Susan Schmidt; James V. Grimaldi (October 16 2005). "How a Lobbyist Stacked the Deck—Abramoff Used DeLay Aide, Attacks On Allies to Defeat Anti-Gambling Bill". Washington Post. p. A01. http://www.washingtonpost.com/wp-dyn/content/article/2005/10/15/AR2005101501539_3.html. 

Although this Washington Post article was written in 2005, the subject of the story centers on the 1999 Internet Gambling Prohibition Act (IGPA) that never came to be. IGPA was bill that cleared the Senate and "appeared on its way to passage by an overwhelming margin in the House of Representatives." Although a strong lobbying effort from the moral right and anti-gambling groups such as the Christian conservatives thought they had sealed the passage of this bill, political payoffs behind the scene derailed the process.

Even though the National Gambling Impact Study Commission’s Final Report gave fresh life to an anti-gambling bill, powerful lobbying efforts orchestrated by Jack Abramoff eventually scuttled the passage. These efforts employed a “win-at-any-cost strategy that went so far as to launch direct-mail attacks on vulnerable House conservatives” and included at one point, “circulat[ing] a forged letter of support from Florida Gov. Jeb Bush.” After the $2 million pro-gambling campaign defeated the bill, several charities tied to Abramoff and his accomplices helped launder the money.

This story serves as an example of how powerful lobbyists and corruption is capable of manipulating Capitol Hill and eventually national law. Although for the average gambler, they were never the wiser. Conservatives swore that they would one day resurrect the bill and that day eventually came also surrounded in controversy. [See UIGEA 2006]

In 1996 the National Gambling Impact Study Commission Act was signed into law which established the National Gambling Impact Study Commission, “charged by Congress with a ‘very broad and very difficult task – to conduct a comprehensive legal and factual study of the social and economic implications of gambling in the United States.’” The Commission efforts included “holding a series of hearings around the country…received testimony from hundreds of experts…making several site visits, commissioning original research, conducting surveys of the existing, wide-ranging literature, and soliciting and receiving input from a broad array of individuals and organizations.” This process took two years, and the final report was published in 1999. During the report’s introduction, the Commission addresses Internet gambling specifically, “Thus, with only a few exceptions in areas such as the Internet, we agree that gambling is not a subject to be settled at the national level, but is more appropriately addressed at the state, tribal and local levels.”

It seems that the authors’ limited understanding of cyberspace permitted them to treat the Internet as a unified jurisdiction capable to being encompassed by a national law, since any state would be hard pressed to enforce a law governing the de-centralized Internet’s transmissions across state lines. They did include a specific section devoted to Internet gambling in which they came to no clear conclusion, but rather harped on the uncertainty that the technology has brought to the legal field. Mainly they assert that the most likely law to invoke is the Wire Act, but simultaneously admit that “wire communications” may not apply to the World Wide Web that can employ satellite technology and other wireless technology. They also raise the issue that the statute does not clearly define gambling “contests” and if it should apply to nonsports betting such as Internet bingo, lotteries, or casino-style games. More poignantly, the Commission asks relevant but unanswered questions such as “What are the legal jurisdictions when it comes to Internet gambling? Where are the bets and wagers actually taking place?” Such questions were already covered for brick-and-morter establishments and accompanying telephone communications as a result of the RICO laws and the like.

In conclusion, the Commission made four recommendations regarding Internet gambling: 1) the federal government should prohibit…Internet gambling not already authorized, 2) prohibit wire transfers to known Internet gambling sites or the banks who represent them, 3) prohibit states from permitting the expansion of gambling into homes…, 4) the federal government should take steps to encourage foreign government not to harbor Internet gambling organizations that prey on US citizens.

While the report focused on addressing both the social and economic situation regarding gambling, the only technological solutions in regards to Internet gambling they came up with were recommending enforcement strategies that targeted ISPs, credit card providers, money transfer agencies, and makers of wireless communication systems. In order to police the nebulous Internet, they planned on holding the financial facilitators responsible.

Sporting Events – Transmission of Bets, Wagers, and Related Information Act,Pub. L. No. 87-216, § 2, 75 Stat. 491, 552-553 (1961)  http://uscode.house.gov/download/pls/18C50.txt

Adopted in 1961, the intent of this law was to help law enforcement agencies, especially at the state level, fight organized crime. The Federal Wire Act, in companionship with other federal bookmaking statutes – Travel Act, Interstate Transportation of Wagering Paraphernalia Act, and the Illegal Gambling Business Act – established how organized gambling activities would be deemed illegal and punishable.

Subsection (a) of the Wire Act, a criminal provision, provides:
Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both [18 U.S.C. § 1084(a).]

Two provisions standout from the above clause. Namely, “engaged in the business of betting or wagering” and “wire communication facility.” The first quote is most often interpreted to exclude casual bettors. It has been argued, even by congressmen during the debate on this bill, that “[t]his bill only gets after the bookmaker, the gambler who makes it his business to take bets or to lay off bets. . . It does not go after the causal gambler who bets $2 on a race. That type of transaction is not within the purvue of the statute” [United States v. Baborian, 528 F. Supp. 324, 328 (D.R.I. 1981) (quoting 107 Cong.Rec. 16,534 (1961)).]

Regarding the definition of a “wire communication facility,” the following wording applies, “[A]ny and all instrumentalities, personnel, and services (among other things, the receipt, forwarding, or delivery of communications) used or useful in the transmission of writings, signs, pictures, and sounds of all kinds by aid of wire, cable, or other like connection between the points of origin and reception of such transmission.” It remains unclear if the Internet falls in this category. It may be true that certain cables and wires facilitate the Internet, but information also can be transmitted wirelessly between destinations. Wireless transmissions would fall outside the scope of a “wire communication facility.” Since the authoring of this bill preceded the Internet, no consensus has been made on whether it should be applied to online gambling.

One thing is for sure, the Wire Act clearly separates sports betting from nonsports betting, and has been used to define the legality of nonsports betting online. That is to say, the Wire Act fails to prohibit using the Internet to bet on games of chance, such as poker.

This project looks at the legislative history surrounding gambling over the Internet. Although gambling has been a part of human culture throughout the ages, several countries have attempted either to regulate or prohibit this behavior. Traditionally gambling took place in brick-and-mortar establishments where local law had clear jurisdiction; however, since the advent of the Internet gambling has moved into the borderless territory of cyberspace. A majority of this project evaluates recent attempts within the United States to enact legislation surrounding online gambling. Namely I will outline how the government's first attempt, retroactively invoking the 1961 Wire Act, remained weak in its ability to prohibit online poker until the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) made the processing of payments for online gambling illegal. Currently there is legislation slated for September 2009 that would repeal the UIGEA and move to regulate and tax rather than prohibit online gambling.

This article challenges the conventional belief amongst economists that "markets where traders risk their own money should produce better forecasts than markets where traders run no financial risk." In actuality, real money markets reflect more than past predicitive performance, they relfect an entire mass of social factors behind individual wealth, like financial status and willingness to take risks. Play-money prediction markets are based solely on track record and previous predictive performance and many systems use this model in addition to prize incentives based on rank to ensure players continue to buy and sell. The primary research of this paper is a study conducted to determine the level of accuracy sacrificed when using play-money compared to real-money prediction markets. The conclusion reached was that both markets were almost identical in accuracy.

It appears that though the predicitve power of these two real and play money markets are about equal, that the play-money one would actualy average a closer fit to Surowiecki's opinions about what constitutes a good market by eliminating the discouraging financial factor. This study is crucial in the examination of incentives as it attacks a noticible divide within the prediction market world.