to spend more than $10,000 of the proceeds from an illegal gambling operation at any one time and place under the money laundering provisions, 18 U.S.C. 1957; or (7) for a gambling business to accept payment for illegal Internet gambling under the Unlawful Internet Gambling Enforcement Act (UIGEA), 31 U.S.C. 5361-5367. Enforcement of these provisions has been challenged on constitutional grounds. Attacks based on the Commerce Clause, the First Amendment’s guarantee of free speech, and the Due Process Clause have enjoyed little success. The commercial nature of a gambling business seems to satisfy doubts under the Commerce Clause. The limited First Amendment protection afforded crime facilitating speech encumbers free speech objections. The due process arguments raised in contemplation of federal prosecution of offshore Internet gambling operations suffer when financial transactions with individuals in the United States are involved. Citations to state and federal gambling laws, and the text of the statutes cited above, are included. This report appears in abridged form, without footnotes, full citations, or supplementary material, as CRS Report RS21984, Internet Gambling: An Abridged Overview of Federal Criminal Law. Related CRS reports include CRS Report RS22749, Unlawful Internet Gambling Enforcement Act (UIGEA) and Its Implementing Regulations, and CRS Report R41614, Remote Gaming and the Gambling Industry. Congressional Research Service Internet Gambling: Overview of Federal Criminal Law Contents Introduction...................................................................................................................................... 1 The Wire Act.................................................................................................................................... 2 Illegal Gambling Businesses............................................................................................................ 8 Travel Act ...................................................................................................................................... 13 Unlawful Internet Gambling Enforcement Act (UIGEA).............................................................. 16 Racketeer Influenced and Corrupt Organizations (RICO)............................................................. 24 Money Laundering......................................................................................................................... 27 Laundering the Proceeds................................................................................................................ 28 Promotion ................................................................................................................................ 28 Concealment ............................................................................................................................ 31 Tax Evasion and Report Evasion............................................................................................. 33 Spending the Proceeds............................................................................................................. 33 Constitutional Considerations........................................................................................................ 36 Commerce Clause.................................................................................................................... 36 First Amendment ..................................................................................................................... 37 Due Process ............................................................................................................................. 38 Selected Federal Anti-Gambling Laws (Text) ............................................................................... 40 Wire Act (18 U.S.C. 1084) ...................................................................................................... 40 Illegal Gambling Business Act (18 U.S.C. 1955).................................................................... 41 Travel Act (18 U.S.C. 1952).................................................................................................... 42 Unlawful Internet Gambling Enforcement Act (31 U.S.C. 5361 et seq.) ................................ 42 RICO (18 U.S.C. 1961 et seq.) ................................................................................................ 48 Money Laundering (18 U.S.C. 1956, 1957) ............................................................................ 50 Federal Anti-Gambling Laws (Citations) ...................................................................................... 56 State Anti-Gambling Laws (Citations)........................................................................................... 58 Contacts Author Contact Information........................................................................................................... 58 Congressional Research Service Internet Gambling: Overview of Federal Criminal Law Introduction Internet gambling is gambling on, or by means of, the Internet. It encompasses placing a bet online with a bookie, betting shop, or other gambling enterprise. It also includes wagering on a game played online. A few states ban Internet gambling per se.1 Most states, however, rely upon their generally applicable gambling laws.2 Gambling that is unlawful when conducted in person is ordinarily unlawful when conducted online.3 There are many federal gambling laws, most enacted to prevent unwelcome intrusions of interstate or international gambling into states where the activity in question has been outlawed.4 In very general terms, it is a federal crime • to use wire communications to place or receive bets on, or to transmit gambling information relating to, sporting contests or events;5 • to conduct a large-scale gambling business in violation of state law;6 • to travel interstate or overseas, or to use any other facility of interstate or foreign commerce, to facilitate the operation of an illegal gambling business;7 • to conduct a gambling business and accept payment for illegal Internet gambling participation;8 • to systematically commit these crimes in order to acquire or operate a commercial enterprise;9 • to launder the proceeds of an illegal gambling business or to plow them back into the business;10 • to spend or deposit more than $10,000 of the proceeds of illegal gambling in any manner;11 or • to conspire with others, or to aid and abet them, in their violation of any of these federal laws.12 1 E.g., ILL.COMP.STAT.ANN. ch. 720 §5-28-1(a)(12); IND.CODE ANN. §35-45-5-2; LA.REV.STAT.ANN. §14:90.3; MICH.COMP. LAWS ANN. §§750.301, 752.796; MONT.CODE ANN. §23-5-112; ORE.REV.STAT. §167.109; S.D.COD.LAWS ANN. §§22-25A-1 to 22-25A-15; WASH.REV.CODE ANN. §9.46.240; WIS.STAT.ANN. §§945.01, 945.03. 2 The citations to the various state anti-gambling laws are listed at the end of this report. The particulars of those laws are generally beyond the scope of this report. 3 E.g., People ex rel. Vacco v. World Interactive Gaming Corp., 185 Misc.2d 852, 859-60, 714 N.Y.S.2d 844, 850-51 (2010)(the New York gambling statutes apply to online betting in New York); United States v. Cohen, 260 F.3d 68, 73 (2d Cir. 2001)(same); OP. TEX. ATT’Y GEN. DM-344 (1995)(state gambling laws apply to online gambling); OP. FLA. ATT’Y GEN. 95-70 (1995)(same). 4 Citations to federal anti-gambling statutes are listed at the end of this report. 5 18 U.S.C. 1084. 6 18 U.S.C. 1955. 7 18 U.S.C. 1952. 8 31 U.S.C. 5363. 9 18 U.S.C. 1962. 10 18 U.S.C. 1956. 11 18 U.S.C. 1957. Congressional Research Service 1 Internet Gambling: Overview of Federal Criminal Law The Wire Act Commentators most often mention the Wire Act13 when discussing federal criminal laws that outlaw Internet gambling in one form or another.14 Early federal prosecutions of Internet gambling generally charged violations of the Wire Act.15 In fact, Cohen, perhaps the most widely known of federal Internet gambling prosecutions, involved the Wire Act conviction, upheld on appeal, of the operator of an offshore, online sports book.16 In general terms, the Wire Act outlaws the use of interstate telephone facilities by those in the gambling business to transmit bets or gambling-related information. Offenders are subject to imprisonment for not more than two years and/or a fine of the greater of not more than twice the gain or loss associated with the offense or $250,000 (not more than $500,000 for organizations).17 They may have their telephone service canceled at law enforcement request,18 and conduct that violates the Wire Act may provide the basis for a prosecution under the money laundering statutes, the Travel Act, the Illegal Gambling Business Act, RICO, or the Unlawful Internet Gambling Enforcement Act.19 (...continued) 12 18 U.S.C. 371, 2. 13 18 U.S.C. 1084. 14 Gottfried, The Federal Framework for Internet Gambling, 10 RICHMOND JOURNAL OF LAW AND TECHNOLOGY 26, 46 (2004)(“[T]he Wire Act ... is the federal act most often applied in efforts to prosecute Internet gambling.... ”); Keller, The Game’s the Same: Why Gambling in Cyberspace Violates Federal Law, 108 YALE LAW JOURNAL 1569, 1580 (1999)(“It is the breadth of the Wire Wager Act that has attracted the most attention in the Internet gambling context because notwithstanding the possible applicability of other federal laws, it directly prohibits the use of a wire transmission facility to foster a gambling business”); Do Not Bet on Unilateral Prohibition of Internet Gambling to Eliminate Cyber-Casinos, 1999 UNIVERSITY OF ILLINOIS LAW REVIEW 1045, 1057; Gambling On-Line: For a Hundred Dollars, I Bet You Government Regulation Will Not Stop the Newest Form of Gambling, 22 UNIVERSITY OF DAYTON LAW REVIEW 163, 180 (1996); Goldstein, On-Line Gambling: Down to the Wire? 8 MARQUETTE SPORTS LAW JOURNAL 1, 18 (1997); General Accounting Office [now the Government Accountability Office], Internet Gambling: An Overview of the Issues 11 (Dec. 2002). 15 United States v. Ross, 1999 WL 782749 (S.D.N.Y. Sept. 16, 1999)(denying a motion to dismiss a four count indictment charging violations of 18 U.S.C. 1084 and 18 U.S.C. 371 (conspiracy) in connection with Internet gambling business operated out of Curacao in the Netherlands Antilles); see also, People ex rel. Vacco v. World Interactive Gaming Corporation, 185 Misc.2d 852, 861-62, 714 N.Y.S.2d 844, 852 (1999)(noting in dicta violations of the Wire Act in connection with an offshore Internet casino that accepted wagers from bettors in New York); cf., United States v. D’Ambrosia, 313 F.3d 987, 987-89 (7th Cir. 2002)(resolution of sentencing issues associated with Wire Act conviction of the operators “of an offshore internet-based sports bookmaking operation”); United States v. Tedder, 403 F.3d 836, 838 (7th Cir. 2005); see also, Indictment, United States v. Kaplan, No. 4:06-CR-337(CEJ)(E.D.Mo. June 1, 2006). 16 United States v. Cohen, 260 F.3d 68 (2d Cir. 2001). 17 18 U.S.C. 1084(a), 3571(b),(d). 18 “When any common carrier, subject to the jurisdiction of the Federal Communications Commission, is notified in writing by a Federal, State, or local law enforcement agency, acting within its jurisdiction, that any facility furnished by it is being used or will be used for the purpose of transmitting or receiving gambling information in interstate or foreign commerce in violation of Federal, State or local law, it shall discontinue or refuse, the leasing, furnishing, or maintaining of such facility, after reasonable notice to the subscriber, but no damages, penalty or forfeiture, civil or criminal, shall be found against any common carrier for any act done in compliance with any notice received from a law enforcement agency. Nothing in this section shall be deemed to prejudice the right of any person affected thereby to secure an appropriate determination, as otherwise provided by law, in a Federal court or in a State or local tribunal or agency, that such facility should not be discontinued or removed, or should be restored,” 18 U.S.C. 1084(d). 19 18 U.S.C. 1956, 1957, 1084, 1955, 1962, and 31 U.S.C. 5363, respectively. Each of these statutes is discussed, infra, and the text of each appears at the end of this report. Congressional Research Service 2 Internet Gambling: Overview of Federal Criminal Law Wire Act prohibitions apply to anyone who I. being engaged in the business of betting or wagering II. knowingly III. uses a wire communication facility IV. A. for the transmission in interstate or foreign commerce 1. of bets or wagers or 2. information assisting in the placing of bets or wagers on any sporting event or contest, or B. for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or C. for information assisting in the placing of bets or wagers.... 18 U.S.C. 1084(a).20 As a general matter, the Wire Act has been more sparingly used than some of the other federal gambling statutes, and as a consequence it lacks some of interpretative benefits which a more extensive case law might bring. The act is addressed to those “engaged in the business of betting or wagering” and therefore apparently cannot be used to prosecute simple bettors.21 The government must prove that the defendant was aware of the fact he was using a wire facility to transmit a bet or gambling-related information; it need not prove that he knew that such use was unlawful.22 The courts have also rejected the contention that the prohibition applies only to those who transmit, concluding that “use for transmission” embraces both those who send and those who receive the transmission.23 20 “In order to prove a §1084(a) violation, the government must show that (1) ‘the defendant regularly devoted time, attention and labor to betting or wagering for profit,’ (2) the defendant used a wire communication facility: (a) to place bets or wagers on any sporting event or contest; or (b) to provide information to assist with the placing of bets or wagers [on any sporting event or contest]; or (c) to inform someone that he or she had won a bet or wager and was entitled to payment or credit,’ and (3) the transmission was made from one state to another state or foreign country,” United States v. Lombardo, 639 F.Supp.2d 1271, 1278 (D.Utah 2007). A Justice Department Office of Legal Counsel opinion argues for inclusion of the language in italics; see Whether Proposals by Illinois and New York to Use the Internet and Out-of-State Transaction Processors to Sell Lottery Tickets to In-State Adults Violate the Wire Act, 35 Op. O.L.C. __, ___ (Sept. 20, 2011), available at http://www.justice.gov/OLC/2011/state-lotteries-opinion.pdf. 21 United States v. Scavo, 593 F.2d 837, 843 (8th Cir. 1979)(“If an individual performs only an occasional or nonessential service or is a mere bettor or customer, he cannot property be said to engage in the business”); see also, Rewis v. United States, 401 U.S. 808, 810-11 (1971)(noting that the absence of a Congressional intent to include “mere bettors” among those who, by operation of 18 U.S.C. 2, might be convicted of aiding or abetting a violation of the Travel Act, 18 U.S.C. 1952 (relating to interstate travel to carry on a gambling business, inter alia), but see, United States v. Southard, 700 F.2d 1, 20 n.24 (1st Cir. 1983) (“The district court held that the statute did not prohibit the activities of ‘mere bettors.’ We take no position on this ruling except to point out that the legislative history is ambiguous on this point at best”). 22 United States v. Blair, 54 F.3d 639, 642-43 (10th Cir. 1995); United States v. Ross, 1999 LW 7832749, Slip at 8-9 (S.D.N.Y. Sept. 16, 1999); cf., United States v. Cohen, 260 F.3d 68, 71-3 (2d Cir. 2001)(conviction for conspiracy to engage in conduct in violation the Wire Act does not require proof that the defendant knew that the conduct was unlawful); contra, Cohen v. United States, 378 F.2d 751, 756-57 (9th Cir. 1967). 23 United States v. Pezzino, 535 F.2d 483, 484 (9th Cir. 1976). United States v. Sellers, 483 F.2d 37, 44-5 (5th Cir. 1973); United States v. Tomeo, 459 F.2d 445, 447 (10th Cir. 1972); Sagansky v. United States, 358 F.2d 195, 200 (1st Cir. 1966); contra, United States v. Stonehouse, 452 F.2d 455 (7th Cir. 1971). Congressional Research Service 3 Internet Gambling: Overview of Federal Criminal Law Grammatically, interstate transmission appears as a feature of only half of the elements (compare, “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,” (IV.A.1 & 2. above), with, “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,” (4.B. & C. above). Nevertheless, virtually every court to consider the question has concluded that a knowing, interstate or foreign transmission is an indispensable element of any Wire Act prosecution.24 As a practical matter, the Justice Department appears to have resolved the question of whether the section applies only to cases involving gambling on sporting events (compare IV.A.1 & 2. with IV.B. & C. again). The vast majority of prosecutions involve sports gambling, but cases involving other forms of gambling under the Wire Act are not unknown.25 One federal appellate panel concluded that the Wire Act applies only to sports gambling;26 while a subsequent district court concluded that it applies to non-sports gambling as well.27 The Justice Department’s Office of Legal Counsel, however, ultimately opined that “interstate transmissions of wire communications that do not relate to a ‘sporting event or contest,’ 18 U.S.C. §1084(a), fall outside the reach of the Wire Act.”28 Construction of the Wire Act is complicated by the defense available under subsection 1084(b) for the transmission of gambling information.29 Read casually it might suggest a general defense, but the district court in the Internet gambling case in the Southern District of New York has highlighted its more restrictive scope, “the §1084(b) exemption by its terms applies only to the transmission of information assisting in the placing of bets, not to the other acts prohibited in §1084(a), i.e., transmission of (1) bets or wages or (2) wire communications entitling the recipient to money or credit as a result of bets or wagers. With regard to transmissions of information assisting in the placing of bets, the exemption is further narrowed by its requirement that the betting at issue be legal in both jurisdictions in which the transmission occurs. No exemption applies to the other wire communications proscribed in §1084(a) even if the betting at issue is legal in both jurisdictions. See United States v. McDonough, 835 F.2d 1103, 1105 (5th Cir. 1988).”30 The Second Circuit panel in Cohen, endorsed the court’s construction.31 24 United States v. Southard, 700 F.2d 1, 24 (1st Cir. 1983), citing inter alia, Sagansky v. United States, 358 F.2d 195, 199 n.4 (1st Cir. 1966); United States v. Barone, 467 F.2d 247, 249 (2d Cir. 1972); Cohen v. United States, 378 F.2d 751, 754 (9th Cir. 1967); contra, United States v. Swank, 441 F.2d 264, 265 (9th Cir. 1971). 25 E.g., AT&T Corp. v. Coeur d’Alene Tribe, 45 F.Supp.2d 995 (D.Idaho 1998) (lottery); United States v. Smith, 390 F.2d 420, 421 (4th Cir. 1968); United States v. Chase, 372 F.2d 453, 457 (4th Cir. 1967). Smith and Chase both involved “numbers” and seem to have arisen under the same facts. None of these cases specifically reject, or even mention, a “sporting event” limitation. 26 In re MasterCard International Inc., 313 F.3d 257, 262 (5th Cir. 2002)(“The district court concluded that the Wire Act concerns gambling on sporting events or contests and that the [RICO] plaintiffs had failed to allege that they had engaged in internet sports gambling. We agree ... ”). 27 United States v. Lombardo, 639 F.Supp.2d 1271, (D.Utah 2007). 28 Whether Proposals by Illinois and New York to Use the Internet and Out-of-State Transaction Processors to Sell Lottery Tickets to In-State Adults Violate the Wire Act, 35 Op. O.L.C. __, ___ (Sept. 20, 2011), available at http://www.justice.gov/OLC/2011/state-lotteries-opinion.pdf. 29 “Nothing in this section shall be construed to prevent the transmission in interstate or foreign commerce of information for use in news reporting of sporting events or contests, or for the transmission of information assisting in the placing of bets or wagers on a sporting event or contest from a State or foreign country where betting on that sporting event or contest is legal into a State or foreign country in which such betting is legal,” 18 U.S.C. 1084(b). 30 United States v. Ross, 1999 WL 782749 (S.D.N.Y. Sept. 16, 1999). Congressional Research Service 4 Internet Gambling: Overview of Federal Criminal Law An accomplice who aids and abets another in the commission of a federal crime may be treated as if he had committed the crime himself.32 The classic definition from Nye & Nissen explains that liability for aiding and abetting attaches when one “in some sort associates himself with the venture, participates in it as in something that he wishes to bring about, [and] seeks by his action to make it succeed.”33 The Department of Justice advised the National Association of Broadcasters that its members risked prosecution for aiding and abetting when they provided advertising for the online gambling operations.34 In addition to such accomplice liability, a conspirator who contrives with another for the commission of a federal crime is liable for conspiracy, any completed underlying crime, and for any additional, foreseeable offense committed by a confederate in furtherance of the common scheme.35 There is some dispute over the application of the Wire Act to certain horse racing activities. Some contend that the Wire Act was amended sub silentio by an appropriations rider rewording a (...continued) 31 260 F.3d at 73 (emphasis added) (“Cohen appeals the district court for instructing the jury to disregard the safe harbor provision contained in §1084(b). That subsection provides a safe harbor for transmissions that occur under both of the following two conditions: (1) betting is legal in both the place of origin and the destination of the transmission; and (2) the transmission is limited to mere information that assists in the placing of bets, as opposed to including the bets themselves”). 32 “Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal,” 18 U.S.C. 2(a). 33 Nye & Nissen v. United States, 336 U.S. 613, 619 (1949); see also United States v. George, 658 F.3d 706, 708 (7th Cir. 2011); United States v. Devries, 630 F.3d 1130, 1133 (8th Cir. 2011); United States v. Petersen, 622 F.3d 196, 208 (3d Cir. 2010); United States v. Hungerford, 465 F.2d 1113, 1117 (9th Cir. 2006). 34 Advertising for Internet Gambling and Offshore Sportsbook Operations, Letter from United States Deputy Attorney General John G. Malcolm to the National Association of Broadcasters dated June 11, 2003, filed as Exhibit A with the complaint in Casino City, Inc. v. United States Department of Justice, Civil Action No. 04-557-B-M3 (M.D.La.), quoted in, First Amendment as Last Resort: The Internet Gambling Industry’s Bid to Advertise in the United States, 50 ST. LOUIS UNIVERSITY LAW JOURNAL 1289, 1290 (2006). In other related developments, U.S. marshals seized $3.2 million that Discovery Communications had accepted for ads from Tropical Paradise, a Web casino operation based in Costa Rica, The Wall Street Journal - Europe, A5 (Aug. 2, 2004), and the federal prosecutors apparently warned PayPal, a money transfer service, that it risked prosecution under 18 U.S.C. 1960 (transmission of funds intended to be used to promote or support unlawful activity) by providing services to online gambling operations, American Banker, 1 (April 2, 2003); see also, Smith, Interbet, It’s Illegal, But Online Gambling Mushrooms Anyway, ROCKY MOUNTAIN NEWS 1B (Jan. 30, 2006)(“the Sporting News earlier this month agreed to pay a $4.2 million fine and launch a $3 million public-service campaign to settle federal charges it had run illegal online gambling advertising”); Internet Gambling Prohibition Act of 2006: Hearing Before the Subcomm. on Crime, Terrorism, and Homeland Security of the House Comm. on the Judiciary, 109th Cong. 13 (2006) (Hearing) (statement of Bruce G. Ohr, Chief of the Organized Crime and Racketeering Section, Criminal Division, United States Department of Justice)(“[I]n January 2006, the United States Attorney’s Office in St. Louis announced a $7.2 million settlement with the Sporting News to resolve claims that the Sporting News promoted illegal gambling ... by accepting fees in exchange for advertising illegal gambling”). 35 Pinkerton v. United States, 328 U.S. 640, 645-48 (1946); Salinas v. United States, 522 U.S. 52, 62-3 (1997)(“The partners in the criminal plan must agree to pursue the same criminal objective and may divide up the work, yet each is responsible for the acts of each other”). The conspiratorial agreement is itself a separate crime under 18 U.S.C. 371 (“If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both. If, however, the offense, the commission of which is the object of the conspiracy, is a misdemeanor only, the punishment for such conspiracy shall not exceed the maximum punishment provided for such misdemeanor”); United States v. Bingham, 653 F.3d 983, 997 (9th Cir. 2011); United States v. Vazquez-Castro, 640 F.3d 19, 24 (1st Cir. 2011); United States v. Matias, 465 F.3d 169, 173 (5th Cir. 2006). Congressional Research Service 5 Internet Gambling: Overview of Federal Criminal Law provision in the civil Interstate Horseracing Act.36 The Justice Department does not share this view.37 The Interstate Horseracing Act is the product of the emergence of state licensed off-track betting parlors.38 The parlors accepted wagers on races conducted both within the state and without. Race tracks and those dependent upon their success objected that the tracks were losing customers who lived proximate to both an in state track and an off-track betting parlor in a neighboring state.39 The Horseracing Act provides for compensation agreements. More precisely, it prohibits acceptance of interstate off-track wagers except as it provides,40 but permits such acceptance with the consent of various horse racing associations, state horse racing commissions, state off-track racing commissions, and horse racing track operators.41 It affords aggrieved states, horse racing associations and horsemen’s groups a cause of action against violators of its provisions.42 It neither provides criminal penalties nor explicitly addresses its relationship to other federal and state gambling laws.43 Although the act calls for the consent of the operators of any track located within 60 miles of an off-track betting office,44 it does not give track operators a cause of action for failure to comply with this or any of its other requirements.45 One track operator attempted unsuccessfully to invoke the Wire Act and federal racketeer influenced and corrupt organization (RICO) provisions to overcome this limitation.46 Suffolk claimed that the defendant, who operated an off-track betting site within 60 miles of Suffolk, accepted wagers on interstate races without its consent and that these activities involved the patterned interstate transmission of gambling-assisting information (race results) from the track to the off-track betting parlor in violation of the Wire Act and consequently constituted a RICO violation, id. at 1272. The First Circuit affirmed the lower court’s rejection of the claim on the basis of the Wire Act exception found in 18 U.S.C. 1084(b) that exempts the interstate 36 Cabot & Christiansen, Why the Future of Horseracing Is at Risk: The WTO Decision and Senator Kyl, 9 GAMING LAW REVIEW 201, 204-5 (2005). 37 Hearing, at 146 (statement of Bruce G. Ohr, Chief of the Organized Crime and Racketeering Section, Criminal Division, United States Department of Justice). 38 15 U.S.C. 3001-3007. 39 S.Rept. 95-554, at 3-5 (1977); see also, S.Rept. 95-1117, at 4 (1978); H.Rept. 95-1733, at 4 (1978). 40 15 U.S.C. 3003. 41 15 U.S.C. 3004. 42 15 U.S.C. 3005, 3006. 43 The legislative history, however, suggests the absence of an intent to preempt state gambling laws, S.Rept. 95-1117, at 3 (1978) (“This procedure is intended to conform with the prevailing view that these matters are generally of State concern and that the States’ prerogatives in the regulation of gambling are in no [way] preempted by this or other Federal law”); see also, H.Rept. 95-1733, at 3 (1978); Kentucky Division, Horsemen’s Benevolent & Protective Ass’n, Inc. v. Turfway Park Racing Ass’n, 20 F.3d 1406, 1414 (6th Cir. 1994)(“Under the Act, each state may prohibit interstate off-track wagering within its borders, and may prohibit a resident racetrack from contracting with an off-track wagering facility in another state”). 44 15 U.S.C. 3004(b). 45 15 U.S.C. 3005, 3006 (limiting liability to, and a cause of action for the benefit of, “the host State, the host racing association and the horsemen’s group”). 