Does Satoshi Dice break US Anti Gambling Laws?

[nibor]

Anyone understand the legal situation in the US regarding gambling?

I understand that Sports Betting on the internet is illegal in the US - this is clearly stated.

I understand that Poker is illegal (http://en.wikipedia.org/wiki/United_States_v._Scheinberg) but this case was brought based on:
"the U.S. Attorney for the Southern District of New York, bases his case on a New York law that makes it a Class A misdemeanor, punishable by up to a year in prison, to run a game of chance where bets are placed within the state".

So according to wikipedia (yes.. yes.. i know could all be wrong - hence question!) SatoshiDice falls into exactly the same camp as Online Poker.

So unless SatoshiDice excludes players who sent Bitcoins from New York State (which we all know is technically impossible due to P2P nature of Bitcoin) they are breaking exactly the same US law that put 10 people in prison and hundreds of millions of dollars of assets confiscated.

More info here (http://entertainment.howstuffworks.com/online-gambling2.htm) that supports my opinion that SatoshiDice is illegal in US.

Everyone agree? (with my conclusion - not whether the law is a good one!).

Also there is a more tentative argument (and the reason that Banks are not keen to have exchanges as customers) that running an Exchange or being the Bank of an Exchange makes you violate the "Unlawful Internet Gambling Enforcement Act of 2006" (http://en.wikipedia.org/wiki/Unlawful_Internet_Gambling_Enforcement_Act_of_2006). I would say that since SatoshiDice is over 50% of the Bitcoin transactions a court would find it simple to conclude that a significant proportion of USD passing through an exchange were in effect payments processed for SatoshiDice, so in breach of this law.

[Mike Hearn]

I think you answered your own question. SatoshiDice is a UK based operation, from what I understand. So it's not illegal in the place where it's based, created and run.

However the USA (and many other countries, but only the US seems to try enforcing it) has laws written like "if you provide service X to residents of area Y you must follow law Z". These sorts of laws aren't really compatible with the internet where services can be seamlessly offered from one jurisdiction into another. They stand nonetheless.

So if I ran SatoshiDice I wouldn't be worried unless I needed to visit a US jurisdiction for some reason. Well, if I ran the site I'd just block US IPs and be done with it actually. It's not worth being harassed by the US government no matter how much money the site makes or how unjust it is for laws to be enforced outside their jurisdiction like that - though by now it may be too late.

BTW transaction volume does not equal value volume. You can be 20% of transaction volume but only 1% of all value volume if the value of transactions are small. Many SD transactions are micropayment messaging transactions, they don't move real value around.

[nibor]

Well, if I ran the site I'd just block US IPs and be done with it actually.

Obviously this makes no difference as you do not need to access the web site to use the service - just know the 10-20 bitcoin addresses to send your bets too - and no way to block payments by location.

So there will be no SatoshiDice representative at Bitcoin 2013 or CES2014!

Also wonder how long the .com address will be up and running.

[justusranvier]

From a technical point of view it's impossible for a court order to shut down Satoshi Dice. The server that processes the bets only needs a connection to the Bitcoin network in order to do its job, so it could be located anywhere in the world and operate undetectably through Tor.

Access to the actual web site isn't necessary to play. All you need to know are the bitcoin addresses to send your bet to, and that information has long since spread too far to be suppressed.

[Invictus]

If playing the dice with bitcoins is against gambling laws, then so is playing monopoly with your family.

[nibor]

If playing the dice with bitcoins is against gambling laws, then so is playing monopoly with your family.

No for 3 reasons:
1) You are not playing monopoly on the internet.
2) You can not change monopoly money into a material amount of USD.
3) You are not playing monopoly as a business with the intent of making a USD profit.


If you analogy was correct then there would still be online poker in the US.

[Invictus]

If playing the dice with bitcoins is against gambling laws, then so is playing monopoly with your family.

No for 3 reasons:
1) You are not playing monopoly on the internet.
2) You can not change monopoly money into a material amount of USD.
3) You are not playing monopoly as a business with the intent of making a USD profit.


If you analogy was correct then there would still be online poker in the US.

1) Yes I do sometimes.
2) Well yes you can, if you find someone stupid enough
3) I'm playing monopoly because I want more monopoly money.

What did the original miners pay for their bitcoins? Nothing, just like you get the monopoly money for nothing.

[01BTC10]

I might be wrong but playing online poker is legal in most US jurisdiction because it's a skill game. Online gambling like Satoshi dice is illegal at federal level because it's pure gambling and banned by the Wire Act. Some states specifically ban online poker but most don't. Funding poker account via the US banking system is illegal because of the UIGEA.

Satoshi dice might fall in a grey area since it's legal to gamble online with playmoney and Bitcoin might not be considered real money. You don't need to fund your account via the US banking system either.

I'm not a lawyer but I was a pro poker player for 6 years.

[Mike Hearn]

Obviously this makes no difference as you do not need to access the web site to use the service

You're thinking like an engineer, not a lawyer. Yes, there are always workarounds. Nobody, including all the major poker sites, can completely eliminate every last US citizen or resident even with the most draconian policies because, eg, some of them are dual citizens, some of them travel a lot to other countries, some of them use proxies or whatever.

Intent matters. If your intent is to comply with the governments wishes, they have a much harder time building a case that'll impress a judge. And if you're really worried about the static address thing, ok, change the addresses you need to send bets to every so often. Or create new ones for every page load. There's no particular reason they have to remain static.

[SgtSpike]

I might be wrong but playing online poker is legal in most US jurisdiction because it's a skill game. Online gambling like Satoshi dice is illegal at federal level because it's pure gambling and banned by the Wire Act. Some states specifically ban online poker but most don't. Funding poker account via the US banking system is illegal because of the UIGEA.

