Attempts to control gambling, sex and questionable Web sites reveal limits of U.S. laws

11/02/99

By Doug Bedell / The Dallas Morning News

As a 24-year-old, red-blooded American, Haden Ware has a hard time bemoaning his surroundings in exile. Life on the tropical Caribbean island of Antigua sounds more like a Corona beer commercial than an episode of The Fugitive.

But Mr. Ware, by virtue of his Internet sports bookmaking operation, is a criminal in the eyes of his country.

If he comes home, he'll be prosecuted for violating the Wire Act of 1961, which prohibits the use of U.S. telephone lines to transmit sports bets.

That same law doesn't touch fellow countrymen who set up an online blackjack casino on the island. Nor does it proscribe penalties for non-U.S. citizens operating the 300 or more wagering Web sites that have sprung up from Granada to Galapagos.

"I am a proud American, but they're using an act against us that was created years ago in the '60s - before the Internet was even in our minds," Mr. Ware says from his Antigua office. "It just doesn't make any sense."

In fact, gambling law is only one of a number of regulatory mechanisms facing strain from a technology that knows no borders and behaves like none of its predecessors.

Laws and rules governing pornography, patents, human organ sales, weapons auctions - even neighborhood zoning for businesses - all face agonizing challenges, experts predict. The questions raised by American efforts to apply old laws to the new, worldwide electronic frontier hold huge potential impact for expanding the Net.

Congressional proposals to make all online gambling illegal, for example, would call for law enforcement agencies to track down all the world's gambling Web sites, seek a court order enjoining the activity, then force Internet service providers to shut down access to each one.

Even the National Gambling Impact Study group acknowledges that the resulting hardware and software needed by ISPs to block access would be costly and difficult to implement. And, given the slippery nature of Web site addressing, completely blocking such a large body of sites may be technically impossible.

"Because the Internet represents an ever-growing interconnected network, no one entity can control or speak for the entire system," said David G. Jemmett, who testified on behalf of the ISPs before the House Judiciary Committee.

That's the problem in a nutshell, says Gene Crick, executive director of the Texas ISP Association. "What we're looking at in terms of international law alone," he says, "is a virtual nightmare."

Says Austin author Bruce Sterling, longtime chronicler of technology and its legal skirmishes: "I think we are in a state of chaos with our laws. I question whether law is ever going to catch up. There's an assumption that sooner or later the authorities will show up, and.. . . tell us how to handle these things.

"I really question whether that's the situation at all."

Zoning adult sites

Until they were featured on Hard Copy, the six co-eds who moved into the 4,000-square-foot home in a quiet Tampa, Fla., neighborhood a year ago had never provoked so much as a raised eyebrow.

But the revelation that the young women were part of a daily adult Webcast set into motion a string of events that may ultimately force the city to revise its zoning laws.

The women, who were billed as college students, were given rent-free accommodations as part of Internet Entertainment Group's Voyeurdorm.com, a subscription Internet service. Their daily activities, including showers and other intimate moments, were being broadcast on the Internet 24 hours a day with more than 20 Web cameras mounted throughout the home.

Mark R. Dolan, a Florida attorney who represents the enterprise, told The Associated Press that local police, not neighbors, initiated inquiries into the location of the home after seeing it on television.

When the venture's ISP reported receiving state subpoenas for the address, Mr. Dolan said he attempted to head off trouble by requesting a zoning exception.

Although the Webcams were in a residential area where businesses are prohibited, he argued, the business transactions for viewer credit cards occurred in downtown Tampa, where commerce is permitted.

Besides, he said, this "virtual business" has no clients physically arriving at the home and presents none of the problems that zoning laws cover to protect residential sectors.

The city ruled against Voyeur Dorm. Now Mr. Dolan has vowed a lengthy court fight.

"This case has implications far beyond adult use," he says. "What, for instance, is the proper role of government regulating e-commerce from one's home?

"The code predates the advent of the Internet," he says. "We need to go back to traditional zoning concerns. Do you upset your neighbors?"

The deal on gambling

In March 1998, when Mr. Ware and 11 other online bookmakers were named in New York criminal complaints, U.S. Attorney General Janet Reno issued a strong warning.

"The Internet is not an electronic sanctuary for illegal betting," she said. "To Internet betting operators everywhere, we have a simple message: You can't hide online, and you can't hide offshore."

Mr. Ware finds that laughable.

"We're not down here trying to get away with anything," he says. "We're just down here because nobody else would license us. Everybody knows what we're doing. We've never tried to hide from anyone."

One of Mr. Ware's associates, Jay Cohen, has returned to the United States to face the charges. And, although Department of Justice prosecutors contend the Wire Act covers the alleged offenses adequately, a report released this summer by the National Gambling Impact Study Commission casts some doubt.

The commission, set up by Congress to study a broad range of gambling issues, points out that the law, designed in pre-Internet days, specifically targets those who use wire communications "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."