46 Sterling Suffolk Racecourse Ltd. v. Burrillville Racing Ass’n, Inc., 989 F.2d 1266 (1st Cir. 1993). RICO prohibits the acquisition or operation of an enterprise whose activities affect interstate or foreign commerce through the patterned commission of two or more “racketeering activities,” that is, two or more other specifically designated offenses (such as violations of 18 U.S.C. 1084(a)(the Wire Act)), 18 U.S.C. 1961-1968. Anyone injured in his business or property by a RICO violation enjoys a cause of action for treble damages, 18 U.S.C. 1964(c). Congressional Research Service 6 Internet Gambling: Overview of Federal Criminal Law transmission of sports gambling-assisting information to and from jurisdictions where gambling on such sporting events or contests is legal.47 Summarizing in general terms, the court declared: To recapitulate, we think it clear that Congress, in adopting section 1084, did not intend to criminalize acts that neither the affected states nor Congress itself deemed criminal in nature. [The defendant’s] acts fall into this chiaroscuro category—perhaps not right, but certainly not felonious. It follows that these acts, not indictable under section 1084, cannot constitute a pattern of racketeering activity within RICO’s definitional parameters. Id. at 1273. The operator of an off-shore Internet gambling site subsequently seized upon this “Congress-didnot-intend-to-criminalize” language when challenging his conviction under the Wire Act. The Second Circuit in Cohen rejected the challenge with the observation that unlike Suffolk where the transmission of gambling-related information came within the safe harbor of section 1084(b), Cohen’s case involved the online (i.e., wire) transmission of wagers themselves, a transmission that falls outside the safe harbor provision of the section 1084(b).48 The facts that gave rise to Suffolk and Cohen, however, occurred prior to the 2000 amendments to the Interstate Horseracing Act. P.L. 106-553, which made appropriations for the District of Columbia as well as for the Departments of Commerce, Justice and State, and which amended the definition of “interstate off-track wager” in the Interstate Horseracing Act to read: “interstate off-track wager” means a legal wager placed or accepted in one State with respect to the outcome of a horserace taking place in another State and includes pari-mutuel wagers, where lawful in each State involved, placed or transmitted by an individual in one State via telephone or other electronic media and accepted by an off-track betting system in the same or another State, as well as the combination of any pari-mutuel wagering pools. 15 U.S.C. 3002(3); sec. 629, P.L. 106-533, 114 Stat. 2762-108 (2000) (language of the amendment in italics). The language in italics was added for the first time in conference with the simple accompanying explanation which in its entirety declares, “the conference agreement includes a new section 629, to clarify the Interstate Horseracing Act regarding certain pari-mutuel wagers.”49 A critic objected to the amendment during floor debate.50 Otherwise the only reference was “inserted or appended, rather than spoken, by a Member of the House on the floor.”51 47 Id. at 1272 (“Conceding, withal, that wagering of the sort transacted at [defendant’s] facility is permissible under the relevant laws of all interested states, appellant pins its RICO-related hopes on section 1084(a). But section 1084(a) carves out a specific exception for circumstances in which wagering on a sporting event is legal in both the sending and receiving state. See 18 U.S.C. 1084(b). That exception applies here”). 48 United States v. Cohen, 260 F.3d 68, 73 (2d Cir. 2001). 49 H.Rept. 106-1005, at 317 (2000). 50 “I want Members of this body to be aware that section 629 of the conference report would legalize interstate parimutual gambling over the Internet. Under the current interpretation of the Interstate Horse Racing Act in 1978, this type of gambling is illegal, although the Justice Department has not taken steps to enforce it. This provision would codify legality of placing wages over the telephone or other electronic media like the Internet,” 146 Cong.Rec. 24938 (2000)(remarks of Rep. Wolf). 51 “The conference report contains a provision (Section 629) which clarifies that the Interstate Horseracing Act permits the continued merging of any wagering pools and wagering activities conducted between individuals and state-licensed and regulated off-track betting systems located in one or more states, whether such wages are conducted in person, via telephone or other electronic media, provided such wages are placed on a closed-loop subscriber-based service, which would include an effective customer and age verification process to ensure that all federal state requirements and (continued...) Congressional Research Service 7 Internet Gambling: Overview of Federal Criminal Law Proponents claim the amendment permits tracks to accept online, out-of-state bets from states where pari-mutuel betting is legal (although not necessarily where either off-track or online betting is legal);52 the Justice Department disagrees.53 Uncertainty over the issue apparently led an Appellate Body of the World Trade Organization (WTO) to conclude that the United States may permit domestic entities to offer Internet gambling on horse racing, but denies offshore entities such an opportunity.54 During hearings on the Unlawful Internet Gambling Enforcement Act, the Justice Department indicated that to confirm its understanding of the law it was conducting “a civil investigation relating to a potential violation of law regarding this activity.”55 Illegal Gambling Businesses Section 1955, which outlaws conducting an illegal gambling business, appears on its face to reach any illegal gambling business conducted using the Internet. Commentators seem to concur.56 However, early prosecutions under the Wire Act were more prevalent.57 (...continued) appropriate data security standards are net to prevent unauthorized use by a minor or non-subscriber. The amendment clarifies that the Interstate Horseracing Act permits wagers made by telephone or other electronic media to be accepted by an off-track betting system in another state provided that such types of wages are lawful in each state involved and meet the requirements, if any, established by the legislature or appropriate regulatory body in the state where the person originating the wager resides,” 146 Cong.Rec. 24979 (2000)(Rep. Rogers)(this statement appears in type face used to “indicate[] words inserted or appended, rather than spoken by a Member of the House on the floor, 146 Cong.Rec. 24908 (2000)”). 52 Cabot & Christiansen, Why the Future of Horseracing Is at Risk: The WTO Decision and Senator Kyl, 9 GAMING LAW REVIEW 201, 204-5 (2005). 53 Hearing, at 146 (statement of Bruce G. Ohr, Chief of the Organized Crime and Racketeering Section, Criminal Division, United States Department of Justice). 54 “[T]he United States has not shown, in light of the Interstate Horseracing Act, that the prohibitions embodied in those measures [i.e., the Wire Act, the Travel Act, and the Illegal Gambling Business Act] are applied to both foreign and domestic service suppliers of remote betting services for horse racing,” United States—Measures Affecting the Cross-Border Supply of Gambling and Betting Services (AB-2005-1), WT/DS285/AB/R, at 126 (April 7, 2005), available at http://www.wto.org/english/tratop_e/disput_e/cases_e/ds285_e.htm. See generally, CRS Report RL32014, WTO Dispute Settlement: Status of U.S. Compliance in Pending Cases, at 74-83. 55 Hearing at 14 (statement of Bruce G. Ohr, Chief of the Organized Crime and Racketeering Section, Criminal Division, United States Department of Justice). 56 Winner, Winner, No Chicken Dinner: An Analysis of Interactive Media Ent’mt & Gaming Ass’n v. Att’y Gen. of the U.S. and the Unjustified Consequences of the UIGEA, 31 LOYOLA OF LOS ANELES ENTERMAINENT LAW REVIEW 55, 59 (2011)(“[T]he Illegal Gambling Business Act (‘IGBA’) appear[s] to apply to Internet gambling”); Geolocation and Federalism on the Internet: Cutting Internet Gambling’s Gordian Knot, 11 COLUMBIA SCIENCE AND TECHNOLOGY LAW REVIEW, 41, 45 (2010)(“Currently, four federal statutes make up the principal Internet gambling prohibition regime in the United States: the Wire Act, the Travel Act, the Illegal Gambling Business Act, and the Unlawful Internet Gambling Enforcement Act (UIGEA). The first three of these statutes were enacted well before the rise of Internet gambling, though they have collectively been interpreted to make some, and perhaps all, forms of online gambling illegal”); Gottfried, The Federal Framework for Internet Gambling, 10 RICHMOND JOURNAL OF LAW AND TECHNOLOGY 26, 53 (2004)(“While section 1955 has yet to be successfully used to prosecute an Internet gaming operation, its minimal requirements may make it a likely candidate for future use”); General Accounting Office [now the Government Accountability Office], Internet Gambling: An Overview of the Issues 11 (Dec. 2002); Blackjack or Bust: Can U.S. Law Stop Internet Gambling? 16 LOYOLA OF LOS ANGELES ENTERTAINMENT LAW JOURNAL 667, 675-77 (1996). 57 But see, United States v. Racing Services, Inc., 580 F.3d 710, 713-14 (8th Cir. 2009)(“Here, in the federal prosecution, proof of a violation of state law was an element of the primary charge, that RSI and Bala violated 18 U.S.C. §1955 by conducting an ‘illegal gambling business.’ In reversing, we held that the government failed to prove a (continued...) Congressional Research Service 8 Internet Gambling: Overview of Federal Criminal Law Violations are punishable by imprisonment for not more than five years and/or fines of the greater of not more than twice the gain or loss associated with the offense or $250,000 ($500,000 for an organization).58 Moreover, the federal government may confiscate any money or other property used in violation of the section.59 The offense may also provide the foundation for a prosecution under the Travel Act, the money laundering statutes, and RICO.60 The sanctions of the Illegal Gambling Business Act apply to anyone who I. A. conducts, B. finances, C. manages, D. supervises, E. directs, or F. owns II. all or part of an illegal gambling business that III. A. is a violation of the law of a State or political subdivision in which it is conducted; B. involves five or more persons who conduct, finance, manage, supervise, direct, or own all or part of such business; and C. has been or remains in substantially continuous operation for a period in excess of thirty days or has a gross revenue of $2,000 in any single day.61 “[N]umerous cases have recognized that 18 U.S.C. 1955 proscribes any degree of participation in an illegal gambling business except participation as a mere bettor.”62 Or as more recently described, “‘[c]onductors’ extends to those on lower echelons, but with a function at their level necessary to the illegal gambling operation.”63 (...continued) state law violation law turned lawful parimutuel account wagering into an illegal gamvling business. 489 F.3d at 34041. But we noted that the ‘government could have avoided this evidentiary insufficiency by proving that RSI entered the account wagering business never intending to distribute its net proceeds to charity[as state law required].’ Id. at 341”); cf., United States v. Hill, 55 F.3d 1197, 1200 (6th Cir. 1995)(“[U]nder §1955, it is quite obvious that bettors should not be held criminally liable either under the statute or under §2 and that local merchants who sell the accounting paper or the computers on which bets are registered are not sufficiently connected to the enterprise to be included even if they know that their goods will be used in connection with the work of the business. On the other hand, it seems similarly obvious that the seller of computer hardware or software who is fully knowledgeable about the nature and scope of the gambling business would be liable under §2 if he installs the computer, electronic equipment and cables necessary to operate a ‘wire shop’ or a parimutuel betting parlor, configures the software programs to process betting information and instructs the owners of the gambling business on how to use the equipment to make the illegal business more profitable and efficient. Such actions would probably be sufficient proof that the seller intended to further the criminal enterprise”); Superseding Indictment, United States v. Scheinberg, No. S3 10 Cr. 336 (LAK), S.D.N.Y. March 10, 2011)(charging individuals associated with Internet poker companies with violations of 18 U.S.C. 1955, of UIGEA, and with money laundering); Indictment, United States v. K23 Group Financial Services, CRIMINAL NO. CCB-11-0239 (D.Md. April, 26, 2011)(charging operators of Internet gambling sites with violations of 18 U.S.C. 1955 and with money laundering). 58 18 U.S.C. 1955(a), 3571(d). 59 18 U.S.C. 1955(d). 60 18 U.S.C. 1952, 1956, 1957, 1962, respectively. 61 United States v. Useni, 516 F.3d 634, 647 (7th Cir. 2008)(“[T]o establish a violation of §1955, the government must show that the defendant conducted, financed, managed, supervised, directed, or owned a gambling business that: (1) violated state law; (2) involved five or more persons; and (3) was either in substantial continuous operation for more than 30 days or had gross revenue of $2,000 or more in a single day”). 62 Sanabria v. United States, 437 U.S. 54, 70-1 n.26 (1978); United States v. Atiyeh, 402 F.3d 354, 372 (3d Cir. 2005). 