Page 56 - AVN January 2016

LEGALESE | |By Clyde DeWitt
became a fad in
the early 2000s,
”When poker
they undertook
Skill, Luck or In Between
Fantasy sports goes viral—now what?
vada’s legal gambling joints were sawdust-on-the-floor saloons
in the small towns that dotted what then was primarily a mining
and railroad state, Las Vegas being one of those towns. In 1941,
the El Rancho was the first place to go beyond the sawdust
joints. World War II sort of interrupted things, though.
The obstacle to developing what you now see in Vegas was
that, like most business ventures, a casino needed a source
of capital. Banks, concerned about being accused of sin, very
to establish
poker as a game
of skill, actually
enjoying some
success.
LEGAL NEWS
Clyde DeWitt is a Las Vegas and Los Angeles
attorney, whose practice has been focused on adult
entertainment since 1980. He can be reached at
ClydeDeWitt@earthlink.net. More information can
be found at ClydeDeWitt.com. This column is not a
substitute for personal legal advice. Rather, it is to alert
readers to legal issues warranting advice from your
personal attorney.
Since the dawn of the World Wide Web, the entrepreneurs
who created what was initially its driving force—porn—have
been salivating about the idea of cashing in on what must be
America’s second most popular vice: gaming. So far, the small
guys have never been able to wedge their way into it. Because
of that fascination, though, this column periodically updates
readers on the interrelationship between the internet and
America’s love-hate relationship with gaming.
The latest phenomenon, now that poker seems to be fizzling
out, is fantasy sports. This monthly column cannot bring
readers up to date on the fantasy sports betting phenomenon
because it changes every day. However, a little background
might help readers put the daily news on fantasy sports in
perspective.
Gambling—especially sports gambling—is a fact of main-
stream American life. Bookies, office pools and the like are
everywhere, whether legal or not. For example, odds are (pun
intended) that as many of your acquaintances as not will have
some kind of bet on the Super Bowl. Yet the penalties for
illegal gambling are Draconian. Under federal law and that
of many states, illegal gambling has been a RICO and money
laundering predicate for decades, subjecting violators to huge
prison sentences and asset forfeitures. The Unlawful Internet
Gambling Enforcement Act of 2006 can subject bankers to
prison sentences for accepting deposits arising from illegal
gambling. The latter, by the way, stopped online poker cold, at
least legally.
Now, analyzing this requires an understanding of the frame-
work of gaming laws. The most fundamental concept involved
is that the laws against gambling—every state has some—are
somewhat like the Infield Fly Rule; unlike laws against assault,
murder, rape, robbery and so on, gambling is illegal only where
the governing body issues an edict saying as much. Going
back to before the 1970s, the general rule was that most forms
of gambling were illegal in every state except Nevada, which
legalized gaming almost across the board in 1931. For the rest
of the country, gambling was illegal, although it took place
everywhere.
Now, legalized gambling in Nevada didn’t automatically
translate into anything approaching what now is the Las Vegas
strip, or even downtown. In the decade after 1931, most of Ne-
rarely were an available source. So, if you saw the movie Bugsy,
you know what happened: the Mob provided the capital. What
a deal! That group had been involved in gambling for years,
always living in the shadows; now they could do it legally—and
they did.
In 1950, politically ambitious Tennessee Senator Estes
Kefauver created the Kefauver Committee (officially, the
Senate Special Committee to Investigate Crime in Interstate
Commerce), which went around the country putting on dog-
and-pony shows about organized crime, subpoenaing many of
the more colorful Mob bosses. The Las Vegas version of that
runout, not surprisingly, focused on the Mob’s involvement in
gambling. (The senator would be Adlai Stevenson’s running
mate in their unsuccessful Democratic presidential bid in 1956.)
Concerned that the federal government would rain on its
exploding gambling mecca, Nevada created, in 1955 and 1959
respectively, the Gaming Control Board, which promulgates
regulations, screens applicants and enforces gaming laws, and
the Gaming Commission, which has the final say on all things
gaming, other than the Nevada Legislature.
If you saw the movie Casino, which has reasonable historical
accuracy (with some name changes and a little artistic license
thrown in), you know that the Wise Guys continued to run the
resorts from the shadows, until they finally were taken over by
Howard Hughes’ mid-1960s purchase of a handful of properties
and the late-1960s legislative amendments allowing public cor-
porations to acquire gaming licenses. (Before that, each owner
was required to be licensed.)
After Vegas really came into its own, popularized by the Rat
Pack, Oceans Eleven, Elvis, Viva Las Vegas and other post-war so-
cial phenomena—along with the first mega-resort (considering
the era), Caesars Palace—American attitudes about gambling
(amongst many other things) evolved. In 1976, New Jersey
became the second state to legalize casino gambling, although
only in Atlantic City. And seeing what a great form of revenue
gaming taxes were for Nevada, states followed by creating state
lotteries: gambling was illegal unless you were the government.
(There were a few exceptions in a few states, such as thorough-
bred racing, dog racing and charity raffles.)
That leads the story to events relevant to sports betting—the
good stuff. In 1992, New Jersey Senator and former NBA star
Bill Bradley pushed through the Professional and Amateur
Sports Protection Act of 1992 (PASPA). In a nutshell, PASPA
outlawed all betting on professional and amateur sports in all
states that had not already legalized it—which as a practical
matter meant just Nevada, the only state that had full-blown
sports betting. There was one exception: New Jersey was al-
lowed an exemption from PASPA to the extent that it legalized
sports betting within a year. But New Jersey blew it, so to this
day Nevada is the only state with full-on sports betting. A few
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