For one thing, not all Internet traffic moves through wires. Satellite or other wireless Internet technologies would seem to fall through that crack in the wording. For another, is posting information on a Web site the same thing as a transmission? Or does it simply reside legally on the Antigua server, from which it is then fetched by a would-be gambler?

Both houses of Congress are pressing forward with legislation that would tighten the loopholes in the antiquated Wire Act. Late last month, a bipartisan group of House members introduced a version of the Internet Gambling Prohibition Act that would specifically outlaw most forms of online wagering and slap Net casino operators with penalties of up to four years in prison.

Whether enforcement can be achieved is another matter.

"The U.S. can stand there and say, 'No! No! No!,' " says Mr. Ware. "But eventually more countries after Costa Rica, Antigua and Australia will start popping up and reaping the benefits of this business. And it's not always going to be easily targeted people like us - American citizens who are outspoken."

Market analysts are predicting that Internet gambling revenue could reach $10 billion by 2002.

"To try and stop this industry is a ludicrous idea," Mr. Ware says. "I think they're going to have to regulate it. Hopefully we'll get by this initial whirlwind, and we can come home."

Kidney for sale

If there is any policing of the Internet occurring right now, it is being done by online companies themselves.

"What we seem to be trying to do now is surrender to a higher authority - to the U.S. corporate community," Mr. Crick says. "It's an extremely interesting transition."

In September, a striking example leapt to life on the auction site eBay.

A "fully functional kidney" was put up for sale. Trafficking in human organs is a felony punishable by up to five years in prison and a hefty fine. But the auction proceeded until a top bid of $5,750,100 was reached. Managers at eBay then stopped the auction.

Porno concerns

While such action may quell concerns of governing bodies for now, worries about widespread availability of pornography and criminal activity continue to push the U.S. government to action.

The U.S. Children's Internet Protection Act being considered by Congress would require public schools to install filtering software on library computers in order to receive federal funds.

"This legislation is an important step in the battle to protect children from the dark side of the Internet," says Sen. John McCain, R-Ariz., one of its backers and a presidential hopeful.

Four times in the last three years, state legislatures have passed laws designed to restrict online distribution of material "harmful to minors."

Federal judges have struck down three of those laws on constitutional grounds. Last month in Virginia, free-speech advocates filed suit to block the fourth.

Once again, the slippery nature of the technology has proved formidable.

The Virginia law makes it illegal for businesses to engage in the "knowing" display to minors of sexually explicit "electronic files or messages" deemed "harmful to juveniles."

The coalition attacking the newest Virginia attempt includes companies and individuals who fear the legislation could threaten the availability of online material from comic books to information on sexual health.

Beyond that, they contend, state laws interfere with the federal government's right to regulate interstate trade by imposing state law on a national and global network.

Just as with gambling legislation, ISPs jumped in to protest that the law would require them to scan all the traffic through their wires, something they say is unfeasible.

And there are worries that the state legislation could conflict with case law already on the books that extends protections to third parties, such as ISPs, that transmit content they had no hand in creating.

"The law creates an impossible situation for ISPs," John R. LoGalbo, associate general counsel for PSINet, told Reuters.

Legal tests ahead

Legal experts watching the Internet's expansion point out that governments and legal systems have traditionally had a hard time dealing with revolutionary technologies.

"There's all sorts of antique laws out there that were designed for very specific situations and are not flexible enough to deal with the Internet," says David Banisar, an attorney in the Washington, D.C., area specializing in computer and communications law.

And, Mr. Sterling says, governments have always been leery of the mischief and criminal activity that technologies can bring into their borders.

Some law enforcement authorities even feared that selling automobiles to the public would enable crooks to escape from police.

But even Mr. Sterling says the struggles to maintain order and establish viable laws governing use of the Internet's incredible powers may get downright scary as more countries get online.

"I keep waiting for the Russian eBay to start up," he says. "Those downtrodden black marketeers of the world can get online and sell body parts or heroin or Stinger missiles or whatever they've got, and there's no one to stop them because the whole thing's based in Chechnya.

"That's a downright, dirty possibility."

Staff writer Doug Bedell can be contacted by writing dbedell@dallasnews.com.

PENDING INTERNET LEGISLATION IN CONGRESS

House of Representatives Bill 87: Internet Ammunition Act

Would require ammo dealers on the Internet to report sales of more than 1,000 rounds on a single day.

House of Representatives Bill 1930: Prisoner Web Site Disclosure Act of 1999

Would require Web sites that provide communication with prison inmates to disclose a prisoner's crime.

Senate Bill 97: Children's Internet Protection Act

Would require public schools to install filtering software on library computers in order to receive federal funds.

Senate Bill 692: Internet Gambling Prohibition Act of 1999

Would prohibit all forms of gambling on the Internet.

Senate Bill 1428: Methamphetamine Anti-Proliferation Act of 1999

Would ban posting recipes for methamphetamine on the Internet.

SOURCE: Wired magazine