63 United States v. O’Brien, 131 F.3d 1428, 1431 (10th Cir. 1997). Perceptions of necessity are not always particularly (continued...) Congressional Research Service 9 Internet Gambling: Overview of Federal Criminal Law The section bars only those activities that involve illegal gambling under applicable state law and that meet the statutory definition of such a business.64 Illegal gambling is at the threshold of any prosecution under the section, and cannot to be pursued if the underlying state law is unenforceable under either the United States Constitution,65 or the operative state constitution.66 The business element can be satisfied (for any endeavor involving five or more participants) either by continuity (“has been or remains in substantially continuous operation for period in excess of thirty days”) or by volume (“has a gross revenue of $2,000 in any single day”).67 The volume prong is fairly self-explanatory and the courts have been fairly generous in their assessment of continuity.68 They are divided, however, on the question of whether the jurisdictional five and continuity/volume features must coincide.69 There is no such diversity of opinion on the question of whether section 1955 lies within the scope of Congress’s legislative authority under the Commerce Clause. The Supreme Court’s decision in United States v. Lopez,70 finding the Gun Free School Zone Act (18 U.S.C. 922(q)) beyond the bounds of Congress’s Commerce Clause power, stimulated a host of appellate decisions here and elsewhere. In the case of section 1955, Lopez challenges have been rejected with the observation that, unlike the statute in Lopez, section 1955 (a) involves the regulation of a commercial activity (a gambling business), (b) comes with jurisdictional elements selected to reserve prosecution to those endeavors likely to substantially affect interstate commerce (five (...continued) demanding, see, e.g., United States v. Heacock, 31 F.3d 249, 252-53 (5th Cir. 1994)(may include “everyone from layoff bettors and line services to waitresses who serve drinks”); United States v. Grey, 56 F.3d 1219, 1221 (10th Cir. 1995) (bartenders and managers of establishments where the defendant placed his video poker machines and who recording winnings, made payoffs, and reset the machines were properly counted as conductors of the defendant’s gambling business); United States v. Mick, 263 F.3d 553, 568-69 (6th Cir. 2001)(“layoff bettors may be considered part of the requisite five members, so long as their dealings with the gambling business are regular and not just based on one contact”); United States v. Febus, 218 F.3d 784, 797 (7th Cir. 2000)(emphasis added) (conduct for purposes of section 1955 extends to the performance of “any act, function or duty which is necessary to or helpful in the ordinary operation of the business” including the owner of a bar who knowingly allowed gamblers to use the bar as a collection site); United States v. Chance, 306 F.3d 356, 379-80 (6th Cir. 2002)(“regularly helpful or necessary to the operation of the gambling enterprise”); Requirement of 18 U.S.C. §1955, Prohibiting Illegal Gambling Business, That Such Business Involve Five or More Persons, 55 ALR FED. 778 (1981 & 2011 Supp.). 64 United States v. Bala, 489 F.3d 334, 338 (8th Cir. 2007)(Section “1955) only prohibits gambling businesses that are ‘in violation of state penal laws,’ not [those in violation of ] state administrative regulations),” citing accord United States v. Gordon, 464 F.2d 357, 357-58 (9th Cir. 1972). 65 Cf., United States v. Hill, 167 F.3d 1055, 1063-64 (6th Cir. 1999). 66 Cf., United States v. Ford, 184 F.3d 566, 582-83 (6th Cir. 1999). 67 Sikes v. Teleline, Inc., 281 F.3d 1350, 1366-367 (11th Cir. 2002). 68 E.g., United States v. Trupiano, 11 F.3d 769, 773-74 (8th Cir. 1993)(“Congress did not purport to require absolute or total continuity in gambling operations. Consistent with this, substantially continuous has been read not to mean every day. The operation, rather, must be one that was conducted upon a schedule of regularity sufficient to take it out of the casual nonbusiness category”). 69 Compare, United States v. Nicolaou, 180 F.3d 565, 568 (4th Cir. 1999)(“the five-person requirement must be satisfied in conjunction with the third element. That is ... section 1955 covers only those gambling operations that involve at all times during some thirty day period at least five persons ... or that involve at least five persons on any single day on which it had gross revenues of $2,000”), with, United States v. Boyd, 149 F.3d 1062, 1064-65 (10th Cir. 1998)(“the government is not required to demonstrate the involvement of five or more persons for a continuous period of more than thirty days to support a conviction under §1955, but rather need only demonstrate that the operation operated for a continuous period of thirty days and involved five or more persons at some relevant time”). 70 514 U.S. 549 (1996). Congressional Research Service 10 Internet Gambling: Overview of Federal Criminal Law participants in a substantial gambling undertaking), and (c) was preceded by Congressional findings evidencing the impact of substantial gambling operations upon interstate commerce.71 The accomplice and conspiratorial provisions attend violations of section 1955 as they do violations of the Wire Act. Although frequently difficult to distinguish in a given case, the difference is essentially a matter of depth of involvement. “[T]o be guilty of aiding and abetting a section 1955 illegal gambling business ... the defendant must have knowledge of the general scope and nature of the illegal gambling business and awareness of the general facts concerning the venture ... [and he] must take action which materially assists in ‘conducting, financing, managing, supervising, directing or owning’ the business for the purpose of making the business succeed.”72 Unlike conspiracy, one may only be prosecuted for aiding and abetting the commission of a completed crime; “before a defendant can be found guilty of aiding and abetting a violation of section 1955 a violation of section 1955 must exist ... [and] aiders and abettors cannot be counted as one of the statutorily required five persons.”73 As a general rule, a federal conspiracy exists when two or more individuals agree to commit a federal crime and one of them commits some overt act in furtherance of their common scheme.74 “A conspiracy may exist even if a conspirator does not agree to commit or facilitate each and every part of the substantive offense. The partners in the criminal plan must agree to pursue the same criminal objective and may divide up the work, yet each is responsible for acts of each other. If the conspirators have a plan which calls for some conspirators to perpetrate the crime and others to provide support, the supporters are as guilty as the perpetrators.”75 Conspiracy is a separate crime and thus conspirators may be convicted of both substantive violations of section 1955 and conspiracy to commit those violations.76 In fact, under the Pinkerton doctrine, coconspirators are liable for conspiracy, the crime which is the object of the conspiracy (when it is committed), and any other reasonably foreseeable crimes of their confederates committed in furtherance of the conspiracy.77 The application of the Illegal Gambling Business Act to offshore gambling operations that take wagers from bettors in the United States involves two questions. First, does state law proscribing the gambling in question apply when some of the elements of the offense are committed outside its jurisdiction? Second, did Congress intend the section to apply beyond the confines of the United States? 71 E.g., United States v. Riddle, 249 F.3d 529, 538-39 (6th Cir. 2001); United States v. Lee, 173 F.3d 809, 810-11 (11th Cir. 1999); United States v. Threadgill, 172 F.3d 357, 371-72 & n.12 (5th Cir. 1999); United States v. Ables, 167 F.3d 1021, 1026-28 (6th Cir. 1999)(also rejecting the suggestion that section 1955 exceeded the reach of Congress under the Commerce Clause because it intruded into an area traditionally reserved to the states); United States v. Boyd, 149 F.3d 1062, 1066 (10th Cir. 1998); United States v. Zizzo, 120 F.3d 1338, 1350 (7th Cir. 1998); United States v. Wall, 912 F.3d 1444, 1445-452 (6th Cir. 1996). 72 United States v. Hill, 55 F.3d 1197, 1201-202 (6th Cir. 1995). 73 Id. at 1204. 74 United States v. Falcone, 311 U.S. 205, 210 (1941); United States v. Rizk, 660 F.3d 1125, 1134 (9th Cir. 2011); United States v. Cooper, 654 F.3d 1104, 1115 (10th Cir. 2011); United States v. Gore, 636 F.3d 728, 730 (5th Cir. 2011). 75 Salinas v. United States, 522 U.S. 52, 63-4 (1997). 76 Iannelli v. United States, 420 U.S. 770 (1975); United States v. Jimenez Recio, 537 U.S. 270, 274 (2003). 77 Pinkerton v. United States, 328 U.S. 640, 645-48 (1946); United States v. Bingham, 653 F.3d 983, 997 (9th Cir. 2011); United States v. Vazquez-Castro, 640 F.3d 19, 24 (1st Cir. 2011). Congressional Research Service 11 Internet Gambling: Overview of Federal Criminal Law Section 1955 can only apply overseas when based on an allegation that the gambling in question is illegal under a state law whose reach straddles jurisdictional lines. For example, a statute that prohibits recording bets (bookmaking) in Texas cannot be used against a gambling business which records bets only in Jamaica or Dominican Republic, even if the bets are called in from Texas.78 On the other hand, an overseas gambling business may find itself in violation of section 1955 if it accepts wagers from bettors in New York, because New York law considers the gambling to have occurred where the bets are made, inter alia.79 Whether a federal criminal statute applies overseas is a matter of Congressional intent.80 The intent is most obvious where Congress has expressly stated that a provision shall have extraterritorial application.81 Section 1955 has no such expression of intended overseas application. In the absence of an explicit statement, the courts use various interpretive aids to divine Congressional intent. Unless some clearer indication appears, Congress is presumed to have intended its laws to apply only within the United States.82 The courts have recognized contrary indications under several circumstances.83 Congress will be thought to have intended a criminal proscription to apply outside the United States where one of the elements of the offense, like the commission of an overt act in furtherance of a conspiracy, occurs in the United States.84 Similarly, Congress will be thought to have intended to outlaw overseas crimes calculated to have an impact in the United States, for example, false statements made abroad in order to gain entry 78 United States v. Truesdale, 152 F.3d 443, 446-49 (5th Cir. 1998) (rejecting the argument that the gambling was illegal under a provision of Texas law not mentioned in indictment or the jury charge). 79 People ex rel. Vacco v. World Interactive Gaming Corp., 185 Misc.2d 852, 859-60, 714 N.Y.S.2d 844, 850 (1999)(“Respondents argue that the Court lacks subject matter jurisdiction, and that Internet gambling falls outside the scope of New York state gambling prohibitions, because the gambling occurs outside of New York state. However, under New York Penal Law, if the person engaged in gambling is located in New York, then New York is the location where the gambling occurred (See Penal Law §225.02(2)). Here, some or all of those funds in an Antiguan bank account are staked every time the New York user enters betting information into the computer. It is irrelevant that Internet gambling is legal in Antigua. The act of entering the bet and transmitting the information from New York via the Internet is adequate to constitute gambling activity within New York State”). 80 EEOC v. Arabian American Oil Co., 499 U.S. 244, 248 (1991)(“Congress has the authority to enforce its laws beyond the territorial boundaries of the United States. Whether Congress has in fact exercised that authority ... is a matter of statutory construction”); Foley Brothers v. Filardo, 336 U.S. 281, 284-85 (1949) (“The question . . is not the power of Congress to extend the ... law to ... foreign countries. Petitioners concede that such power exists. The question is rather whether Congress intended to make the law applicable”); United States v. al Kassar, 660 F.3d 108, 117-18 (2d Cir. 2011)(“[A]s a general proposition, Congress has the authority to enforce its laws beyond the territorial boundaries of the United States”); United States v. Martinez, 599 F.Supp.2d 784, 796-97 (W.D.Tex. 2009); see generally, CRS Report 94-166, Extraterritorial Application of American Criminal Law. 81 E.g., 18 U.S.C. 2381 (relating to treason committed in the United States “or elsewhere”). 82 “It is a ‘long-standing principle of American law that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States,’” Morrison v. National Australia, 130 S.Ct. 2869, 2877 (2010), quoting, EEOC. v. Arabian American Oil Co., 499 U.S. at 248 (1991); see also, Argentine Republic v. Amerada Hess Shipping, 488 U.S. 428, 440 (1989); Sale v. Haitian Centers Council, Inc., 509 U.S. 155, 173 (1993); Smith v. United States, 507 U.S. 197, 203 (1993); Small v. United States, 544 U.S. 385, 388-89 (2005)(“This notion has led the Court to adopt the legal presumption that Congress ordinarily intends its statutes to have domestic, not extraterritorial application”); but see, United States v. al Kassar, 660 F.3d 108, 118 (2d Cir. 2011)(internal citations omitted)(“The presumption that ordinary acts of Congress do not apply extraterritorially, does not apply to criminal statutes”). 83 United States v. al Kassar, 660 F.3d 108, 118 (2d Cir. 2011)(internal citations omitted)(“When the text of a criminal statute is silent, Congressional intent to apply the statute extraterritorially must be inferred from the nature of the offense”). 84 United States v. MacAllister, 160 F.3d 1304, 1308 (11th Cir. 1998). Congressional Research Service 12 Internet Gambling: Overview of Federal Criminal Law into the United States.85 Finally, Congress will be thought to have intended extraterritorial application for a criminal statute where its purpose in enacting the statute would otherwise be frustrated, for instance, the theft of United States property overseas.86 There is a countervailing presumption interwoven among these interpretive devices. Congress is presumed not to have intended any extraterritorial application that would be contrary to international law.87 International law in the area is a matter of reasonableness, of minimal contacts,88 traditionally described as permitting geographical application of a nation’s laws under five principles: a country’s laws may be applied within its own territory (territorial principle); a country’s laws may be applied against its own nationals wherever they are located (nationality principle); a country’s laws may be applied to protect it from threats to its national security (protective principle); a country’s laws may be applied to protect its citizens overseas (passive personality principle); and a country’s laws may be applied against crimes repugnant to the law of nations such as piracy (universal principle).89 Section 1955 does not say whether it applies overseas. Yet an offshore illegal gambling business whose customers where located in the United States seems within the section’s domain because of the effect of the misconduct within the United States. Travel Act The operation of an illegal gambling business using the Internet may easily involve violations of the Travel Act,90 as several writers have noted.91 Like the Illegal Gambling Business Act, Travel Act convictions result in imprisonment for not more than five years and/or fines of the greater of not more than twice the gain or loss associated with the offense or $250,000 ($500,000 for an 85 Ford v. United States, 273 U.S. 593, 620-21 (1927)(“Acts done outside a jurisdiction, but intended to produce and producing detrimental effects within it, justify a State in punishing the cause of the harm as if he had been present at the effect”); United States v. Larsen, 952 F.2d 1099, 1100-101 (9th Cir. 1991); United States v. Hill, 279 F.3d 731, 739-40 (9th Cir. 2002). 