Introduction

Gambling has been a part of American life longer than the Constitution. The first recorded instance of gambling in the English colonies occurred in 1620 with horse races in Virginia. [1] Shortly thereafter came the first instance of government in America addressing the issue of gambling when in 1621 the Plymouth Colony placed restrictions on gambling in that colony. [2] Ever since that time, gambling has been regulated at both the federal and state levels. [3]

With the advent of the Internet, gambling regulations that do not anticipate the use of online gambling are quickly becoming outdated. As individual citizens become increasingly able to bet virtually unrestricted amounts of money via the Internet, state governments that regulate gambling will find it increasingly difficult to maintain their regulatory structures and, at the same time, meaningfully limit such gambling.

This article will specifically address the tension between Internet gambling and state gambling policy (using Colorado law as the primary example of state policy) and will provide a workable solution that could be adapted by the federal government as well as any state that wishes to control Internet gambling. Part I of this comment discusses state gambling policies, mainly through the vehicle of Colorado's Limited Gaming Act, and compares gambling in Colorado with gambling on the Internet in its current, largely unregulated, form. Part I also demonstrates the tension that is inherent between Internet gambling and regulated gambling under Colorado law. Part II examines multiple proposed solutions that have been put forth by various sources in an effort to ease these tensions. The sources of the solutions include the Internet gambling industry itself, as well as other state governments and the federal government. Finally, Part III of this comment will explore a plan of action that will accommodate the interests of the various parties involved. [4]

I. Colorado's Limited Gaming Act Versus Internet Gambling

The premise underlying this article is that there are areas of conflict between the regulated gambling permitted by the laws of the states and the largely unregulated gambling that can be engaged in on the Internet. In order to understand these conflicts one must first take a brief look at these two different gambling regimes. What follows is a relatively simple examination of the broad outlines of Colorado's gambling laws [5] and a comparison of gambling under those laws with gambling as it can take place on the Internet.

A. Colorado's Limited Gaming Act of 1991

The basic goal of Colorado's Limited Gaming Act is to produce a gaming industry in Colorado that is profitable and beneficial to both the communities where the gaming takes place and to the state as a whole. [6] In order to achieve this goal, the public must have confidence and trust in the industry since an industry plagued by cheating and criminal elements produces little economic benefit for the communities where it is located. [7] Public confidence and trust in the gambling industry depends on fostering three somewhat interrelated beliefs. First, the public must trust that the games themselves are legitimate and second, that a winner will be paid those winnings to which she is entitled. Third, the public must believe that persons involved in the gambling industry are free from the influences of organized crime, in the case of casino owners, operators, employees, and cheating, in the case of casino patrons.[8]
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Colorado's Limited Gaming Act regulates the legitimacy of the games in several ways. First, gamblers are only permitted to engage in three general types of gambling: blackjack, poker, and slot machines. [9] Second, and perhaps most importantly, gamblers are limited to a maximum bet of five dollars. [10] Third, with respect to slot machines the law mandates that the amount of winnings paid out by a machine is to be at least eighty-percent of the total amount of money paid into the machine. [11] Finally, the large majority of the remaining laws dealing with the legitimacy of the games are laws prohibiting various forms of cheating. [12] These sections prohibit unfair practices by gambling device manufacturers, casino owners or operators, casino employees, and players, in an effort to ensure that each individual player enjoys a relatively equal opportunity to win.

In addition to being confident that the games they play at casinos are fair, players also want to be sure that the moneys they win will be paid to them. The best way to promote player confidence is to make sure that casinos maintain adequate cash reserves in order to meet all payout obligations to casino patrons. [13] Pursuant to this goal of financial soundness, the Limited Gaming Act has three major provisions: first, every casino licensed pursuant to the Limited Gaming Act must keep a complete and accurate record of all gambling transactions, and those records must be open and available for inspection by the Division of Gaming [14] at the division's request; [15] second, casinos are prohibited from extending credit to their patrons;[16] and third, any licensee who willfully refuses to pay winnings to a winner is guilty of a class one misdemeanor. [17] Again, these provisions are designed to ensure that the public is confident that casinos are not defrauding their customers by means of questionable financial practices.

