In an issue that is right up Christine’s alley, this election day, voters in several states will be considering ballot initiatives involving gambling or lotteries.  Indeed, my own state of Maryland has proposed such an initiative, which would add a new constitutional amendment approving up to 15,000 “video lottery terminals” in five locations throughout the state.  Like other states, Maryland’s initiative aims to raise money to cover its significant budget shortfall—a shortfall of about $430 million.  As one can imagine, these initiatives have sparked considerable debate, and that debate seems to be heightened when viewed in the context of the current financial and economic crisis. 

Proponents of the Maryland measure contend that the initiative could potentially raise $600 million, a significant portion of which would go to fund public education.  From this perspective, in a time when states are strapped for cash and thus not only have had to increase taxes, but also have had to take measures such as slashing budgets and instituting hiring freezes and/or mandatory furloughs, it is hard to argue with a proposal designed to inject $600 million into the state’s coffers.  As the Baltimore Sun noted in its recent endorsement of the measure, while raising revenue from gambling is not ideal, it may be better than the alternative choices of higher taxes or allowing public education and health care to suffer if budget cuts continue unabated.  Proponents also point out that many Marylanders travel out of state to nearby states like Delaware or West Virginia where gambling is allowed, and hence we might as well enable these Marylanders to spend those funds in their own state. 

Opponents first question whether gambling initiatives can be counted on to raise significant revenue.  Given recent reports indicating that revenue has fallen sharply in many casinos, this is not an idle question.  These reports reflect the reality that people no longer have discretionary funds to spend on activities like gambling.  Then too, opponents insist that gambling has costly secondary effects because, as studies suggest, it is addictive, leads to increased alcoholism and otherwise negatively impacts other businesses and the surrounding community.   Moreover, opponents express concern that gambling measures will prove especially harmful to lower class communities, imposing what some describe as a regressive tax on those communities.  Again, such an argument has particular salience in these economic times.  Indeed, if more people are living paycheck to paycheck, can or should we pin even part of our economic recovery on the hope that they will use part of their paychecks to gamble? 

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According to the Chronicle of Higher Education (gated version here), CBS Sports is creating a fantasy football league (no entry fee, no prizes, but we know how people use fantasy sports websites) using college football players' names and stats.  Fantasy sports are not considered online gambling (and therefore illegal) under federal law, so this may not prompt the "no gambling in college sports" argument.  (Fantasy sports, it is argued, don't pose the threat of corruption of sports because it would be incredibly hard for someone to payoff all the people necessary to ensure that one's fantasy team wins.)  A college basketball fantasy league is also in the works.

However, some are a little concerned about the "exploitation" of the college athletes, and some say that fantasy game may run afoul of NCAA amateurism rules.  Note that the NCAA receives more than $500 million a year from CBS just for televising March Madness, and there is no telling how much per year total.  And none of the money goes to any of the athletes, including the athletes that will be featured on the fantasy sports site.  The NCAA is looking to broaden its rules so that teams can capitalize more on players' popularity, but letting the actual popular player in on that moneyfest doesn't seem to be on the table.

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Jonathan Adler today quotes from an opinion in the NYT by Northwestern professor on whether prediction markets should be granted a safe harbor by the CFTC.  I tried to comment on this post, but the spam filter wouldn't let me post my comment because it contained "blacklisted words" that gave the suspicion that I was a gambling spammer.  Because I could not think of how to write my comment without the blacklisted words, here is my comment:

I agree that there should be a safe harbor for prediction markets (and other types of online speculation), but I take issue with the statement (of Professor John McGinnis) that federal and state law generally does not prohibit gambling.  I think that's false.  Federal law does prohibit online gambling generally, with few exceptions for securities trading and fantasy sports.  Federal law also prohibits gambling over "the wires."  Given its jurisdiction, that's about all federal law can do.  I would also say that most states generally prohibit gambling, but have many exceptions.  In other words, in most states, gambling is prohibited unless it is specifically allowed.  A better way to frame the argument is to say that most states allow many types of gambling, from casino gambling to horse racing, and prediction markets, which have positive externalities, should also be allowed.  Of course, the real comparison is that prediction markets are online, and online gambling is illegal throughout the U.S.  To carve out an exemption, one would have to face that blanket prohibition head on.