86 United States v. Bowman, 260 U.S. 94, 98 (1922)(“Other [crimes] are such that to limit their locus to the strictly territorial jurisdiction would be greatly to curtail the scope and usefulness of the statute and leave open a large immunity for frauds as easily committed by citizens ... in foreign countries as at home. In such cases, Congress has not thought it necessary to make specific provision in the law that the locus shall include ... foreign countries, but allows it to be inferred from the nature of the offense”); Blackmer v. United States, 284 U.S. 421, 438 (1932)(“The jurisdiction of the United States over its absent citizen, so far as the binding effect of its legislation is concerned, is a jurisdictional in personam, as he is personally bound to take notice of the laws that are applicable to him and to obey them”); United States v. Vasquez-Velasco, 15 F.3d 833, 839 (9th Cir. 1994); United States v. Delgado-Garcia, 374 F.3d 1337, 1345347 (D.C.Cir. 2004). 87 Weinberger v. Rossi, 456 U.S. 25, 32 (1982)(“It has been a maxim of statutory construction since the decision in Murray v. the Charming Betsy, that an act of Congress ought never to be construed to violate the law of nations, if any other possible construction remains”); United States v. Dawn, 129 F.3d 878, 882 (7th Cir. 1997); United States v. Yousef, 327 F.3d 56, 96 (2d Cir. 2003). 88 RESTATEMENT (THIRD) OF THE FOREIGN RELATIONS LAW OF THE UNITED STATES §§401 to 423 (1986 & 2006 Supp.). 89 Jurisdiction with Respect to Crime, 29 AMERICAN JOURNAL OF INTERNATIONAL LAW (SUPP.) 439, 445 (1935). 90 18 U.S.C. 1952. 91 Gottfried, The Federal Framework for Internet Gambling, 10 RICHMOND JOURNAL OF LAW AND TECHNOLOGY 26, 52 (2004); Do Not Bet on Unilateral Prohibition of Internet Gambling to Eliminate Cyber-Casinos, 1999 UNIVERSITY OF ILLINOIS LAW REVIEW 1045, 1057; Schwartz, The Internet Gambling Fallacy Craps Out, 14 BERKELEY TECHNOLOGY LAW JOURNAL 1021, 1028-29 (1999); General Accounting Office [now the Government Accountability Office], Internet Gambling: An Overview of the Issues 11 (Dec. 2002). Congressional Research Service 13 Internet Gambling: Overview of Federal Criminal Law organization).92 The act may serve as the foundation for a prosecution under the money laundering statutes93 and RICO.94 It has neither the service termination features of the Wire Act nor the forfeiture features of the Illegal Gambling Business Act. The Travel Act’s elements cover anyone who I.A. travels in interstate or foreign commerce, or B. uses any facility in interstate or foreign commerce, or C. uses the mail II. with intent A. to distribute the proceeds of i. any business enterprise involving unlawful activities (including gambling) in violation of the laws in which it is conducted or of the laws of the United States; or ii. any act which is indictable as money laundering; or B. to otherwise i. promote, ii. manage, iii. establish, iv. carry on, or v. facilitate the promotion, management, establishment, or carrying on, of any business enterprise involving unlawful activities (including gambling) in violation of the laws in which it is conducted or of the laws of the United States, or any act which is indictable as money laundering; and III. thereafter so A. distributes the proceeds from any business enterprise involving gambling or from any act indictable as money laundering, or B. promotes, manages, establishes, carries on, or facilitates the promotion, management, establishment, or carrying on of any business enterprise involving unlawful activities (including unlawful gambling) or any act indictable as money laundering. The courts often abbreviate their statement of the elements: “The government must prove (1) interstate travel or use of an interstate facility; (2) with the intent to ... promote ... an unlawful activity and (3) followed by performance or attempted performance of acts in furtherance of the unlawful activity.”95 92 18 U.S.C. 1955(a), 3571(d). 18 U.S.C. 1956 and 1957. 94 18 U.S.C. 1961-1963. 95 United States v. Escobar-de-Jesus, 187 F.3d 148, 177 (1st Cir. 1999); United States v. Bankston, 182 F.3d 296, 315 (5th Cir. 1999); United States v. Montford, 27 F.3d 137, 138 n.1 (5th Cir. 1994); United States v. Xiong, 262 F.3d 672, 676 (7th Cir. 2001); United States v. Welch, 327F.3d 1081, 1090(10th Cir. 2003); United States v. Nishnianidze, 342 F.3d 6, 15 (1st Cir. 2003); United States v. Driver, 535 F.3d 424, 430 (6th Cir. 2008). When the violation is a distribution of profits rather than promotional offense, the second element in the abbreviated list of elements is changed to “with the intent to distribute the proceeds of an unlawful activity,” United States v. Hinojosa, 958 F.2d 624, 629 (5th Cir. 1992). 93 Congressional Research Service 14 Internet Gambling: Overview of Federal Criminal Law The Supreme Court determined some time ago that the Travel Act does not apply to the simple customers of an illegal gambling business, although interstate solicitation of those customers may certainly be covered.96 When the act’s jurisdictional element involves mail or facilities in interstate or foreign commerce, rather than interstate travel, evidence that a telephone was used,97 or an ATM,98 or the facilities of an interstate banking chain99 will suffice.100 The government is not required to show that the defendant used the facilities himself or that the use was critical to the success of the criminal venture. It is enough that he caused them to be used 101 and that their employment was useful for his purposes.102 Moreover, intrastate telephone communications constitute the use of “facilities in interstate or foreign commerce.”103 Thus in the case of Internet gambling, the jurisdictional element of the Travel Act might be established at a minimum either by reference to the telecommunications component of the Internet, to shipments in interstate or foreign commerce (in or from the United States) associated with establishing operations on the Internet, to any interstate or foreign nexus to the payment of the debts resulting from the gambling, or to any interstate or foreign distribution of the proceeds of such gambling. A criminal business enterprise, as understood in the Travel Act, “contemplates a continuous course of business—one that already exists at the time of the overt act or is intended thereafter. Evidence of an isolated criminal act, or even sporadic acts, will not suffice,”104 and it must be shown to be involved in an unlawful activity outlawed by a specifically identified state or federal statute.105 Finally, the government must establish some overt act in furtherance of the illicit business committed after the interstate travel or the use of the interstate facility.106 96 Unlike 18 U.S.C. 1953 (interstate transportation of certain gambling paraphernalia), section 1952 does not exclude the interstate or foreign shipment of newspapers (whether soliciting customers or otherwise) from the activities that may trigger the section’s jurisdictional element, see, e.g., Erlenbaugh v. United States, 409 U.S. 239 (1972)(upholding a conviction for violation of section 1952 which took the form of interstate delivery newspapers “scratch sheets” to out of state bookies). 97 Rewis v. United States, 401 U.S. 808, 811 (1971); United States v. Nishnianidze, 342 F.3d 6, 15 (1st Cir. 2003); United States v. Baker, 227 F.3d 955, 962 (7th Cir. 2000); United States v. Jenkins, 943 F.2d 167, 172 (2d Cir. 1991); United States v. Graham, 856 F.2d 756, 760-61 & n.1 (6th Cir. 1988). 98 United States v. Baker, 82 F.3d 273, 275 (8th Cir. 1996). 99 United States v. Rogers, 387 F.3d 925, 935 (7th Cir. 2004); United States v. Auerbach, 913 F.2d 407, 410 (7th Cir. 1990). 100 Of course, interstate travel will also suffice, United States v. Xiong, 262 F.3d 672, 676 (7th Cir. 2001). 101 United States v. Baker, 82 F.3d at 275; United States v. Auerbach, 913 F.2d at 410. 102 United States v. Baker, 82 F.3d at 275-76; United States v. McNeal, 77 F.3d 938, 944 (7th Cir. 1996); United States v. Houlihan, 92 F.3d 1271, 1292 (1st Cir. 1996). 103 United States v. Nader, 542 F.3d 713, 718-20 (9th Cir. 2008). 104 United States v. Roberson 6 F.3d 1088, 1094 (5th Cir. 1993); see also, United States v. James, 210 F.3d 1342, 1345 (11th Cir. 2000); United States v. Saget, 991 F.2d 702, 712 (11th Cir. 1993)(“If the defendant engages in a continuous course of cocaine distribution rather than a sporadic or casual course of conduct, then the statutory requirement of a business enterprise involving narcotics is satisfied”); United States v. Iennaco, 893 F.2d 394, 398 (D.C.Cir. 1990). 105 United States v. Griffin, 85 F.3d 284, 287-88 (7th Cir. 1996); United States v. Campione, 942 F.2d 429, 433-36 (7th Cir. 1991); United States v. Jones, 909 F.2d 533, 536-39 (D.C.Cir. 1990). 106 United States v. Jenkins, 943 F.2d 167, 173 (2d Cir. 1991); United States v. Admon, 940 F.2d 1121, 1125 (8th Cir. 1991); United States v. Burns, 298 F.3d 523, 537-38 (6th Cir. 2002); United States v. Nishnianidze, 342 F.3d 6, 15 (1st Cir. 2003). Congressional Research Service 15 Internet Gambling: Overview of Federal Criminal Law Accomplice and co-conspirator liability, discussed earlier, apply with equal force to the Travel Act.107 The act would only apply to “business enterprises” involved in illegal gaming, so that e-mail gambling between individuals would likely not be covered. And Rewis, supra, seems to bar prosecution of an Internet gambling enterprise’s customers as long as they remain mere customers.108 But an Internet gambling venture that constitutes an illegal gambling business for purposes of section 1955, supra, and is engaged in some form of interstate or foreign commercial activity in furtherance of the business will almost inevitably have included a Travel Act violation. Unlawful Internet Gambling Enforcement Act (UIGEA) The Wire Act, the Illegal Gambling Business Act, and the Travel Act implicitly outlaw Internet gambling and related activity. The Unlawful Internet Gambling Enforcement Act (UIGEA) does so explicitly. More exactly, it prohibits those who engage in a gambling business from accepting payments related to unlawful Internet gambling.109 Violations are punishable by imprisonment for not more than five years and/or a fine of not more than $250,000 (not more than $500,000 for organizations).110 Offenders may be subject to civil and regulatory enforcement actions as well.111 The Unlawful Internet Gambling Enforcement Act declares that I. No person II. engaged in the business of betting or wagering III. may knowingly accept IV. in connection with participation of another person V. in unlawful Internet gambling 107 United States v. Driver, 535 F.3d 424, 431 (6th Cir. 2008)(aiding and abetting); United States v. Childress, 58 F.3d at 721 (D.C.Cir. 1995)(citing the Pinkerton principle of co-conspirator liability); see also, United States v. Auerbach, 913 F.2d at 410 (7th Cir. 1990) (co-conspirator liability); United States v. Rogers, 387 F.3d 925, 935 (7th Cir. 2004) (aiding and abetting); United States v. Lee, 359 F.3d 194, 209 (3d Cir. 2004)(aiding and abetting); United States v. Pardue, 983 F.2d 943, 945-46 (8th Cir. 1993)(aiding and abetting); United States v. Dischner, 974 F.2d 1502, 1521 (9th Cir. 1992) (aiding and abetting). 108 Contra, Blackjack or Bust: Can U.S. Law Stop Internet Gambling? 16 LOYOLA OF LOS ANGELES ENTERTAINMENT LAW JOURNAL at 675 (“The Travel Act applies not only to Internet casinos, but it also seems to apply to players who use interstate facilities for the transportation of unlawful activities [i.e., their wagers]”)(the JOURNAL article does not discuss Rewis). 109 31 U.S.C. 5363. 110 31 U.S.C. 5366(a), 18 U.S.C. 3571. 111 31 U.S.C. 5364, 5364. Congressional Research Service 16 Internet Gambling: Overview of Federal Criminal Law VI. a. credit, or the proceeds of credit, extended to or on behalf of such other person (including credit extended through the use of a credit card; or b. an electronic fund transfer, or funds transmitted by or through a money transmitting business, or the proceeds of an electronic fund transfer or money transmitting service, from or on behalf of such other person; or c. any check, draft, or similar instrument which is drawn by or on behalf of such other person and is drawn on or payable at or through any financial institution; or d. the proceeds of any other form of financial transaction, as the Secretary and the Board of Governors of the Federal Reserve System may jointly prescribe by regulation, which involves a financial institution as a payor or financial intermediary on behalf of or for the benefit of such other person.112 UIGEA’s proscription draws meaning from a host of definitions, exceptions, and exclusions— some stated, others implied. It does not define “person.” Nevertheless, as elsewhere in the United States Code, “persons” for purposes of UIGEA means individuals as well as “corporations, companies, associations, firms, partnerships, societies, and joint stock companies.”113 It does not define the “business of betting or wagering,” although it defines what it is not and defines the terms that provide the grist for such a business: bets or wagers. The business of betting or wagering does not encompass the normal business activities of financial or communications service providers,114 unless they are participants in an unlawful Internet gambling enterprise.115 On the other hand, Congress chose the term “business of betting or wagering” rather than the term “illegal gambling business,” found in the Illegal Gambling Business Act.116 This implies that UIGEA covers businesses regardless of whether they met the threshold requirements of Illegal Gambling Business Act, that is (1) five participants and (2) continuous operations for at least thirty days or gross revenues in excess of $2,000 a day. To come within the statute’s reach, a business must involve “bets or wagers” and must accept payment relating “unlawful Internet gambling.” To bet or wager is to stake something on the outcome of a game or event. More exactly, “[t]he term ‘bet or wager’—(A) means the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting 112 31 U.S.C. 5363. 