The bulk of Colorado's Limited Gaming Act is concerned with ways of fostering public confidence in the integrity of casinos and casino employees. The legislative declaration of the Act states that, for limited gaming in Colorado to succeed, the public must be confident that "gaming is free from criminal and corruptive elements."[18]

Under the Limited Gaming Act, anyone desiring a gaming license must apply to the Colorado Limited Gaming Control Commission ("Gaming Commission"). [19] A prospective licensee must demonstrate that she possesses "good moral character" in order to obtain a license. [20] Accordingly, the Gaming Commission is required to deny licensure where the applicant's background reveals that the applicant has been convicted for any one of a number of gambling and gambling-related offenses. [21]

The prospective licensee may appeal the Gaming Commission's initial denial of licensure. However, such appeals face an uphill battle. The legislature has declared that:

No applicant for a license or other affirmative commission approval has any right to a license or to the granting of the approval sought. Any license issued or other commission approval granted pursuant to the provisions of this article is a revocable privilege, and no holder acquires any vested right therein or thereunder. [22]

In addition to overseeing the licensing of casino employees, the Division of Gaming and the Gaming Commission are also responsible for the licensing of the casinos and gambling machine manufacturers.[25] In 1997, the Gaming Commission issued its first denial of a request for license renewal by a gambling machine manufacturer. [26] The Gaming Commission accused the manufacturer of allowing the founder of the company, a man alleged to have connections with "career offender cartels," [27] to maintain a position of influence within the company. [28] The Gaming Commission has also issued fines to companies that have failed to abide by the Limited Gaming Act and the regulations promulgated pursuant to that Act. [29]

The picture that emerges from the above examination is one of a gambling industry that is strictly regulated by two agencies that have been given sweeping powers by both the legislature and the courts to promote the honesty and integrity of that industry. As will be shown, the level of regulation imposed on Internet-based casinos is minimal compared to that in Colorado, and this lack of regulation makes such casinos incompatible with Colorado's current gambling policies. [30]

B. Why Internet Casinos Do Not Currently Meet Colorado's Regulatory Standards[31]

Internet casinos do not, as a rule, meet the regulatory standards that have been established for land-based casinos in Colorado. As an illustration, we will compare the English Harbour Casino [32] to the regulatory regime imposed by Colorado's Limited Gaming Act. The result will show that English Harbour does not live up to Colorado's attempts to promote the integrity of the games, the integrity of casino finances, and the integrity of casino owners and employees. [33]

The English Harbour casino does not conduct "limited gaming" as that word is understood by Colorado law. Patrons of the casino need only be the age of majority, rather than the age of twenty-one as proscribed by Colorado law. [34] The casino does not limit itself to the permissible games of poker, blackjack and slot machines, but instead also offers such games as craps, keno, and roulette. [35] Finally, the gaming offered by English Harbour is not limited in the financial sense in the same way as Colorado gaming. English Harbour does not restrict its gamblers to a maximum of five dollars per bet, [36] as is required by Colorado law. [37]
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English Harbour's web-site offers its patrons little assurance regarding its financial integrity. Winners are told that they will be paid their winnings promptly at their request. [38] English Harbour also states that all data transferred to it is encrypted and will be secure in its transmission. [39] However, there is no information regarding whether the casino is licensed in its home jurisdiction, or whether it complies with any financial requirements set by any jurisdiction.

The casino is also unclear regarding what steps it takes to ensure the integrity of the casino's owners and/or employees. Who is English Harbour Entertainment, Ltd.? The web-site does not provide viewers with any information regarding the stability or integrity of the owners of the casino. Further, there is no assurance provided to the customer that the casino has had to meet any strict ownership requirements as those casinos operating in Colorado must do.

One final note regarding the points of incompatibility between Internet casinos and land-based casinos. When this paper was first written in February of 1998, a different casino was discussed as an exemplar. [40] As late as December, 1998, that casino was in operation. However, shortly before this article's publication, the casino disappeared from the Web. The transience of the Web further illustrates the incompatibility of Internet-based gambling with Colorado's Limited Gaming Act. The regulatory scheme in Colorado is designed to help ensure that casinos are not the kind of organization that can take the customers' money and run at a moment's notice. The consumer who gambles via the Internet, however, is not only gambling that his or her poker hand will turn up a winner, but also that the casino will be there the next time he or she logs in.

II. Other Entities' Attempts at Easing Regulatory Tensions

As the previous Part demonstrates, Internet gambling as it currently exists is in tension with the regulatory scheme established by Colorado's Limited Gaming Act. This comment is not the first to recognize this tension between state gambling laws and Internet casinos, and this section examines the solutions that have been put forth by other entities. This Part will examine, in turn, the suggestions made by the industry itself, enforcement attempts by other states, and legislation introduced in both the United States House of Representatives and the Senate during the 105 ^th Congress. Finally, each sub-section will evaluate the potential success of the relevant proposed solution in addressing Colorado's regulatory concerns.

