That law, enacted in 2006, prohibits banks from processing payments for unlawful Web gambling. Problem is, there's no national consensus on what constitutes illegal gambling. As of September, six states made it a crime for individuals to place bets online, but the remaining states had no laws specifically regulating online gambling, according to Joe Brennan Jr., chairman of the Interactive Media Entertainment & Gaming Association. That organization unsuccessfully challenged the 2006 law, arguing that it was too vague to be enforced, given the differing state standards.
While a federal appellate court rejected the group's argument, the recent decision to postpone banks' deadline for compliance appears to indicate that the authorities are having second thoughts about whether the plan is workable.
Certainly individual states have run into legal quagmires when trying to control online gambling. Kentucky Gov. Steve Beshear recently attempted to seize more than 140 domain names of gambling sites, sparking a legal showdown that drew the attention of digital rights groups like the Electronic Frontier Foundation, Center for Democracy & Technology and ACLU. Those organizations argued that the seizure was unconstitutional for several reasons, including that it restricted interstate commerce.
An appellate court ruled against Beshear, but he appealed to Kentucky's highest court, which is still considering the matter.
Additionally, earlier this year Minnesota officials made an ill-considered decision to ask Internet service providers to block access to around 200 gambling-related Web sites.
But the authorities backed off after the Interactive Media Entertainment & Gaming Association filed a lawsuit alleging that the request was unconstitutional. Among other reasons, the association argued that the request violated the free speech rights of the Web sites as well as state residents because some of the sites on the blacklist contain lawful material.
Meantime, Rep. Barney Frank (D-Mass.) has introduced legislation to legalize Web gambling. The measure, Gambling Regulation Consumer Protection & Enforcement Act, would authorize the U.S. Treasury Department to license Web gambling companies.