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Sometimes I think while teaching Securities Regulation that I could make an argument that anything is a security, and the same goes with researching gambling.  Here's another gambling candidate that caught my ear on the radio today:  Something Store.

Here's the idea -- you pay $10, and Something Store will send you "something."  You have no idea what until you receive your package.  The store doesn't try to match you with anything, so "[y]ou can be a 25 year-old man and your something maybe a white tank top embroidered with a pink heart."  In fact, the website says shipments are chosen randomly (albeit from their storeroom, which I assume was not stocked randomly).  The concept as sold as a way to suprise yourself.  The website says that your something will probably be brand new (although possibly refurbished) and they "hope you will be pleasantly surprised."  No returns, all sales final; the site suggests regifting, giving away, or selling any "something" you don't need.

Is this gambling?  It seems a little like games at the fair where you could win a big stuffed animal, but odds are you will win a plastic dinosaur the size of a fig newton.  I seem to remember in my past "grab bags" being for sale at stores -- the bags were closed, so you didn't know what you had until you bought the bag.  At Something Store, the experience seems to be what is being sold, not the potential upside of a great something.  (They do not have testimonials from customers who received iPods or flat screen TVs, for example.)  You are buying a surprise, and that's really about all you'll get.

Who would do this?  Well, not many people.  According to the site, less than 6000 somethings have been ordered in the past six months.  Perhaps bringing this idea online during a time of less economic uncertainty when $10 seemed like a good price to throw away on being surprised.

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This semester has been fairly busy, so I have not been following gambling issues in the news as well as I would like.  For example, viewers of Deal or No Deal have filed lawsuits in multiple states claiming that the "Lucky Case" game is an illegal gambling game.  In some states, losers may file civil suits to recover gambling losses in illegal games.  The Lucky Case game allows at home viewers to choose which of five or so cases a prize is in (like a shell game) for money.  Viewers text in their guesses.  Texting charges apply, as well as a $.99 fee, which seems to go to NBC.  At least here in Illinois, that sounds like gambling.  However, the Georgia Supreme Court, in answering a question certified to it by the federal district court in Georgia, said that the game did not fall under its definition of "gambling contract," and so the viewers could not sue for losses.  The court left open the question whether the Lucky Case game is a lottery, however.  Fortunately or unfortunately, viewers do not have the ability to sue for losses in illegal lotteries, so unless the State of Georgia wants to prosecute NBC, the game could go on.  (In Illinois, gambling losses must be at least $50 for losers to have the right to sue for recovery.)  Because these laws vary from state to state, cases are still pending in other states, including California.

NBC seems to understand what is going on.  On the website, the Lucky Case game is listed as taking a "short break."  Another game, where viewers text in votes for the next Deal or No Deal model for a chance at a $10k price, NBC seems to be covering all bases.  First, in consideration of the $1 texting fee, voters receive Deal or No Deal computer wallpaper and a chance to win the $10k.  Second, if the viewer doesn't want to vote, they can merely enter for a chance to win the $10k for free.  By tying the $1 to the right to vote and the wallpaper, the game does not seem to require gambling consideration. 

What I thought was interesting about this Law.com story on the Georgia case was its disdain for the "colonial era Georgia statute."  I guess all old statutes are obsolete, like those for murder, burglary, etc.

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I was going to blog on this story last week, but I wanted to wait until we had a virtual world expert, Leandra, in-house to help with the analysis.