A. The Internet Gambling Industry's Proposal for Self-Regulation

Industry self-regulation is championed by the Interactive Gaming Council ("IGC"). [41] The IGC is part of the Interactive Services Association, a group of over 300 companies who have banded together for the purpose of "promoting and developing consumer interactive services worldwide." [42] In May 1997, the IGC released a ten-point "Industry Code of Conduct" ("the Code") at the North American Gaming Regulators conference in Phoenix, Arizona. [43] The Code is applicable to members of the IGC and is otherwise purely voluntary.
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1. Similarities Between the IGC Code and Colorado's Limited Gaming Act

Similar to Colorado's Limited Gaming Act, the Code addresses, in part, the three areas of public confidence that the Act was designed to promote: the legitimacy of the games; the financial stability of the casinos; and the moral integrity of the casinos and their employees. [44]

The Code addresses game legitimacy at various places in its ten points. The Code provides that IGC members shall make their "systems, algorithms, and practices available for inspection and review by any legitimate gaming commission or governmental authority" in any jurisdiction where the member makes its services available to consumers.[45] Each member is also required to "institute controls to detect and eliminate fraud." [46] Finally, the fourth point of the Code states that members should publish only accurate information regarding their operations and make the payout percentages for their games available to the public. [47]

The casinos' financial stability is also covered by the Code. Point five of the Code provides that "[IGC] members will retain detailed transaction records which will be archived, accessible and auditable by any legitimate gaming commission or government authority." [48] Additionally, IGC members are required to conduct any and all financial transactions according to "accepted standards of internationally recognized banking institutions." [49] Casinos that are members of the IGC are also required to abide by whatever financial transaction reporting provisions enacted by the jurisdictions where they are physically located. [50] Finally, members must "ensure that there is adequate financing available to pay all current obligations and that working capital is adequate to finance ongoing operations." [51]

The Code also addresses the Limited Gaming Act's concern with the moral integrity of the casinos, their employees and their patrons. The Code, in point one, requires an IGC member to abide by the laws and regulations of the jurisdiction where it proposes to do business. [52] There is also a provision requiring members to implement procedures to identify and control the spending of compulsive gamblers. [53] And, finally, the Code mandates that members institute procedures to ensure that a patron meets the minimum age requirements that the patron's jurisdiction has established for engaging in gambling activities. [54]

These then, are the similarities between the IGC Code and Colorado's Limited Gaming Act. The Code's provisions are susceptible to interpretations that bring it somewhat in line with Colorado's gambling regulations. However, as will be shown, there are troubling inconsistencies between the two that make the current iteration of the IGC Code inadequate to the task of applying Colorado's regulatory framework to Internet gambling.
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2. Points of Incompatibility Between the IGC Code and Colorado's Limited Gaming Act

The most material point on which the Code and the Limited Gaming Act diverge is in the area of enforcement. Membership in the IGC is voluntary and currently not required by any government body. [55] Since the Code itself has no sanction provisions, it would appear that the only punishment the IGC could issue for a violation of the Code would be to revoke an Internet casino's membership in the association. One Internet casino operator and IGC member has suggested that lack of membership in the IGC will be heavily advertised as a warning sign to consumers. [56] However, as of early 1998, this negative advertising is not happening. [57] Thus, the Code does not have the enforcement power that Colorado's criminal sanctions carry. [58]

Setting aside this major substantive difference between the Code and the Limited Gaming Act, there are also several descriptive differences between these two regulatory schemes. The Code requires only that a member casino operate according to the laws of the jurisdiction where it is physically located and to abide by limitations of other jurisdictions "to the greatest extent technically feasible." [59] Thus, the Code does not mandate any limits on the types of games offered, [60] nor the amount of money that gamblers can bet. [61]

Additionally, since the Code requires member casinos to be licensed only under the laws where the Internet casino is physically located, a member casino may or may not be subjected to strict licensing requirements similar to those under Colorado's Limited Gaming Act. Finally, the Code's broad requirements leave the decision of who is eligible for licensing up to a member casino's home jurisdiction. Thus, if the home jurisdiction has no such licensing standards in place, casinos licensed by that jurisdiction could be operated by persons deemed to be unfit for licensing under the Limited Gaming Act. [62]