1 U.S.C. 1. 114 31 U.S.C. 5362 (2)(“The term ‘business of betting or wagering’ does not include the activities of a financial transaction provider, or any interactive computer service or telecommunications service”). 115 31 U.S.C. 5367 (“Notwithstanding section 5362(2), a financial transaction provider, or any interactive computer service or telecommunications service, may be liable under this subchapter if such person has actual knowledge and control of bets and wagers, and—(1) operates, manages, supervises, or directs an Internet website at which unlawful bets or wagers may be placed, received, or otherwise made, or at which unlawful bets or wagers are offered to be placed, received, or otherwise made; or (2) owns or controls, or is owned or controlled by, any person who operates, manages, supervises, or directs an Internet website at which unlawful bets or wagers may be placed, received, or otherwise made, or at which unlawful bets or wagers are offered to be placed, received, or otherwise made”). 116 18 U.S.C., 1955(b)(1). 113 Congressional Research Service 17 Internet Gambling: Overview of Federal Criminal Law event, or a game subject to chance, upon an agreement or understanding that the person or another person will receive something of value in the event of a certain outcome.”117 Earlier in UIGEA’s legislative history, the definition of “bet or wager” used the phrase “a game predominantly subject to chance” rather than simply “a game subject to chance.” The Justice Department questioned whether the original phrase was “sufficient to cover card games, such as poker.”118 The change in language appears to accommodate that concern by extending coverage to games that have an element of chance, even if not necessarily a predominant element. The definition also explicitly covers lotteries119 and information relating to the financial aspects of gambling.120 The list of other common activities exempted from the definition includes securities and commodities exchange activities,121 insurance,122 Internet games and promotions that do not involve betting,123 and certain fantasy sporting activities.124 117 31 U.S.C. 5362(1)(A). Hearing at 16 (statement of Bruce G. Ohr, Chief of the Organized Crime and Racketeering Section, Criminal Division, United States Department of Justice). 119 31 U.S.C. 5362(1)(B),(C)(“The term ‘bet or wager’ ... (B) includes the purchase of a chance or opportunity to win a lottery or other prize (which opportunity to win is predominantly subject to chance); (C) includes any scheme of a type described in section 3702 of title 28”). 28 U.S.C. 3702 provides, “It shall be unlawful for—(1) a governmental entity to sponsor, operate, advertise, promote, license, or authorize by law or compact, or (2) a person to sponsor, operate, advertise, or promote, pursuant to the law or compact of a governmental entity, a lottery, sweepstakes, or other betting, gambling, or wagering scheme based, directly or indirectly (through the use of geographical references or otherwise), on one or more competitive games in which amateur or professional athletes participate, or are intended to participate, or on one or more performances of such athletes in such games.” 120 31 U.S.C. 5362(1)(D)(“The term ‘bet or wager’ ... (D) includes any instructions or information pertaining to the establishment or movement of funds by the bettor or customer in, to, or from an account with the business of betting or wagering”). 121 31 U.S.C. 5362(1)(E)(i)-(iv)(“The term ‘bet or wager’ ... (E) does not include—(i) any activity governed by the securities laws (as that term is defined in section 3(a)(47) of the Securities Exchange Act of 1934 for the purchase or sale of securities (as that term is defined in section 3(a)(10) of that Act); (ii) any transaction conducted on or subject to the rules of a registered entity or exempt board of trade under the Commodity Exchange Act; (iii) any over-the-counter derivative instrument; (iv) any other transaction that—(I) is excluded or exempt from regulation under the Commodity Exchange Act; or (II) is exempt from State gaming or bucket shop laws under section 12(e) of the Commodity Exchange Act or section 28(a) of the Securities Exchange Act of 1934”). 122 31 U.S.C. 5362(1)(E)(v)-(vii)(“The term ‘bet or wager’ ... (E) does not include ... (v) any contract of indemnity or guarantee; (vi) any contract for insurance; (vii) any deposit or other transaction with an insured depository institution”). 123 31 U.S.C. 5362(1)(E)(viii)(“The term ‘bet or wager’ ... (E) does not include ... (viii) participation in any game or contest in which participants do not stake or risk anything of value other than—(I) personal efforts of the participants in playing the game or contest or obtaining access to the Internet; or (II) points or credits that the sponsor of the game or contest provides to participants free of charge and that can be used or redeemed only for participation in games or contests offered by the sponsor”). 124 31 U.S.C. 5362(1)(E)(ix)(“The term ‘bet or wager’ ... (E) does not include ... (ix) participation in any fantasy or simulation sports game or educational game or contest in which (if the game or contest involves a team or teams) no fantasy or simulation sports team is based on the current membership of an actual team that is a member of an amateur or professional sports organization (as those terms are defined in section 3701 of title 28) and that meets the following conditions: (I) All prizes and awards offered to winning participants are established and made known to the participants in advance of the game or contest and their value is not determined by the number of participants or the amount of any fees paid by those participants. (II) All winning outcomes reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of the performance of individuals (athletes in the case of sports events) in multiple real-world sporting or other events. (III) No winning outcome is based—(aa) on the score, point-spread, or any performance or performances of any single real-world team or any combination of such teams; or (bb) solely on any single performance of an individual athlete in any single real-world sporting or other event”). 118 Congressional Research Service 18 Internet Gambling: Overview of Federal Criminal Law “Unlawful Internet gambling” refers to an Internet bet or wager that is illegal in the place where it is placed, received, or transmitted.125 The term does not encompass various forms of Internet use by the horse racing industry, regardless of their legal status over other provisions of law.126 If certain conditions are met, the definition also exempts from UIGEA’s prohibitions certain intrastate and intratribal forms of gambling, like state lotteries and Indian casinos that operate under state regulations or compacts.127 To qualify for the intrastate exception, a bet must: (1) be made and received in the same state;128 (2) comply with applicable state law that authorizes the gambling and the method of transmission including any age and location verification and security requirements;129 and (3) be in accord with various federal gambling laws.130 The intratribal exception is comparable, but a little different. Compliance with the various federal gambling laws remains a condition.131 And there are comparable security as well as age and location verification demands.132 The intratribal gambling, however, may involve transmissions between the lands of two or more tribes and need not be within the same state.133 125 31 U.S.C. 5362(10)(A)(“The term ‘unlawful Internet gambling’ means to place, receive, or otherwise knowingly transmit a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is unlawful under any applicable Federal or State law in the State or Tribal lands in which the bet or wager is initiated, received, or otherwise made”). 126 31 U.S.C. 5362(10)(D)(“(i) In general.—The term ‘unlawful Internet gambling’ shall not include any activity that is allowed under the Interstate Horseracing Act of 1978 (15 U.S.C. 3001 et seq.). (ii) Rule of construction regarding preemption.—Nothing in this subchapter may be construed to preempt any State law prohibiting gambling. (iii) Sense of Congress.—It is the sense of Congress that this subchapter shall not change which activities related to horse racing may or may not be allowed under Federal law. This subparagraph is intended to address concerns that this subchapter could have the effect of changing the existing relationship between the Interstate Horseracing Act and other Federal statutes in effect on the date of the enactment of this subchapter. This subchapter is not intended to change that relationship. This subchapter is not intended to resolve any existing disagreements over how to interpret the relationship between the Interstate Horseracing Act and other Federal statutes”). 127 31 U.S.C. 5362(10)(B), (C). 128 31 U.S.C. 5362(10)(B)(i)(“The term ‘unlawful Internet gambling’ does not include placing, receiving, or otherwise transmitting a bet or wager where—(i) the bet or wager is initiated and received or otherwise made exclusively within a single State”). See also, 31 U.S.C. 5362(10)(E)(“The intermediate routing of electronic data shall not determine the location or locations in which a bet or wager is initiated, received, or otherwise made”). 129 31 U.S.C. 5362(10)(B)(ii)(“The term “unlawful Internet gambling” does not include placing, receiving, or otherwise transmitting a bet or wager where ... (ii) the bet or wager and the method by which the bet or wager is initiated and received or otherwise made is expressly authorized by and placed in accordance with the laws of such State, and the State law or regulations include—(I) age and location verification requirements reasonably designed to block access to minors and persons located out of such State; and (II) appropriate data security standards to prevent unauthorized access by any person whose age and current location has not been verified in accordance with such State’s law or regulations”). 130 31 U.S.C. 5362(10)(B)(iii)(“The term “unlawful Internet gambling” does not include placing, receiving, or otherwise transmitting a bet or wager where ... (iii) the bet or wager does not violate any provision of—(I) the Interstate Horseracing Act of 1978 (15 U.S.C. 3001 et seq.); (II) chapter 178 of title 28 (commonly known as the “Professional and Amateur Sports Protection Act”); (III) the Gambling Devices Transportation Act (15 U.S.C. 1171 et seq.); or (IV) the Indian Gaming Regulatory Act (25 U.S.C. 2701 et seq.)”). The Gambling Devices Transportation Act, also known as the Johnson Act, among other things prohibits the interstate transportation of gambling devices under some circumstances. The Indian Gaming Regulatory Act, as the name suggests, regulates gambling on Indian lands. 131 31 U.S.C. 5362(C)(iv). 132 31 U.S.C. 5362((10)(B)(iii)(“The term ‘unlawful Internet gambling’ does not include placing, receiving, or otherwise transmitting a bet or wager where ... (iii) the applicable tribal ordinance or resolution or Tribal-State compact includes—(I) age and location verification requirements reasonably designed to block access to minors and persons located out of the applicable Tribal lands; and (II) appropriate data security standards to prevent unauthorized access by (continued...) Congressional Research Service 19 Internet Gambling: Overview of Federal Criminal Law Definitions aside, UIGEA’s prohibitions can only be breached by one who acts “knowingly.” As a general rule, “the word ‘knowingly’ means that the defendant realized what she was doing and was aware of the nature of her conduct and did not act through ignorance, mistake or accident.”134 However, “the term ‘knowingly’ does not necessarily have any reference to a culpable state of mind or to knowledge of the law.”135 There is nothing to shield UIGEA defendants from the same general accomplice and conspirator liability provisions that apply in the case of any other federal felony. Those who aid or abet a violation, that is, those who knowingly embrace the criminal activity and assist in its commission with an eye to its success, are liable to the same extent as those who commit the offense directly.136 Conspirators are liable for conspiracy, for any completed crime that is the object of the plot, and for any additional, foreseeable offense committed by a confederate in furtherance of the common scheme.137 Section 5362(2) excludes the activities of financial institutions, as well as communications and Internet service providers, from the definition of “business of betting or wagering.” Section 5367 (...continued) any person whose age and current location has not been verified in accordance with the applicable tribal ordinance or resolution or Tribal-State Compact”). 133 31 U.S.C. 5362(10)(B)(i)(ii)(“The term “unlawful Internet gambling” does not include placing, receiving, or otherwise transmitting a bet or wager where—(i) the bet or wager is initiated and received or otherwise made exclusively—(I) within the Indian lands of a single Indian tribe (as such terms are defined under the Indian Gaming Regulatory Act); or (II) between the Indian lands of 2 or more Indian tribes to the extent that intertribal gaming is authorized by the Indian Gaming Regulatory Act; (ii) the bet or wager and the method by which the bet or wager is initiated and received or otherwise made is expressly authorized by and complies with the requirements of—(I) the applicable tribal ordinance or resolution approved by the Chairman of the National Indian Gaming Commission; and (II) with respect to class III gaming, the applicable Tribal-State Compact”). Class I gaming refers to social games played for stakes of minimal value; class II gaming means bingo and cards games that are legal under applicable state law (not including blackjack, baccarat and other banking games); class III gaming describes any other form of gambling that is not class I or class II gaming and includes things like casino gambling, 25 U.S.C. 2703. 