Leandra blogged below on the economy of Second Life and whether exchanges there for Lindens should be taxable.  This duplication of an economy in cyberspace has another ramification besides than this very interesting tax question.  Apparently, there are "hundreds" of casinos on Second Life where players can wager and win Lindens.  The creators of Second Life, Linden Labs, worried about possible criminal liability for hosting the world that contains these casinos, invited FBI agents into Second Life to take a look around and give them guidance.  (CNN story here.)  Apparently, since the U.S. crackdown on online gambling (which readers of the Glom should probably be sick of hearing about by now!), gambling on Second Life has increased.  Unfortunately, the FBI have not given Linden Labs any clear conclusions at this time.

So, how could gambling on Second Life be any different from gambling on an onine site, which the U.S. government says is illegal nine different ways?  I could go to an online site, use money from my bank account or credit card to create an account at the online casino.  When I have winnings, I can cash out.  Now, it sounds like on Second Life, I would use money from my bank account or credit card to buy Lindens to use at the online casino.  When I have winnings, I can then cash out.  How is this different? 

According to the DOJ, I would be violating the Wire Act by gambling on Second Life.  (I would like the chance to fight that one in court, but I don't have time to be a test case right now.)  Also, after the SAFE Ports Act passed last Fall, Second Life would be liable for processing the exchange of U.S. dollars to Lindens and from Lindens that facilitated the illegal online gambling.  So why is the FBI so confused?  If PartyPoker would just make me purchase "PartyBucks" at some ratio, would that make it legal?  My colleague Larry Ribstein has coined the phrase "the Apple Rule" to describe the seeming willingness to prosecute corporate officers for options backdating, which may or may not be illegal, but not popular officers such as Steve Jobs, who have done the same exact thing.  Perhaps we could call this "the Posner Rule"; Second Life is so hip and cool and brainy that even lovable jurists like Richard Posner drop by every now and then.  So how could Second Life be criminal like those sleazy online gambling sites based in foreign countries and run by foreigners?  Either it's all legit or it's all not.

The CNN article reported that there are "hundreds" of casinos on Second Life, and that the larger ones might earn $1500 (U.S., not Lindens) per month.  So, let's multiply $1000 per month by 500 casinos.  That's $500,000 per month, or $6M a year.  And it's only beginning.  If the FBI tells Linden Labs that these casinos are legitimate, how many casinos do you think there will be this time next year, as U.S. players shift away from online gambling, which has become increasingly difficult to navigate after U.S. payment systems have opted out?  Look for the Bellagio -- Second Life, Trump Second Life, and even PartyPoker Second Life.

Just one more thing, In the many comments to Leandra's posts, it seems that some readers equate "virtual" for "imaginary."  I think that gambling helps put this in some perspective.  Lindens seems to have a real-world value, an exchange rate to the U.S. dollar, so Lindens are more like foreign currency than imaginary currency.  Or, you can think of Lindens as casino chips.  Just because your winnings come in chips doesn't make them untaxable winnings, nor do you get to pay your taxes in chips.  Just as I would have to report the sale of my house to the IRS if I were paid in casino chips, Beanie Babies, Lira or free lawn mowing for the rest of my life, I see no difference in being paid in Lindens for my goods, services or poker playing. 

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In Austin today, a public hearing is being held on this bill, which would allow poker games to be organized by licensed persons in the state of Texas.  Apparently, California and Montana have already legalized poker outside of casinos.  Should the bill pass, Texas would be an interesting gambling state.  Although Texas has had a lottery since the early 90s, Texas has no commercial casinos and only one tribal casino (in Eagle Pass, which is fairly "out of the way" for most folks).  For Texas then to allow legalized poker would be a bold move and might open the door to other efforts to expand gambling in the state.  However, the bill distinguishes poker from other games because it is a game of skill, not chance.

There are multiple bills pending to allow casino gambling, electronic gaming devices, etc.