None of this is to suggest that the IGC is mistaken in its premise that a non governmental entity can play a role in the regulation of Internet gambling. An independent body establishing guidelines for Internet casinos is part of what this comment argues is Colorado's best hope of regulating Internet gambling consistent with the policies underlying the Limited Gaming Act. [63]

B. The Litigation Solution

The second choice that is currently available to Colorado is to follow the lead of Minnesota and sue Internet casinos in state court under existing state laws. This section will first examine Minnesota's litigation strategy of combining federal gambling laws with state consumer protection laws in order to get a civil injunction against an Internet-based sports gambling operation. The analysis will then close with a description of the two primary problems with Minnesota's approach, namely the limitations on extraterritorial application of United States law and the enforcement problems inherent in judgments against foreign defendants.
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On July 18, 1995, the Minnesota Attorney General's office filed suit against Granite Gate Resorts, Inc. ("Granite Gate"). Granite Gate, a Nevada corporation, was operating a web site that advertised a sports wagering service [64] and a service that, for a fee, would provide tips on projected winners of upcoming sporting events. [65] Granite Gate claimed that its services were legal and thus made no restrictions concerning who could access their services. [66]

The Minnesota Attorney General sought an injunction against Granite Gate, a form of relief made available by the consumer protection laws of Minnesota. [67] The complaint alleged that Granite Gate was violating § 18 U.S.C. 1084 by permitting Minnesota residents to transmit bets or wagers, or information on bets or wagers, by the use of a wire communication in foreign or interstate commerce. [68] The complaint further alleged that because the services that Granite Gate offered were illegal under § 18 U.S.C. 1084, Granite Gate "engaged in false advertising deceptive trade practices and consumer fraud by representing that their sports handicapping service and proposed sports bookmaking service are lawful." [69] Thus, Minnesota's theory of its case was that Granite Gate's services were illegal (under federal law), that Granite Gate advertised to prospective customers that its services were legal, and that these representations made by Granite Gate were, therefore, in violation of the consumer protection laws of Minnesota.

The Attorney General also claimed that Minnesota's courts had personal jurisdiction over Granite Gate. [70] Both the District Court and the Minnesota Appeals Court agreed with the Attorney General that Granite Gate, via its web-site, had solicited a nationwide clientele that would include Minnesota residents, and such solicitations constituted purposeful availment of the benefits of conducting business in the forum state of Minnesota, thus granting Minnesota's courts jurisdiction to hear the case. [71]

Minnesota's arguments in State ex rel Humprey appear to provide a powerful weapon for states that want to shut down Internet casinos. However, there are two limitations, one theoretical and the other practical, that prevent this solution from giving Colorado an effective method of resolving the tensions between Internet gambling and the Limited Gaming Act.

The first weakness of Minnesota's solution is that the state's arguments about the underlying federal law may not be interpreted the same way in Colorado. Federal law, in its current state, probably does not prohibit Internet casinos located overseas from operating on the Internet. Both domestic and international law place limits on a nation's prescriptive jurisdiction, [72] and Minnesota's use of federal law may violate these limits, as will be shown.
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The role of the Federal Courts in cases that involve international law concerns is: "to enforce the Constitution, laws, and treaties of the United States, not to conform the law of the land to norms of customary international law." [73] Where there are inconsistencies between what a domestic statute and customary international law requires, the court is bound to apply the domestic statute, even where the application of the statute might violate norms of customary international law. [74] In such instances, the "inconsistent statute simply modifies or supersedes customary international law to the extent of the inconsistency." [75] At first glance these statements appear to bolster Minnesota's argument. If applying federal gambling statutes to foreign Internet casinos violates customary international law, then so be it. The Minnesota court must apply the United States' law, even if doing so would violate precepts of international law.

Unfortunately, such an argument overlooks one problem: the Supreme Court long ago created an exception to this rule. The exception states that "an act of congress ought never to be construed to violate the law of nations, if any other possible construction remains . . . ." [76] Thus, United States courts have required that, for domestic law to have extraterritorial application, there must be some specific and express intent by the legislature for the law to have such an effect. The provision of federal law that Minnesota used in State ex rel Humphrey prohibits the knowing use of "a wire communication facility for the transmission in interstate or foreign commerce " of various types of gambling information. [77] The term "foreign commerce" by itself, however, has been ruled by the Fifth Circuit not to provide sufficient legislative intent so that a law would have extraterritorial effect. [78]

