1. Case Name:
Lee H. Rousso v. State of Washington
2. Case Citation:
This case is not yet on Westlaw or Lexis. A link to a PDF of the opinion follows.
http://people.ischool.berkeley.edu/~bcarver/mediawiki/images/6/62/Rousso_v_State.pdf
3. Facts of the Case
In 2006, Washington amended its state Gambling Act by adding “the internet†to list of terms through which it is prohibited to transmit gambling information. The amendments also made the transmission of gambling information a class C felony.
Lee Rousso plays online poker. There is no dispute that, if Rousso were playing online poker for money, both Rousso and the operators of the online poker rooms would be engaged in the transmission and receipt of gambling information under the amended act.
4. Procedural Posture:
Rousso sought a declaratory judgment that the addition of the “the internet†to Washington Gambling Act interfered with the dormant commerce clause.
5. Holding
The court found that the State’s interest in regulating gambling outweighs the burdens that the gambling act imposes on interstate and international commerce.
6. Reasoning
The court initially noted that the Gambling Act amendments are facially neutral and apply to the transmission of gambling information regardless of whether the transmission occurs solely between Washington residents or between Washington residents and out-of-state customers or businesses.
As such, the court moved on to the second step, and analyzed whether the amendments could survive the Pike balancing test, which focuses on (1) the legitimacy of the government’s interest and (2) the burden on interstate commerce in light of the local benefit.
First, the court noted that the legislature considered gambling to be an activity with significant negative side effects. The state constitution, for example, explicitly provided that the legislature was precluded from ever authorizing any lottery. The court concluded that the state had a strong, longstanding police interest in regulating all gambling activities. The court also noted that the state would not be able to effectively address the problems of Internet gambling without regulating the Internet itself.
Second, the court described the difficulties in balancing the burden on interstate commerce with the local benefit – a problem arises in the application of the act because it purports to impose criminal liability on Internet gambling business that are located entirely out of state. The court noted that the DCC also has an interest in the dual problems of inconsistent state regulation and state attempts to control extraterritorial activity. Relying on Heckel (24 P.3d 404), the court determined that these problems were simply part of the Pike balancing test. The court concluded that the state’s overriding interest in prohibiting gambling outweighed any of these concerns.
7. Critical Analysis
This case was a fairly straightforward application of the Washington Supreme Court’s decision in Heckel, with one potential hitch: the application of the statute was not entirely clear in Rousso, but the court did note at one point that “the act purports to impose criminal liability on Internet gambling businesses that are neither located in Washington nor actively solicit wagers from Washington residents.†The Heckel court distinguished its case from the principles of Am. Libraries Assoc. v. Patakaki (969 F. Supp 160) by contrasting the New York statute, which could reach all content posted on the internet, with the Washington statute, that reached only the deceptive messages directed toward a Washington resident or originating from a Washington computer.
A clearer interpretation of the statute would likely clear up the extent to which it reaches exclusively extraterritorial conduct, but it is possible that Pataki may have more of an impact when the case is appealed.
Lee H. Rousso v. State of Washington
2. Case Citation:
This case is not yet on Westlaw or Lexis. A link to a PDF of the opinion follows.
http://people.ischool.berkeley.edu/~bcarver/mediawiki/images/6/62/Rousso_v_State.pdf
3. Facts of the Case
In 2006, Washington amended its state Gambling Act by adding “the internet†to list of terms through which it is prohibited to transmit gambling information. The amendments also made the transmission of gambling information a class C felony.
Lee Rousso plays online poker. There is no dispute that, if Rousso were playing online poker for money, both Rousso and the operators of the online poker rooms would be engaged in the transmission and receipt of gambling information under the amended act.
4. Procedural Posture:
Rousso sought a declaratory judgment that the addition of the “the internet†to Washington Gambling Act interfered with the dormant commerce clause.
5. Holding
The court found that the State’s interest in regulating gambling outweighs the burdens that the gambling act imposes on interstate and international commerce.
6. Reasoning
The court initially noted that the Gambling Act amendments are facially neutral and apply to the transmission of gambling information regardless of whether the transmission occurs solely between Washington residents or between Washington residents and out-of-state customers or businesses.
As such, the court moved on to the second step, and analyzed whether the amendments could survive the Pike balancing test, which focuses on (1) the legitimacy of the government’s interest and (2) the burden on interstate commerce in light of the local benefit.
First, the court noted that the legislature considered gambling to be an activity with significant negative side effects. The state constitution, for example, explicitly provided that the legislature was precluded from ever authorizing any lottery. The court concluded that the state had a strong, longstanding police interest in regulating all gambling activities. The court also noted that the state would not be able to effectively address the problems of Internet gambling without regulating the Internet itself.
Second, the court described the difficulties in balancing the burden on interstate commerce with the local benefit – a problem arises in the application of the act because it purports to impose criminal liability on Internet gambling business that are located entirely out of state. The court noted that the DCC also has an interest in the dual problems of inconsistent state regulation and state attempts to control extraterritorial activity. Relying on Heckel (24 P.3d 404), the court determined that these problems were simply part of the Pike balancing test. The court concluded that the state’s overriding interest in prohibiting gambling outweighed any of these concerns.
7. Critical Analysis
This case was a fairly straightforward application of the Washington Supreme Court’s decision in Heckel, with one potential hitch: the application of the statute was not entirely clear in Rousso, but the court did note at one point that “the act purports to impose criminal liability on Internet gambling businesses that are neither located in Washington nor actively solicit wagers from Washington residents.†The Heckel court distinguished its case from the principles of Am. Libraries Assoc. v. Patakaki (969 F. Supp 160) by contrasting the New York statute, which could reach all content posted on the internet, with the Washington statute, that reached only the deceptive messages directed toward a Washington resident or originating from a Washington computer.
A clearer interpretation of the statute would likely clear up the extent to which it reaches exclusively extraterritorial conduct, but it is possible that Pataki may have more of an impact when the case is appealed.