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I'm sure many of our corporate law readers get kind of sick of my posts on gambling.  What does gambling have to do with corporate law?  Aside from the obvious speculation comparison with investing, I am also interested in the "can a whole industry be criminal" aspect.  In recent years, we have seem criminal prosecutions for corporate misconduct that was not only widespread in certain industries but also not perceived by many to be criminal in nature.  (Think "earnings management" or backdating.)  Well, this week begins our nation's traditional revelry in illegal gambling:  the NCAA Tournament Pool.  Can a whole country be criminal?

Note that the Glom pool contains no wagering; it is clearly above-board and good, clean fun.  However, the other office pools that charge $2, $5, or more are seen by almost all as also good, clean fun.  I have received several emails today from licensed attorneys or future attorneys inviting me to participate in these fun pools.  According to some counts, almost one-third of U.S. workers this week will participate in a pool, with some of them spending work time to contemplate their entries.  And yes, in most states, these pools are clearly illegal.  (Vermont actually passed a law a few years ago making such pools not illegal as long as all entrance fees are paid out, interestingly.)  In Illinois, it is a Class A misdemeanor to "[m]ake a wager upon the result of any game, contest, or any political nomination, appointment or election," yet I'm sure it's happening right now, as I type! 

So why do we care, if we now that state regulators have historically turned a blind eye to something they have zero resources and zero incentive to investigate?  Because who knows when the tide will turn?  As Monty Python fans know, "Nobody expects the Spanish Inquisition!"  Perhaps U.S. prosecutors will take organizers of office pools away in handcuffs for "theft of honest services" for using employer time and materials to print out brackets.  Or perhaps those of us who received the brackets via email will be arrested for violating the Wire Wager Act and face federal prosecution.

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Today's NYT has an article reporting that former NY Senator Al D'Amato is joining forces with poker player associations to attempt to overturn the federal ban on online gambling.  (His interest seems limited to poker playing online, which he considers a skill and not a game of chance, and not other forms of online gambling.)  While that aspect of the article is interesting to me, out of my hatred for the last-minute attaching of online gambling prohibitions to a bill on terrorism and the nation's ports, what really stood out was the very casual and frequent mentions of D'Amato's casual, frequent illegal gambling.  Apparently now D'Amato has a weekly poker game in Long Island, "where a bad night might mean that a player drops $5000 or more."  When D'Amato was at least a part-time resident in Washington, D.C., he "was the host at a Thursday evening poker game at his Capitol Hill office, playing with other lawmakers, staff members and lobbyists."  This seems like an odd subplot of this article given that, in New York and D.C., this type of gambling is illegal.

New  York General Obligation Law 5-410 states that "[a]ll wagers, bets or stakes, made to depend upon any race, or upon any gaming by lot or chance, or upon any lot, chance, casualty, or unknown or contingent event whatever, shall be unlawful."  (There are exceptions for state-run lotteries and parimutuel horse racing.)  New York Penal Law 225.00 defines "contest of chance" as "any contest, game, gaming scheme or gaming device in which the outcome depends in a material degree upon an element of chance, notwithstanding that skill of the contestants may also be a factor therein."  Now, although D'Amato's poker game is "unlawful," it may be that no player will be guilty of a crime.  Just looking at the NY statutes, it appears that players have not committed a gambling offense unless they are "promoters."  So, as long as D'Amato doesn't take a rake for hosting the game, then the whole enterprise will be overlooked, and this is how most social gambling in nice houses on Long Island is ignored.  If the game were in a public place, then even the players could be cited for "loitering" for the purposes of engaging in gambling. 

Should D'Amato' s Long Island poker game be aboveboard, we have to wonder why the same game played online is illegal or in a poker room where some sort of "rent" is paid to a host.  Does the existence of a host create more negative externalities?  Increase participation?  Isn't it funny how if our so-called immoral activities take place by happenstance ("Hey, let's get everyone over and play poker," "Hey, I know we just met, but would you like to come back to my place?") then it's fine, whereas the introduction of a paid intermediary to faciliate the activity makes it illegal? 