The second weakness in Minnesota's approach is the purely practical problem of enforcing judgments against foreign Internet casinos. Minnesota's Attorney General sought both an injunction and monetary damages against Granite Gate. [79] Although the defendant in State ex rel Humphrey was a Nevada corporation, most Internet casinos today are located in foreign countries. The likelihood of enforcing a judgment against such international entities is small. If the Internet casino has assets in the United States, the Full Faith and Credit Clause of the U.S. Constitution and other laws, such as the Uniform Respect of Foreign Judgments Act, make it relatively easy to attach those assets in the United States. However, if there are no assets located in the United States, the state must then go to the foreign jurisdiction where the Internet casino is located and attempt to enforce the judgment there. Needless to say, foreign jurisdictions will most likely fail to enforce a judgment based on an activity that, although adjudged illegal in the United States, is not considered illegal in the foreign jurisdiction.

C. Proposed Legislative Solutions on the National Level

As discussed above, 18 U.S.C. § 1084, the federal law that Minnesota's lawsuit was based on, is ambiguous in its application to foreign Internet casinos. [80] In an effort to deal with these ambiguities and to update the law for application to the Internet specifically, both the United States House of Representatives and Senate have introduced differing versions of a bill entitled the Internet Gambling Prohibition Act of 1997 ("IGPA"). [81] Neither statute passed in the 105 ^th Congress, but it is anticipated that the bills will be reintroduced for further debate in the 106 ^th Congress. [82] This sub-section will review these two proposed statutes and evaluate their strengths and weaknesses.

1. The House Version of the IGPA

The House version of the IGPA, if passed, will amend §§ 1081 and 1084 of Title 18 of the United States Code. [83] These proposed changes will enhance states' abilities to shut down Internet casinos in three ways. First, the definitional portions of these two sections will be updated to include the transmission of bets or wagers via the Internet. Second, a new subsection will be added that specifically states that Congress intends for the law to apply extraterritorially. [84] Third, the House version of the IGPA would give state and local law enforcement agencies the authority to apply for, and to receive, civil injunctions against Internet casinos. [85]
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Although the changes proposed by the House version of the IGPA seem to address the theoretical weaknesses of Minnesota's argument, [86] the practical problems of enforcement will still remain. The House IGPA provides three means of enforcement -- punishment of the interactive gaming provider, punishment of the individual user, and civil injunctions against common carriers and interactive computer service providers. Each one of these enforcement mechanisms has potential flaws serious enough to threaten any real attempts at regulation of interactive gaming.

Amended § 1084 would give the government the authority to punish interactive gaming providers whether or not they are located within the United States. However, prescriptive jurisdiction (the ability to regulate conduct) is wholly separate from enforcement jurisdiction (the ability to punish violations of the regulation). The United States, or one of its political subdivisions acting pursuant to a grant of authority, will be unable to obtain a remedy for a violation of law unless jurisdiction over the violator or some of the violator's assets is obtained. Simply put, if an interactive gaming provider maintains its entire operation, including all assets, overseas, and the owners themselves remain outside of the reach of the United States, there is very little that can be done to punish violations of amended § 18 U.S.C. 1084. [87]

Perhaps the only remaining possibility in a situation such as that outlined above would be to extradite the owners to face charges in the United States. Under customary international law, a state is not required to extradite someone found within its borders. [88] Thus, extradition is almost always governed by treaty. To further complicate matters, a common provision in extradition treaties is the dual criminality exception. Under this exception, an extradition request will be honored only where the alleged activity is a crime in both the requesting nation and the nation where the defendant is located. [89] Thus, in order for the United States to extradite an individual for violating 18 U.S.C. 1084, the requested nation must have a similar crime on its books. Because of the sums of money potentially involved in the interactive gaming industry, the United States may have a difficult time persuading other nations to ban interactive gaming. [90]

Instead of pursuing the interactive gaming providers, the United States could instead focus its efforts on the individual Internet gamblers. If amended, § 1084 would also provides for the imposition of a fine and/or imprisonment for these individuals. However, today's technology permits gamblers to disguise their identity and activity in multiple ways. [91] The various ways in which data encryption is used in financial transactions via the Internet will make it difficult, costly, and time consuming for law enforcement agencies to track down individual gamblers. [92]