Satoshi dice might fall in a grey area since it's legal to gamble online with playmoney and Bitcoin might not be considered real money. You don't need to fund your account via the US banking system either.

I'm not a lawyer but I was a pro poker player for 6 years.

Isn't it illegal to gamble with anything of value though?  Bitcoin certainly has value...

[Isokivi]

The fact that something is available on the internet that is not allowed in the US is most certainly not breaking any law unless it is directly marketing itself to the US population. Hence a paid advert in a magazine that is only published in the states could for example constitute a criminal offence.

[SgtSpike]

The fact that something is available on the internet that is not allowed in the US is most certainly not breaking any law unless it is directly marketing itself to the US population. Hence a paid advert in a magazine that is only published in the states could for example constitute a criminal offence.

I'm not certain the US courts see it that way.  They just indicted a guy for writing software that was used by gambling sites in the US.  I'm certain they could indict a gambling site that didn't make an effort to keep US players out of it.

[01BTC10]

I might be wrong but playing online poker is legal in most US jurisdiction because it's a skill game. Online gambling like Satoshi dice is illegal at federal level because it's pure gambling and banned by the Wire Act. Some states specifically ban online poker but most don't. Funding poker account via the US banking system is illegal because of the UIGEA.

Satoshi dice might fall in a grey area since it's legal to gamble online with playmoney and Bitcoin might not be considered real money. You don't need to fund your account via the US banking system either.

I'm not a lawyer but I was a pro poker player for 6 years.

Isn't it illegal to gamble with anything of value though?  Bitcoin certainly has value...

I'm not a lawyer so this is only my opinion. There is no court precedent concerning Bitcoin and online gambling that I know of. Should this issue be brought to court by the DOJ; I can only speculate that you are right and they will probably view monetary value into Bitcoin.

[sunnankar]

If playing the dice with bitcoins is against gambling laws, then so is playing monopoly with your family.

No for 3 reasons:
1) You are not playing monopoly on the internet.
2) You can not change monopoly money into a material amount of USD.
3) You are not playing monopoly as a business with the intent of making a USD profit.


If you analogy was correct then there would still be online poker in the US.

No, nibor, it is your analogy and assertions of law which is incorrect. And your three reasons are not the legal standard and you are attempting to create a test, exchangeability into USD or other funds denominated in the currency of a country, for the issue of what is a payment when there are already applicable tests in the USC. Last I checked it was Congress, not you, who created USC.

Payments, money transfers, designated payment providers and etc. already have established definitions under 31 USC 5362-5363 and terms like money transmitting service already have definitions under 31 USC 5330.

Under all of these definitions the common element is 'currency or funds denominated in the currency of any country'.

One issue relevant to this is whether bitcoins are funds? Currency or funds must be denominated in the currency of a country (31 USC 5330).

Airline frequent flyer miles, strings of text in a .txt file, PDF or Word files, ISK in Eve Online or other fictional units in games like Monopoly or World of Warcraft and Bitcoins are not denominated or redeemable (exchangeability is not a standard under the Code) in the currency of a country. Therefore, none of those mentioned nor bitcoins are funds.

One problem with attempting to legally define bitcoins, which probably will not even be attempted for years, is that any definition will likely fail constitutionality because of overbreadth or being void for vagueness. And there is always the rule of lenity.

Now, since bitcoins are exchangeable, like anything else individuals place value on, that is not to say that there are not tax implications when using Bitcoins, but those rules are governed under different code.

[Bugpowder]

We can discuss legal status and strategies, but I think the bottom line is that its status has not yet well-defined by the courts.  Until the Justice Department issues some guidance on the issues of bitcoin and bitcoin based gambling, or they file a suit we just don't know.

IANAL, but IMHO, aggressive prosecutors probably would be able to file charges against US citizens that run bitcoin gambling sites. Whether they would want to take on a potentially tricky case and whether they would prevail in a criminal suit is totally unclear.  I also think we are probably years away from seeing any action on this front, if we ever do.

[niko]

We can discuss legal status and strategies, but I think the bottom line is that its status has not yet well-defined by the courts.  Until the Justice Department issues some guidance on the issues of bitcoin and bitcoin based gambling, or they file a suit we just don't know.

IANAL, but IMHO, aggressive prosecutors probably would be able to file charges against US citizens that run bitcoin gambling sites. Whether they would want to take on a potentially tricky case and whether they would prevail in a criminal suit is totally unclear.  I also think we are probably years away from seeing any action on this front, if we ever do.

I agree. Furthermore, a sign of trouble would be the issue of btc gambling being made into an electoral issue in the U.S. I can see a presidential (or other) candidate with "strong values" trying to score points...   

[odolvlobo]

Big online poker sites in (or available to) the U.S. ran for several years before the U.S. government decided to crack down. The same thing could easily happen to Satoshi Dice, though I don't know how a crackdown could be done.

[01BTC10]

Big online poker sites in (or available to) the U.S. ran for several years before the U.S. government decided to crack down. The same thing could easily happen to Satoshi Dice, though I don't know how a crackdown could be done.

Seizure of the ".com" domain. A ".co.uk" domain name for example is better suited since online gambling is legal in the UK.

[Isokivi]

The fact that something is available on the internet that is not allowed in the US is most certainly not breaking any law unless it is directly marketing itself to the US population. Hence a paid advert in a magazine that is only published in the states could for example constitute a criminal offence.

I'm not certain the US courts see it that way.  They just indicted a guy for writing software that was used by gambling sites in the US.  I'm certain they could indict a gambling site that didn't make an effort to keep US players out of it.

If I were in some way affiliated with satoshidice I most certainly would not live withing the US and I'd actually be hesitant about traveling there either, but I'd be very very supprized if a "normal" country would extradite (I may of have mispelled that word) you there to face charges.