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As my colleague Larry Ribstein has already pointed out, the state of Illinois is considering selling its state lottery for a one-time lump sum.  The folks at one of the other law schools here in Illinois also are talking about it.  As Larry points out, there are some obvious problems with putting up to $10 billion in the hands of a single Illinois governor, but there are some other problems, too, that go beyond the short-term profits to be gained from selling off public revenue-generating assets.  As a point of reference, lotteries have over U.S. history been both completely prohibited and freely permitted; the current state of affairs is that state may vote to legalize lotteries, and all such states use the state-owned monopoly model.  Private lotteries would represent a change in the legal landscape; currently private parties may not start their own lotteries.

As readers know, I write and think a lot about different types of gambling.  Although occasional readers probably think that I have a purely libertarian view of gambling regulation, I think my position is more nuanced.  I argue for reasoned and consistent regulation (or nonregulation)of similar speculation activities based on the net utility of such activity.  So, I would could be for either complete prohibition or permission, or a hybrid approach that treats like activities similarly.  If I were to begin prohibiting activities along a utility spectrum, the first thing I would prohibit would be the lottery.  As a negative-sum game, it creates no net positive utility but also may create negative utility through externalities.  Melissa Kearney, who is quoted in the NYT article, has studied the externalities of lotteries, including crime, bankruptcies, and domestic problems.  However, states may argue that if the profits of the lottery are 100X, and the costs of treating the additional problems as 50X, then the state still comes out ahead.  However, does this calculus still work in a world in which the 100X goes to the private owners of the lottery and not the state, which must pay for the additional social services costs?

The fix would be to tax the privately-owned lottery at a 50% rate.  The NYT article didn't say anything about the tax rate of the lottery, although many states tax commercial and tribal casinos at a higher rate.  Is this tax pre-paid somehow in the lump sum payment for the lottery?  I am not cheered by that thought; I would prefer that my state government get paid as it goes.

I also think it will be interesting to see a private-run lottery.  As it is, many states aggressively advertise their lottery.  Here in Illinois, lottery card vending machines are in the grocery stores, which makes one wonder about the effectiveness of age requirements for lottery participation.  The machines are next to the Coinstar and candy vending machines, so my son always wants to "play that game."  Nice.  The NYT article suggests that advertising will be more aggressive.  Also note that one exception to the anti-gambling provisions in the SAFE Port Act is online wagering in "intrastate transactions" authorized by the law of such state.  I would bet serious money that a private Illinois lottery would have an online game up and running fairly quickly.

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One week after arresting two non-U.S. shareholders in a non-U.S. financial services company that was used by U.S. online gamblers, the Justice Department has issued subpoenas to four firms -- HSBC, Credit Suisse, Deutsche Bank and Dresdner Kleinwort.  Each of these banks has major operations in the U.S.  What these banks have in common is that they participated in the IPOs of popular online gambling sites, such as PartyGaming.  The reporters do not know if the subpoenas are merely information-seeking or are a signal of a future prosecution of the firms.  The subpoenas may be designed to identify U.S. shareholders of online gambling companies for future arrests.

For everyone keeping score, here is the current list of DOJ anti-gambling targets:

• Neteller's Canadian founders Stephen Lawrence and John Lefebvre, who indirectly own less than 6% of Neteller and hold no officer or director positions -- arrested Monday, January 15, 2007 while vacationing in Malibu and the U.S. Virgin Islands
• David Carruthers, CEO of BetonSports, arrested while changing planes at DFW in July 2006.  Ten other arrest warrants were issued for non-U.S. BetonSports employees, and four have been arrested in the U.S. so far.
• Sportingbet's CEO Peter Dicks was detained in New York on Louisiana warrant, but NY refused to extradict him and allowed him to return to his home in the UK.