The third and final avenue of enforcement through amended § 1084 is a civil injunction against either a common carrier or an interactive computer services provider. In this way, law enforcement can prevent an individual from gaining access to interactive gaming by taking away the individual's ability to access the interactive gaming providers web-site. However, amended §1084 only gives jurisdiction over common carriers and interactive computer service providers that are subject to jurisdiction by the Federal Communications Commission ("FCC"). It is unclear whether or not interactive computer service providers (commonly known as "Internet Service Providers" or "ISPs") are subject to the FCC's jurisdiction. The FCC has ruled that it will not assert jurisdiction over what it calls enhanced service providers. There is some indication that ISPs are "enhanced service providers" under the FCC's regulatory scheme and are therefore not subject to FCC jurisdiction. If that is the case, amended §1084's purported extension to interactive computer service providers is a nullity, and law enforcement is, in the end, left without a practical remedy.
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2. The Senate Version of the IGPA

The Senate version of the IGPA also provides a potential means of prohibiting Internet gambling, but does so in a fundamentally different way than the House version. There are three major differences between these two sets of proposed legislation, one a difference in form, and the other two differences in substance.

The first difference in the Senate's IGPA is one of form, rather than substance. The Senate IGPA, rather than amending § 1084 of Title 18, adds a new section to this title, § 1085. This new section also prohibits Internet gambling, but does so in more explicit terms than its House counterpart. [93]

Of more importance than the formal changes proposed in the Senate's IGPA are the two substantive changes being proposed. The first of these changes is the retreat from the House's position regarding extraterritoriality. [94] The Senate version does not declare it to be the "sense" of the Senate that the House version does. [95] It is therefore unclear how the Senate expects IGPA to apply to those casinos that are located overseas.

The second substantive change that the Senate's proposed IGPA would make is the apparent preemption of state law. Section 1084 currently states that "[n]othing contained in this section shall create immunity from criminal prosecution under any laws of any State." [96] However, the Senate IGPA does not place any language similar to this in what would be Section 1085. Therefore, one possible reading of the resulting statutory scheme is that, although traditional gambling is still subject to state law under § 1084, Internet gambling is now solely a federal concern over which states do not have regulatory authority. If this is a correct construction of § 1085, then the Senate IGPA will change the long-recognized right of states to regulate the gambling activities that occur within their borders. [97]

The Senate IGPA has at least one major weakness. The bill makes the optimistic assumption that nations will be eager to sign a treaty that will expose their citizens to criminal liability for activity that those nations either passively allow or even actively promote. [98] Nations that legalize Internet gambling certainly cannot be expected to then sign a treaty that would obligate them to extradite law abiding corporate officers to the United States to face criminal charges. [99] In the end, the only nations that the United States is likely to have such agreements with are those countries that decide to outlaw Internet gambling themselves, and these nations would be the most likely to extradite without such agreements. Moreover, it is extremely unlikely that such nations would contain many of the gambling operations the US would like to prosecute.
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Both the House and the Senate versions of the IGPA will clarify the issue of whether federal gambling laws are intended to apply to Internet gambling. The House version, while making this minimal contribution in furtherance of states' claims against Internet casinos, still does not solve the perplexing problem of enforcing judgments against foreign casinos. Meanwhile, the Senate version appears to preclude states from having the flexibility to approach Internet gambling in a way that fits a state's already-established gambling policy. Thus, neither of these avenues provides an adequate solution to the tensions that exist between Internet gambling and gambling under Colorado's Limited Gaming Act.

III. A Solution That Will Reconcile Internet Gambling With The Colorado Limited Gaming Act

Each one of the solutions presented in Part II -- industry self-regulation, litigation, and the proposed federal legislation -- has various flaws that make it undesirable by itself. However, this article argues that, although each solution is imperfect, a combination of these solutions will provide states with the most effective means currently available for controlling Internet gambling in a manner that is consistent with the states' policy goals. [100] The following is a description of a plan that this comment argues will best serve the states in any effort to regulate Internet gambling in a manner consistent with the policy goals expressed by their gambling laws.

A. Step One: Litigate, Litigate, Litigate

Before they do anything else, the states must first be willing to go to court against any and all of the currently unregulated Internet casinos. To this end, the states' Attorney Generals should follow the lead of Minnesota and use the litigation technique developed by Minnesota in the State ex rel Humphrey case. [101] As mentioned earlier, the principal drawback to filing these cases is doubt that courts will exercise personal jurisdiction over the defendants as well as the great likelihood that any judgment obtained will be largely unenforceable.

