Legal Q Re: Servers

[TheDrew]

I was asked a question re: online gambling that I think one of you might be able to answer.

Can a company like Pokerstars park its code/DB in the United States if it is not serving US customers? Or, more generally, do international gambling websites use American servers? Ie. Licensed in Malta, Isle of Man, Alderney etc.

The only information I found was:

excluded from the coverage of "unlawful Internet gambling" are
waypoints along the World Wide Web that are only incidental to the places where the electronic transmission of the bet or wager is initiated and finally received.

I find the ambiguity in all of these laws to be frustrating and I hope that all American players get online again very soon.

[PokerXanadu]

I'm pretty sure the answer is "no", although this is more a function of the ambiguity of the laws than the letter of the laws. AFAIK, none of the international gambling web sites currently locate their servers in the US, whether or not they are licensed and whether or not they serve US customers. This includes Caesars Interactive, which set up shop in Canada for their overseas online gambling operations rather than at their Nevada headquarters (but their poker site is operated by 888.com).

The answer will probably quickly change now, with the change in the opinion of the DOJ of the Wire Act, and changes in state laws.

[DonkeyQuixote]

Actually, the answer is yes.

There is no legal barrier in the US to a company basing servers in the US to provide services to online gambling customers strictly outside the US. The US operation cannot itself break foreign laws. Some foreign licensing regimes may require placement of game servers on their territory, but that is a different issue. In practice, there is generally a redundancy of industry servers, scattered among several locations around the world.

(Everest at one point seemingly was operated from Boston and its then-parent traded on US stock exchanges. (I am not sure where their game servers were located however.)

I would suggest that, unless the prospective DOJ settlement specifically allows or even better requires it to do so, PStars is not going to set up servers or its DB or its code in the US.

(IF DOJ wanted to create US jobs, why NOT require PStars to relocate its main operations to the US, as a condition of settlement...... sort of like a P.O. visiting someone on probation......)

[Josem]

Privacy laws in many countries (particularly Europe) would be an additional hurdle to clear here.

[tamiller866]

Originally Posted by TheDrew

I was asked a question re: online gambling that I think one of you might be able to answer.

Can a company like Pokerstars park its code/DB in the United States if it is not serving US customers? Or, more generally, do international gambling websites use American servers? Ie. Licensed in Malta, Isle of Man, Alderney etc.

The only information I found was:

excluded from the coverage of "unlawful Internet gambling" are
waypoints along the World Wide Web that are only incidental to the places where the electronic transmission of the bet or wager is initiated and finally received.

I find the ambiguity in all of these laws to be frustrating and I hope that all American players get online again very soon.

That's such a left-field question since the only reason a company would subject itself the a US State's regulation and US taxes would be access to US customers.

But hypothetically, if say Nevada wanted to position itself as the new 'gold standard' IOM type regulator for international online gambling, they would need to get White listed to take UK customers, and they would need to reach a compact with the EU.

Since they wouldn't be in violation of State law and didn't offer sports betting, none of the existing Federal laws could be used to stop them, but Congress would likely pass new legislation to block them.

I've suggested in the past that simply pulling the trigger on accepting interstate or international customers might be the best strategy to force the federal government's hand to exercise their Commerce Clause authority over internet gambling, but they will probably save that as a nuclear option when/if California or another large population State were ever to pass an intrastate online gaming bill.