134 United States v. Dominguez, 661 F.3d 1051, 1068 (11th Cir. 2011); United States v. Voice, 622 F.3d 870, 876 (8th Cir. 2010); United States v. Alston-Graves, 435 F.3d 331, 337 (D.C. Cir. 2006)(citing cases from the First, Seventh, and Eighth Circuits). 135 Bryan v. United States, 524 U.S. 184, 192 (1998)(“[T]he knowledge requisite to knowing violation of a statute is factual knowledge as distinguished from knowledge of the law”); United States v. Dominguez, 661 F.3d 1051, 1068 (11th Cir. 2011); United States v. Blair, 54 F.3d 639, 642 (10th Cir. 1995)(in the context of the Wire Act “knowingly” does not mean that the defendant must be shown to have known his conduct violated the Wire Act); cf., United States v. Cohen, 260 F.3d 68, 71-3 (2d Cir. 2001)(conviction for conspiracy to engage in conduct in violation the Wire Act does not require proof that the defendant knew that the conduct was unlawful); contra, Cohen v. United States, 378 F.2d 751, 756-57 (9th Cir. 1967). 136 18 U.S.C. 2; Nye & Nissen v. United States, 336 U.S. 613, 619 (1949); see also United States v. George, 658 F.3d 706, 708 (7th Cir. 2011); United States v. Devries, 630 F.3d 1130, 1133 (8th Cir. 2011); United States v. Petersen, 622 F.3d 196, 208 (3d Cir. 2010); United States v. Hungerford, 465 F.2d 1113, 1117 (9th Cir. 2006). 137 Pinkerton v. United States, 328 U.S. 640, 645-48 (1946); Salinas v. United States, 522 U.S. 52, 62-3 (1997)(“The partners in the criminal plan must agree to pursue the same criminal objective and may divide up the work, yet each is responsible for the acts of each other”). The conspiratorial agreement is itself a separate crime under 18 U.S.C. 371 (“If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both. If, however, the offense, the commission of which is the object of the conspiracy, is a misdemeanor only, the punishment for such conspiracy shall not exceed the maximum punishment provided for such misdemeanor”); United States v. Bingham, 653 F.3d 983, 997 (9th Cir. 2011); United States v. Vazquez-Castro, 640 F.3d 19, 24 (1st Cir. 2011); United States v. Matias, 465 F.3d 169, 173 (5th Cir. 2006). Congressional Research Service 20 Internet Gambling: Overview of Federal Criminal Law declares that such entities may nonetheless incur liability under the act if they are directly engaged in the operation of an Internet gambling site.138 Neither section precludes their incurring liability as accomplices or co-conspirators. As noted earlier, whether a federal law applies to conduct committed entirely outside the United States is ordinarily a matter of congressional intent.139 The most obvious indicia of congressional intent is a statement within a particular statute that its provisions are to have extraterritorial application. UIGEA contains no such statement. Its legislative history of the act, however, leaves little doubt that Congress was at least as concerned with offshore illegal Internet gambling businesses as with those operated entirely within the United States.140 Offenders may also suffer civil constraints. UIGEA creates a limited federal civil cause of action to prevent and restrain violations of the act.141 It authorizes federal and state attorneys general to sue in federal court for injunctive relief to prevent and restrain violations of the act.142 It does not foreclose other causes of action on other provisions of state or federal law,143 but it does preclude suits in state court to enforce the act.144 It does not expressly authorize a private cause of action.145 It does not expressly offer attorneys general or anyone else any prospect of relief other than the federal court orders necessary to prevent and restrain.146 Moreover, it expressly limits the 138 31 U.S.C. 5367 (“Notwithstanding section 5362(2), a financial transaction provider, or any interactive computer service or telecommunications service, may be liable under this subchapter if such person has actual knowledge and control of bets and wagers, and—(1) operates, manages, supervises, or directs an Internet website at which unlawful bets or wagers may be placed, received, or otherwise made, or at which unlawful bets or wagers are offered to be placed, received, or otherwise made; or (2) owns or controls, or is owned or controlled by, any person who operates, manages, supervises, or directs an Internet website at which unlawful bets or wagers may be placed, received, or otherwise made, or at which unlawful bets or wagers are offered to be placed, received, or otherwise made”). 139 See supra text accompanying notes 61-69. 140 See, e.g., H.Rept. 109-412 (Pt.1), at 8 (2006)(“[The Act’s] primary purpose is to give U.S. law enforcement new, more effective tools for combating offshore Internet gambling sites that illegally extend their services to U.S. residents via the Internet”); H.Rept. 109-412 (Pt.2), at 8 (2006)(“The booming industry of offshore websites accepting bets and wagers from persons located in the United States raises a number of social and criminal concerns related to Internet gambling”). 141 31 U.S.C. 5365. 142 Id. 143 31 U.S.C. 5375(a) (“In addition to any other remedy under current law ... ”). 144 Id.(emphasis added) (“In addition to any other remedy under current law, the district courts of the United States shall have original and exclusive jurisdiction to prevent and restrain restricted transactions by issuing appropriate orders in accordance with this section, regardless of whether a prosecution has been initiated under this subchapter.”) 145 31 U.S.C. 5365((b)(1)(A), (2)(A), (3)(A)(“(1) ... The United States, acting through the Attorney General, may institute proceedings under this section to prevent or restrain a restricted transaction.... (2) ... The attorney general (or other appropriate State official) of a State in which a restricted transaction allegedly has been or will be initiated, received, or otherwise made may institute proceedings under this section to prevent or restrain the violation or threatened violation ... (3) ... Notwithstanding paragraphs (1) and (2), for a restricted transaction that allegedly has been or will be initiated, received, or otherwise made on Indian lands (as that term is defined in section 4 of the Indian Gaming Regulatory Act)—(i) the United States shall have the enforcement authority provided under paragraph (1); and (ii) the enforcement authorities specified in an applicable Tribal-State Compact negotiated under section 11 of the Indian Gaming Regulatory Act (25 U.S.C. 2710) shall be carried out in accordance with that compact”). 146 31 U.S.C. 5365(b)(1)(B), (2)(B)(“(1) ... Upon application of the United States under this paragraph, the district court may enter a temporary restraining order, a preliminary injunction, or an injunction against any person to prevent or restrain a restricted transaction, in accordance with rule 65 of the Federal Rules of Civil Procedure. (2) ... Upon application of the attorney general (or other appropriate State official) of an affected State under this paragraph, the district court may enter a temporary restraining order, a preliminary injunction, or an injunction against any person to prevent or restrain a restricted transaction, in accordance with rule 65 of the Federal Rules of Civil Procedure”). Congressional Research Service 21 Internet Gambling: Overview of Federal Criminal Law instances when the attorneys general may institute proceedings against Internet service providers and financial institutions. They may only proceed civilly against financial institutions to block transactions involving unlawful Internet gambling unless the institution is directly involved in an unlawful Internet gambling business.147 Barring application of the same direct involvement exception, the attorneys general may sue Internet service providers under the act only to block access to unlawful Internet gambling sites or to hyperlinks to such sites under limited circumstances.148 Subject to an exception that mirrors the direct involvement exception, the act also removes providers from the coverage of the Wire Act provision under which law enforcement officials may insist that communications providers block the wire communications of Wire Act violators.149 Neither of the provisions restricting the civil liability of financial institutions and of Internet service providers explicitly immunizes them from criminal prosecution for aiding or abetting or for conspiracy. Although UIGEA restricts the civil liability of financial institutions, it binds them under a regulatory enforcement scheme outlined in the act. The act calls upon the Secretary of the Treasury and the Governors of the Federal Reserve Board in conjunction with the Attorney General to create a regulatory mechanism that identifies and blocks financial transactions prohibited in the act.150 Among its other features,151 the mechanism must admit to practical 147 31 U.S.C. 5365(d)(“Notwithstanding any other provision of this section, and subject to section 5367, no provision of this subchapter shall be construed as authorizing the Attorney General of the United States, or the attorney general (or other appropriate State official) of any State to institute proceedings to prevent or restrain a restricted transaction against any financial transaction provider, to the extent that the person is acting as a financial transaction provider”). For the text of 31 U.S.C. 5367 see supra note 143. A financial transaction provider is anyone who is “a creditor, credit card issuer, financial institution, operator of a terminal at which an electronic fund transfer may be initiated, money transmitting business, or international, national, regional, or local payment network utilized to effect a credit transaction, electronic fund transfer, stored value product transaction, or money transmitting service, or a participant in such network, or other participant in a designated payment system,” 31 U.S.C. 5362(4). 148 31 U.S.C. 5365(c)(1)(“ Relief granted under this section against an interactive computer service shall—(A) be limited to the removal of, or disabling of access to, an online site violating section 5363, or a hypertext link to an online site violating such section, that resides on a computer server that such service controls or operates, except that the limitation in this subparagraph shall not apply if the service is subject to liability under this section under section 5367; (B) be available only after notice to the interactive computer service and an opportunity for the service to appear are provided; (C) not impose any obligation on an interactive computer service to monitor its service or to affirmatively seek facts indicating activity violating this subchapter; (D) specify the interactive computer service to which it applies; and (E) specifically identify the location of the online site or hypertext link to be removed or access to which is to be disabled”). 149 31 U.S.C. 5365(c)(2)(“An interactive computer service that does not violate this subchapter shall not be liable under section 1084(d) of title 18, except that the limitation in this paragraph shall not apply if an interactive computer service has actual knowledge and control of bets and wagers and—(A) operates, manages, supervises, or directs an Internet website at which unlawful bets or wagers may be placed, received, or otherwise made or at which unlawful bets or wagers are offered to be placed, received, or otherwise made; or (B) owns or controls, or is owned or controlled by, any person who operates, manages, supervises, or directs an Internet website at which unlawful bets or wagers may be placed, received, or otherwise made, or at which unlawful bets or wagers are offered to be placed, received, or otherwise made”). Section 1084(d) provides in relevant part, “(d) When any common carrier, subject to the jurisdiction of the Federal Communications Commission, is notified in writing by a Federal, State, or local law enforcement agency, acting within its jurisdiction, that any facility furnished by it is being used or will be used for the purpose of transmitting or receiving gambling information in interstate or foreign commerce in violation of Federal, State or local law, it shall discontinue or refuse, the leasing, furnishing, or maintaining of such facility, after reasonable notice to the subscriber, but no damages, penalty or forfeiture, civil or criminal, shall be found against any common carrier for any act done in compliance with any notice received from a law enforcement agency.” 150 31 U.S.C. 5364 (a)(“Before the end of the 270-day period beginning on the date of the enactment of this subchapter, the Secretary and the Board of Governors of the Federal Reserve System, in consultation with the Attorney General, shall prescribe regulations (which the Secretary and the Board jointly determine to be appropriate) requiring each designated payment system, and all participants therein, to identify and block or otherwise prevent or prohibit restricted (continued...) Congressional Research Service 22 Internet Gambling: Overview of Federal Criminal Law exemptions and ensure that lawful Internet gambling transactions are not blocked.152 Good faith compliance insulates regulated entities from both regulatory153 and civil liability.154 Regulatory enforcement falls to the Federal Trade Commission and to the “federal functional regulators” within their areas of jurisdiction, that is, the Governors of the Federal Reserve, the Comptroller of the Currency, the Federal Deposit Insurance Commission, the Office of Thrift Supervision, the National Credit Union Administration, the Securities and Exchange Commission and the Commodities Exchange Commission.155 The Third Circuit has concluded that UIGEA is neither unconstitutionally vague nor unconstitutionally intrusive on any recognized right to privacy.156 (...continued) transactions through the establishment of policies and procedures reasonably designed to identify and block or otherwise prevent or prohibit the acceptance of restricted transactions in any of the following ways: (1) The establishment of policies and procedures that—(A) allow the payment system and any person involved in the payment system to identify restricted transactions by means of codes in authorization messages or by other means; and (B) block restricted transactions identified as a result of the policies and procedures developed pursuant to subparagraph (A). (2) The establishment of policies and procedures that prevent or prohibit the acceptance of the products or services of the payment system in connection with a restricted transaction”). 