Despite these drawbacks, however, the cases should still be filed. Cases against Internet casinos will serve several useful functions. First, the public will be put on notice that the State does not consider Internet casinos, in their current form, to be legal. If Internet gambling turns out to be an issue that large numbers of citizens care about, the cases will help to crystallize public opinion on the issue. Second, such cases will encourage Internet casinos to think twice before allowing citizens in litigious states to gamble via their web-sites. [102] Finally, consistent and successful litigation against Internet casinos will encourage both the casinos, and the authorities of the jurisdictions where they are located, to push for solutions (such as the one proposed here) that are beneficial to all parties involved.

B. Step Two: Encourage National Legislation

The second, and somewhat simultaneous, step that the states should take is to lobby Congress for a response to Internet gambling on the national level. No matter what else is done, federal law needs to be clarified so that the United States' gambling laws cover Internet gambling, and yet retain the policy flexibility currently enjoyed by states. [103] Neither of the proposed versions of the federal IGPA discussed previously [104] properly meets this goal. The Senate version explicitly covers Internet gambling, but appears to pre-empt any state flexibility in dealing with Internet gambling. The House version retains the flexibility necessary for each state to craft its own Internet gambling policies but is itself of uncertain enforceability. The best legislation would then combine the flexibility provided by the House version with the explicit language of the Senate version.
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A more explicitly worded federal Internet gambling statute would still bring with it all of the enforcement problems discussed earlier. [105] Nevertheless, the enactment of such a statute is still advisable so that any cases brought by the states' Attorney Generals have a stronger statutory basis. Giving states solid statutory authority for bringing cases against Internet casinos increases the incentive for casinos to negotiate regulatory provisions to which the states can hold the casinos accountable.

C. Step Three: Press for International Agreements

In one way or another, the United States will have to rely on international agreements as a means to bind foreign Internet casinos. [106] However, the United States must not rely on foreign states' sense of altruism to regulate a potentially huge source of revenue. Thus, to bind Internet casinos, any international agreements negotiated by the United States need to be ones that also appeal to the various foreign jurisdictions that Internet casinos call home.

What kind of an international agreement would preserve the interests of the Internet casinos, state regulatory flexibility, and the interests of the relevant foreign jurisdictions? For the most part it would be similar to the IGC Code of Conduct discussed earlier. [107] The principal problem with the Code was not necessarily the content of its ten points, but that it could not be formally enforced.

Most important to states' interests, an internationally binding version of the Code would permit states such as Colorado or Minnesota legitimately to apply the policy goals underlying the Limited Gaming Act to Internet casinos. The Code provides that "all members shall use best efforts to obtain any binding legislative or judicial determinations which prohibit or limit operation in another jurisdiction and shall abide by those limitations to the greatest extent technically feasible." [108] This language, therefore, would require members to abide by the policy objectives of the gamblers ' home jurisdictions.

In order to overcome the enforcement problems with the Code as it now exists, the following two provisions would go a long way in making an international agreement a viable solution: first, a provision that signatory nations require any Internet casino operating within its jurisdiction to abide by the agreement based on Code as a condition for the casino's license; [109] second, the establishment of an international board to administer the agreement. [110]
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Conclusion

The international character of the Internet poses new and interesting problems for state gambling policy makers. The inability of the current law to allow for effective enforcement of current policies is the greatest hurdle states face in regulating Internet gambling. In order to adapt their gambling policies to the world of Internet gambling, states will need to find effective means of enforcing whatever policy decisions they make. In order to achieve some regulatory authority over Internet casinos, states will need the cooperation of the foreign jurisdictions where the large majority of Internet casinos are located. In order to gain this cooperation, states should engage in increasing litigation against the casinos and the federal government should pass legislation supporting this activity by the states. The resulting pressure will hopefully bring other nations to the table in order to negotiate an international board that will oversee the implementation of a simple code of conduct that is both adaptable to the needs of the various jurisdictions where gamblers reside and is enforceable against the Internet casinos, wherever they are actually located.