At times like these, I wish I knew more about civil procedure and conflicts of laws than corporate law. The NYT article attributes to attorney Lawrence Ge. Walters the belief that these subpoenas are a radical departure "because the prevailing wisdom had been that investment in a company that is legal and licensed in its jurisdiction was not grounds for prosecution." So, if the U.S. can arrest non-U.S. shareholders of non-U.S. companies that are legal in their jurisdiction, then can these scenarios happen?

• If a resident of Texas, where commercial casinos are not legal, buys stock in Harrah's, can the resident be prosecuted in Texas for illegal gambling?
• If a resident of Nevada, where commercial casinos are legal, buys stock in Harrah's, but goes skiing in Utah, can Utah police arrest the NE resident for illegal gambling?
• Can the state of Texas prosecute the editors of Texas Monthly for selling advertising space to Harrah's?
• Can the state of Texas prosecute a private charter bus company for taking Texas residents from Houston to Louisiana casinos?

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Readers may remember that in October, Congress passed the SAFE Port Act, which contained an anti-online gambling section that was appended right before passage.  President Bush then signed the Act into law.  The provisions create civil and criminal liability for "financial transaction providers" who knowingly control bets and wagers and "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."

On Monday, the U.S. Department of Justice arrested two Canadian founders and current shareholders of Neteller Plc, the PayPal of Canada and the UK (incorporated in the Isle of Man).  Neteller is part of the Neteller Group, which is regulated by the UK Financial Services Authority and listed on the UK AIM stock exchange.  After PayPal exited the online gambling market a few years ago at the insistence of New York regulators, Neteller became the online payment system of choice for online gamblers.  Stephen Lawrence was arrested in the U.S. Virgin Islands, and John Lefebvre was arrested in Malibu, California.  Neither men are currently officers, directors or employees of Neteller, although prior to October, Lawrence was a nonexecutive director and prior to December 2005, Lefebvre was a nonexecutive director.  Following these arrests, Neteller announced today that it would no longer accept U.S. customers.

Interestingly, the two men were not charged with violating the SAFE Port Act.  The two were charged with money laundering.  Perhaps this charge is more compelling after the passage of the SAFE Port Act specifically criminalizes online gambling.  Note that money laundering carries a maximum 20-year sentence whereas the SAFE Port Act provides for a mere 5-year maximum.

What I'm most interested in knowing is under what theory are these shareholders liable?  Neither man owns more than 6% of the company, and each man owns that indirectly.  Neither man was acting as an agent of Neteller.  The release from the Southern District of New York says this:

“Michael J. Garcia, the United States Attorney for the Southern District of New York, and Mark J. Mershon, the Assistant Director in charge of the New York office of the Federal Bureau of Investigation, announced today that Stephen Eric Lawrence and John David Lefebvre were arrested yesterday in connection with the creation and operation of an Internet payment services company that facilitated the transfer of billions of dollars of illegal gambling proceeds from United States citizens to the owners of various Internet gambling companies located overseas.”

I cannot find a charging instrument on Pacer as of this morning.  If someone understands more about money laundering and how charges can extend to nonparticipant shareholders, please enlighten!

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An op-ed in today's NYT laments the end-of-September end-run that Congress did that attached provisions from H.R. 4411 to the SAFE Ports Act.  Once the Act is signed by the President, the provisions will prohibit U.S. financial institutions from facilitating transactions between U.S. consumers and online gambling sites.  The authors of the op-ed, Robert Hahn and Paul Tetlock, criticize prohibiting online gambling because of its effect on information markets.

For example, Tradesports, which is hosted offshore, would arguably come under the auspices of these new provisions, making the host bank of your credit card a criminal for processing your participation in the site.  (Note that the Iowa Electronic Markets operates under a no-action letter.)  The authors argue that some types of wagers have significant positive utility while others do not.  In the authors' view, information sent into the marketplace by these types of sites have a greater utility than the consumption value of online gambling sites. 

