The Department of Justice’s letter reversing its view on the applicability of the Wire Act to non-sports wagering has inspired some states to look hard at legalizing intrastate gambling, but those states now have company on the other side of the aisle. Last week, the Gov. Herbert of Utah signed House Bill 108 (http://le.utah.gov/~2012/bills/hbillenr/hb0108.pdf) into law, which attempts to preemptively say no to any federal licensing scheme that might be passed.
The bill, which takes effect on July 1, 2012, adds a class A misdemeanor to Utah’s gambling law for anyone “who intentionally provides or offers to provide any form of Internet or online gambling to any person in the state.” “Internet gambling” is broadly defined as “gambling or gaming by use of the Internet; or any mobile device that allows access to data and information.” Importantly, the bill excludes a number of entities including Internet service providers, hosting companies, providers of public telecommunications services, or Internet advertising services from liability under the section based on any transmitting the gambling material or storing or delivering the material at a user’s direction.
In addition to creating an express prohibition on online gambling, the bill also preemptively opts Utah out of any federal licensing scheme that may be passed in the future. While any future legislature could simply amend the statute as part of opting into a federal regime, the Utah law would appear to attempt to prohibit any part of the Utah government other than the legislature from opting into the scheme, regardless of what mechanism the federal government created. Setting aside what may become an interesting question of separation of powers for the Utah courts to decide, it’s safe to say that if federal legislation allows states to opt out (and it almost assuredly will) any future online gambling company will have to devise a way to exclude Utah residents.
