Follow the Leaders: A Constructive Examination of Existing Regulatory Tools that Could Be Applied to Internet Gambling

June 16, 2012

Many articles have explored the explosive growth of Internet gambling. As of August 2000, over forty percent of American homes has access to the Internet, and an estimated 4.5 million Americans had already gambled online at least once. Some ambitious forecasts predict that by the year 2006, Internet gambling will become a $100 billion a year industry.
Not surprisingly, the appropriate stance on online gambling has been a frequent topic of scholarly debate. A popular trend in existing literature is to compare the two most likely policy responses to Internet gambling in the United States: should it be prohibited, or should we attempt to regulate it in some way? This article begins with the assumption that in either case an effective enforcement scheme will be vital to the policy’s success.
To that end, this Comment examines two existing regulatory systems in an attempt to extrapolate possible characteristics of a comprehensive plan to deal with Internet gambling. The first model is the regulation of online securities trading by the Securities and Exchange Commission (“SEC”). The analysis then shifts to the enforcement of consumer protection laws in cyberspace by the Federal Trade Commission’s Bureau of Consumer Protection (“BCP”). The intent of this article is not to educate the reader about the substantive law underlying either securities regulation or consumer protection. The intent is to identify techniques that regulators have employed to meet the unique challenges of regulation and law enforcement on the Internet. Finally, the article determines which, if any, of those techniques could be adapted to the context of online gambling.
Ultimately, the regulatory scheme of the SEC proves the more attractive model. A permissive regulatory environment encourages cooperation from website operators, provides incentives for operators to locate within the United States, and narrows the range of police duties shouldered by regulators.