[fnA] J.D., University of Colorado School of Law (expected May 1999); Technical Production Editor, Vol. 70, University of Colorado Law Review. The author wishes to thank his wife Tasha for her support and comments, as well as Prof. Curtis Bradley for his insight into the international law issues presented in this paper.
[1] See WILLIAM N. THOMPSON, LEGALIZED GAMBLING 63 (1994).
[2] See id.
[3] See Lewis v. United States, 348 U.S. 419 (1955) (federal licensing tax on gamblers not inconsistent with state gambling laws); Horner v. United States, 147 U.S. 449 (1893) (federal law prohibiting the use of the U.S. mails for purpose of mailing lottery tickets is not inconsistent with state lottery laws). Every state regulates gambling to some extent, and some even have state constitutional provisions on gambling. See THOMPSON ,supra note 1; see, e.g., Del. Const. art. II, §§ 17-17B; Del. Code Ann. tit. 11, § 1401-1432; W.Va. Code §§ 61-10-5, 61-10-11.
[4] These interests include those of the State and Federal governments as regulatory authorities, the privacy rights of individual consumers, the commercial interests of the Internet casino owners, and the sovereignty interests of the foreign nations that are home to the Internet casinos.
[5] This article focuses on the law of Colorado because it allows limited gaming, combines the laws and policies of those states that freely permit gambling with the laws and policies of those states that severely restrict or flatly prohibit gambling. It is beyond the scope of this article to examine each state's gambling laws and how they relate to Internet gambling. However, the author firmly believes that no state's law currently permits Internet gambling on its face, and thus the reasoning of this comment should be relevant to all states.
[6] SeeThomas E. Berg & Susan K. Wood-Ellis, Colorado Limited Gaming Law: The Application & Licensing Process from the Applicant's Perspective , in NEW COLORADO GAMING LAWS 2 (1991).
[7] See COLO. REV. STAT. § 12-47.1-102(1)(a) (1997) ("The success of limited gaming is dependent upon public confidence and trust . . . ."). See also DeMarco v. Colorado Limited Gaming Control Commission, 855 P.2d 23, 26 (Colo. App. 1993) ("It has been recognized that legalized gambling depends for its success upon both the honesty and the integrity of those conducting the games and the public's perception that the games are being conducted honestly.").
[8] See COLO. REV. STAT. § 12-47.1-102 (1997). See also Berg & Wood-Ellis, supra note 6.
[9] See COLO. REV. STAT. § 12-47.1-103(19) (1997). For the legislative definitions of what actually constitutes these different games, see COLO. REV. STAT . § 12-47.1-103(4) (1997) (defining "blackjack"); COLO. REV. STAT . § 12-47.1-103(22) (1997) (defining "poker"); and COLO. REV. STAT. § 12-47.1-103(26) (1997) (defining "slot machine").
[10] See COLO. REV. STAT. § 12-47.1-816 (1997).
[11] In other words, for every dollar that goes into a slot machine, the machine must, on average, pay out a minimum of eighty cents in winnings. See COLO. REV. STAT. § 12-47.1-813 (1997).
[12] The various cheating related provisions in the Limited Gaming Act are: COLO. REV. STAT. § 12-47.1-822 (1997) (generally prohibiting and defining cheating); COLO. REV. STAT. § 12-47.1-823 (1997) (prohibiting and defining various "fraudulent acts"); COLO. REV. STAT. § 12-47.1-824 (1997) (prohibiting devices for calculating probabilities); COLO. REV. STAT. § 12-47.1-825 (1997) (prohibiting the use of counterfeit chips); COLO. REV. STAT. § 12-47.1-826 (1997) (prohibiting the use of "cheating devices" such as marked cards, fake coins, etc.); and COLO. REV. STAT. § 12-47.1-827 (1997) (prohibiting the manufacturing of a cheating device, the altering of a fair gaming device into an unfair one, and the teaching of others how to cheat).
[13] See Berg & Wood-Ellis, supra note 6.
[14] The Division of Gaming was created by the legislature as part of the Limited Gaming Act. See COLO. REV. STAT. § 12-47.1-201 (1997). The Division was created "to license, implement, regulate and supervise the conduct of limited gaming" in Colorado. Id.
[15] See COLO. REV. STAT § 12-47.1-529 (1997). The section specifically provides:

Each licensee shall keep a complete set of books of account, correspondence, and all other records necessary to show fully the gaming transactions of the licensee, all of which shall be open at all times during business hours for the inspection and examination of the [D]ivision [of Gaming] or its duly authorized representatives. The division may require any licensee to furnish such information as the division considers necessary . . . and may require an audit to be made of such books of account and records on such occasions as the division considers necessary . . . .

It is the sense of the Congress that the Federal Government shall have extraterritorial jurisdiction over the transmission to or receipt from the United States of --
(1) bets or wagers (as that term is defined in section 1081 of title 18, United States Code);
(2) information assisting in the placing of bets or wagers; and
(3) any communication that entitles the transmitter or recipient to the opportunity to receive money or credit as a result of bets or wagers.