151 31 U.S.C. 5364(b)(1), (2) (“In prescribing regulations under subsection (a), the Secretary and the Board of Governors of the Federal Reserve System shall—(1) identify types of policies and procedures, including nonexclusive examples, which would be deemed, as applicable, to be reasonably designed to identify and block or otherwise prevent or prohibit the acceptance of the products or services with respect to each type of restricted transaction; (2) to the extent practical, permit any participant in a payment system to choose among alternative means of identifying and blocking, or otherwise preventing or prohibiting the acceptance of the products or services of the payment system or participant in connection with, restricted transactions”). 152 31 U.S.C. 5364(b)(3), (4)(“In prescribing regulations under subsection (a), the Secretary and the Board of Governors of the Federal Reserve System shall ... (3) exempt certain restricted transactions or designated payment systems from any requirement imposed under such regulations, if the Secretary and the Board jointly find that it is not reasonably practical to identify and block, or otherwise prevent or prohibit the acceptance of, such transactions; and (4) ensure that transactions in connection with any activity excluded from the definition of unlawful internet gambling in subparagraph (B), (C), or (D)(i) of section 5362(10) [relating to lawful intrastate, intratribal, and horse race related gambling] are not blocked or otherwise prevented or prohibited by the prescribed regulations”). 153 31 U.S.C. 5364(c)(“A financial transaction provider shall be considered to be in compliance with the regulations prescribed under subsection (a) if—(1) such person relies on and complies with the policies and procedures of a designated payment system of which it is a member or participant to—(A) identify and block restricted transactions; or (B) otherwise prevent or prohibit the acceptance of the products or services of the payment system, member, or participant in connection with restricted transactions; and (2) such policies and procedures of the designated payment system comply with the requirements of regulations prescribed under subsection (a)”). 154 31 U.S.C. 5364(d)(“A person that identifies and blocks a transaction, prevents or prohibits the acceptance of its products or services in connection with a transaction, or otherwise refuses to honor a transaction—(1) that is a restricted transaction; (2) that such person reasonably believes to be a restricted transaction; or (3) as a designated payment system or a member of a designated payment system in reliance on the policies and procedures of the payment system, in an effort to comply with regulations prescribed under subsection (a),shall not be liable to any party for such action”). 155 31 U.S.C. 5364(e)(“The requirements under this section shall be enforced exclusively by—(1) the Federal functional regulators, with respect to the designated payment systems and financial transaction providers subject to the respective jurisdiction of such regulators under section 505(a) of the Gramm-Leach-Bliley Act [(15 U.S.C. 6805(a)), see also, 15 U.S.C. 6809(2)] and section 5g of the Commodities Exchange Act [(7 U.S.C. 7b-2)]; and (2) the Federal Trade Commission, with respect to designated payment systems and financial transaction providers not otherwise subject to the jurisdiction of any Federal functional regulators (including the Commission) as described in paragraph (1)”). 156 Interactive Media Entertainment and Gaming Ass’n v. Attorney General, 580 F.3d 113, 116, 118 (3d Cir. 2009)(internal citations omitted)(“We reject Interactive’s vagueness claim. The Act prohibits a gambling business from knowingly accepting certain financial instruments from an individual who places a bet over the Internet if such gambling is illegal at the location in which the business is located or form which the individual initiates the bet. Thus, (continued...) Congressional Research Service 23 Internet Gambling: Overview of Federal Criminal Law Racketeer Influenced and Corrupt Organizations (RICO) Illegal gambling may trigger the application of federal racketeering (RICO) provisions.157 Violations of the Wire Act, the Illegal Gambling Business Act, and the Travel Act, as well as any state gambling felony, are all RICO predicate offenses. RICO violations are punishable by imprisonment for not more than twenty years and/or a fine of greater of not more than $250,000 (not more than $500,000 for an organization) or twice the gain or loss associated with the offense.158 An offender’s crime-tainted property may be confiscated, and he may be liable to his victims for triple damages and subject to other sanctions upon the petition of the government.159 RICO makes it a federal crime for any person to I. conduct or participate, directly or indirectly, in the conduct of II. the affairs of an enterprise III. engaged in or the activities of which affect, interstate or foreign commerce IV. A. through the collection of an unlawful debt, or B. through a pattern of racketeering activity, defined to include: 1. any act of gambling which is chargeable under State law and punishable by imprisonment or more than 1 year; 2. any act which is indictable under 18 U.S.C. 1084 (Wire Act); 3. any act which is indictable under 18 U.S.C. 1952 (Travel Act); 4. any act which is indictable under 18 U.S.C. 1955 (relating to conducting an illegal gambling business, 18 U.S.C. 1962(c).160 “To establish the elements of a substantive RICO offense, the government must prove (1) that an enterprise existed; (2) that the enterprise affected interstate or foreign commerce; (3) that the defendant associated with the enterprise; (4) that the defendant participated, directly or indirectly, in the conduct of the affairs of the enterprise; and (5) that the defendant participated in the enterprise through a pattern of racketeering activity by committing at least two racketeering (predicate) acts [e.g., 18 U.S.C. 1084 (Wire Act), 18 U.S.C. 1952 (Travel Act), 18 U.S.C. 1955 (illegal gambling business)]. To establish the charge of conspiracy to violate the RICO statute, the government must prove, in addition to elements one, two and three described immediately above, (...continued) the Act clearly provides a person of ordinary intelligence with adequate notice of the conduct that it prohibits.... Both Lawrence and Earle involved state laws that barred certain forms of sexual conduct between consenting adults in the privacy of the home.... Gambling, even in the home, simply does not involve any individual interest of the same constitutional magnitude. Accordingly, such conduct is not protected by any right to privacy under the constitution”). 157 18 U.S.C. 1961-1968. 158 18 U.S.C. 1963, 3571. 159 18 U.S.C. 1964. 160 Other subsections of 18 U.S.C. 1962 outlaw acquire or maintaining control of a commercial enterprise through collection of an unlawful debt or pattern of racketeering and proscribe conspiracy to commit a RICO offense, 18 U.S.C. 1962(a),(b),(d); see generally, CRS Report 96-950, RICO: A Brief Sketch. Congressional Research Service 24 Internet Gambling: Overview of Federal Criminal Law that the defendant objectively manifested an agreement to participate ... in the affairs of the enterprise.”161 The “person” who commits a RICO offense need not be a human being, but may be “any individual or entity capable of holding a legal or beneficial interest in property,” 162 The “enterprise” element is defined with comparable breath, embracing “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.”163 In spite of their sweeping scope, the elements are distinct and a single defendant may not be simultaneously charged as both the “person” and the “enterprise” under 18 U.S.C. 1962(c).164 Subject to this limitation, however, a RICO enterprise may be formal or informal, legal or illegal. In order for a group associated in fact to constitute a RICO enterprise, it “must have at least three structural features: a purpose, relationships among those associated with the enterprise, and longevity sufficient to permit these associates to pursue the enterprise’s purpose.”165 On the other hand, it “need not have a hierarchical structure or a ‘chain of command’; decisions may be made on an ad hoc basis and by any number methods.... Members of the group need not have fixed roles.”166 And, “nothing in RICO exempts an enterprise whose associates engage in spurts of activity punctuated by periods of quiescence.”167 The interstate commerce element of the RICO offense may be established either by evidence that the enterprise has conducted its affairs in interstate commerce or foreign commerce or has engaged in activities that affect interstate commerce or foreign commerce.168 The “pattern of racketeering activity” element demands the commission of at least two predicate offenses,169 which must be of sufficient relationship and continuity to be described as a “pattern.”170 Related crimes, for pattern purposes, are marked by “the same or similar purposes, 161 United States v. Darden, 70 F.3d 1507, 1518 (8th Cir. 1995); see also United States v. Olson, 450 F.3d 655, 663-64 (7 Cir. 2006); United States v. Bergrin, 650 F.3d 257, 265 (3d Cir. 2011); United States v. Knight, 659 F.3d 1285, 1287 (10th Cir. 2011). 162 18 U.S.C. 1961(3). 163 18 U.S.C. 1961(4). 164 United States v. Bergrin, 650 F.3d 259, 266 (3d Cir. 2011); Wagh v. Metris Direct, Inc., 363 F.3d 821, 830 (9th Cir. 2003); United States v. Fairchild, 189 F.3d 769, 777 (8th Cir. 1999); Anatian v. Coutts Bank (Switzerland) Ltd., 193 F.3d 85, 88-9 (2d Cir. 1999); Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 161 (2001)(holding, however, that the “person” and the individual through whom a corporate enterprises acts may be the same and need not be distinct). 165 Boyle v. United States, 129 S.Ct. 2237, 2244 (2009); United States v. Applins, 637 F.3d 59, 73 (2d Cir. 2011); United States v. Bergrin, 650 F.3d 259, 265-66 (3d Cir. 2011). 166 Boyle v. United States, 129 S.Ct. at 2245; United States v. Bingham, 653 F.3d 983, 992 (9th Cir. 2011). 167 Boyle v. United States, 129 S.Ct. at 2245 (2009). 168 United States v. Robertson, 514 U.S. 669, 671 (1995); proof of even a de minimis effect on interstate commerce is sufficient where the enterprise is engaged in economic activity, United States v. Johnson, 440 F.3d 832, 841 (7th Cir. 2006); Waucaush v. Untied States, 380 F.3d 251, 256 (6th Cir. 2004); United States v. Cianci, 378 F.3d 71,83 (1st Cir. 2004); United States v. Rodriguez, 360 F.3d 949, 955 (9th Cir. 2004). 169 18 U.S.C. 1961(5). 170 “A pattern is not formed by sporadic activity.... [A] person cannot be subjected to the sanctions [of RICO] simply for committing two widely separate and isolated criminal offenses. Instead, the term `pattern’ itself requires the showing of a relationship between the predicates and of the threat of continuing activity. It is this factor of continuity plus relationship which combines to produce a pattern,” H.J., Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229, 239 (1989)(emphasis of the Court); United States v. Cianci, 378 F.3d 71, 88 (1st Cir. 2004); United States v. Bergrin, 650 F.3d 259, 267 (3d Cir. 2011); United States v. Knight, 659 F.3d 1285, 1288-289 (10th Cir. 2011). Prior conviction of a predicate offense, however, is not required or even usual, BancOklahoma Mortgage Corp. v. Capital Title Co., 194 (continued...) th Congressional Research Service 25 Internet Gambling: Overview of Federal Criminal Law results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events.”171 The “continuity” of predicate offenses may be shown in two ways, either by prove of the regular occurrences of related misconduct over a period of time in the past (closed ended) or by evidence of circumstances suggesting that if not stopped by authorities they would have continued in the future (open ended).172 The courts have been reluctant to find the continuity required for a RICO pattern for closed ended enterprises (those with no threat of future predicate offenses) unless the enterprise’s activities spanned a fairly long period of time.173 Open-ended continuity (found where there is a threat of future predicate offenses) is nowhere near as time sensitive and is often found where the predicates consist of murder, drug dealing or other serious crimes or are part of the enterprise’s regular way of doing business.174 The RICO conspiracy and accomplice branches of the law are notable for at least two reasons. RICO conspiracies are outlawed in a subsection of section 1962 that imposes no overt act requirement.175 The crime is complete upon the agreement to commit a RICO offense.176 Second, at least in some circuits, RICO accomplices are not subject to RICO tort liability.177 (...continued) F.3d 1089, 1102 (10th Cir. 1999); cf., Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 488-93 (1985)(a private cause of action under RICO does not require the prior conviction of a defendant). 171 H.J., Inc. v. Northwestern Bell Telephone Co., 492 U.S. at 240, quoting 18 U.S.C. 3575(e); United States v. Torres, 191 F.3d 799, 806 (7th Cir. 1999); United States v. Bruno, 383 F.3d 65, 83-4 (2d Cir. 2004); United States v. Bergrin, 650 F.3d 259, 265-66 (3d Cir. 2011); United States v. Knight, 659 F.3d 1285, 1289 (10th Cir. 2011); United States v. Bingham, 653 F.3d 983, 992 (9th Cir. 2011). 172 H.J.,Inc. v. Northwestern Bell Tel.Co., 492 U.S. 229, 241 (1988)(continuity “is both a closed- and open-ended concept, referring either to a closed end period of repeated conduct, or to past conduct that by its nature projects into the future with a threat of repetition”); First Capital Asset Management v. Satinwood, Inc., 358 F.3d 159, 180 (2d Cir. 2004); United States v. Bradley, 644 F.3d 1213, 1238 (11th Cir. 2011); United States v. Bergrin, 650 F.3d 259, 267 (3d Cir. 2011). 173 First Capital Asset Management v. Satinwood, Inc., 358 F.3d at 181-82 (2d Cir. 2004)(“this Court has never found a closed-ended pattern where the predicate acts spanned fewer than two years”); Roger Whitmore’s Automotive Services, Inc. v. Lake Country, 424 F.3d 659, 672-74 (7th Cir. 2005)(2 years with relatively limited activity involving a relatively few individuals, insufficient); Jackson v. Bellsouth Telecommunications, 372 F.3d 1250, 1267 (11th Cir. 2004)(9 months, insufficient); but see, United States v. Hively, 437 F.3d 753, 764-65 (8th Cir. 2006)(over a year with [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/crs%3A97-619. Public record. Not legal advice.