I don't disagree, and have even presented a taxonomy of wagering activity based in part on the utility of the wager in this article.  However, the U.S. government seems to measure the utility of a wagering activity based on how much pressure an appropriate lobby will exert to exempt its activities.  And, of course, how much pressure will be exerted will depend on the amount of profits available to whom as a result of the wagering activity.  So, if you are the NFL, you will expend great amounts to ensure that fantasy football is exempted from any prohibition.  State lotteries will do likewise.  These activities will be exempted even though the social utility of these activities may be less than the utility of information markets.  These markets need better lobbyists!

However, I would also posit that the U.S. government is not going to turn its scarce resources to information markets just yet. If these sites grow large enough to cannibalize profits from state lotteries, then we'll have a problem.

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This summer I was watching H.R. 4411, a bill passed by the House that prohibited U.S. financial institutions from aiding and abetting online gambling.  When asked if the Senate would pass the bill, I usually said that I was prepared to be surprised.  Although these types of anti-gambling bills had not been passed in the last four Congresses, I was prepared to be surprised.  Well, I'm surprised.

Last week, H.R. 4954 was passed by both the House and the Senate.  The title of the bill is the SAFE Ports Act, and it contains detailed provisions on increasing the security of the nation's ports.  Who would be against safe ports?  However, last week, provisions of H.R. 4411 were tacked on to the end (Sections 801 et seq.) and also passed by both houses, almost unanimously.  The text of these new sections is not included in the text of the bill on Thomas (just the subheadings), so I'm not sure if H.R. 4411 was incorporated full-text.  News accounts like this one in the WSJ seem to assume that the basic thrust of 4411 is intact -- U.S. financial institutions may not accept transactions that facilitate online gambling.

Of course, gamblers can wager through offshore financial institutions like Neteller, etc.  Where there is a will, there's a way.  But our state lotteries and tribal casinos (which were excepted in the conference report) can sleep tight knowing that their family friendly gaming operations will not be cannibalized by evil offshore gambling.

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As readers know, I am often frustrated by the hypocrisies and inconsistencies inherent in U.S. gambling laws.  While six non-residents await proceedings in the U.S. after being arrested while passing through this country for violating U.S. laws by owning online gambling sites operated in foreign countries (here and here), our own country continues to broadcast gambling entertainment on television monitors to numerous jurisdictions.  Although the U.S. holds that it is illegal to allow U.S. citizens here to gamble on legal foreign-owned and operated websites, the U.S. seems to think it is perfectly fine to televise gambling that is legal at its physical location (say, a Las Vegas casino) and then broadcast that game to all 50 states (say, Utah), regardless of whether that gambling is illegal in that jurisdiction.  First, we had the broadcasting of various poker tournaments, and now blackjack.

According to this WSJ story, CBS has a new program called the Ultimate Blackjack Tour, which will air on Saturdays before college football.  The program showcases a blackjack tournament, duplicating successful broadcasts of World Series of Poker and similar shows.  The first few rounds were filmed in a Las Vegas casino, where blackjack is legal.  However, the final rounds were televised in front of a live audience in Los Angeles, where blackjack is illegal.  (California has tribal-owned casinos, and I don't believe the CBS soundstage qualifies.)  Where's the DOJ? 

Now, technically, the tournament on the show may not be gambling if the players are not wagering anything.  The article states that each player in the final rounds start with $100,000 in chips, and the player with the least chips at designated times is eliminated.  The winner may receive a pre-determined prize, making UBT look more like Jeopardy! than a back room card game.  However, the shows obviously encourage interest in real gambling, so the distinction that makes Saturday afternoon watching of UBT legal and Tuesday night playing blackjack online illegal seems fairly fuzzy.  The line between illegal prostitution and legal erotic filmmaking seems to be the camera in the room, so perhaps the camera in the room can turn illegal gambling into legal entertainment also.

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