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Gambling has been an entertaining pastime in casinos for several years. The expansion of the Internet now makes it possible to play casino games online. However, this raises the question of whether online gambling is a legal activity. While federal law criminalizes “betting or wagering” over “a wire communication,” courts have interpreted this differently than the Department of Justice.

What Laws Apply To Online Gambling?

The federal government regulates online gambling activity.  There are several laws that apply to betting and gambling over the Internet. Most importantly, the Federal Wire Act of 1961, does not allow businesses to engage in certain online betting activity in the United States. It is important to note that federal laws can only regulate online gambling activity that takes place in the United States. They do not have the authority to regulate online gambling that takes place entirely in other jurisdictions. Among other laws, Congress also enacted the Illegal Gambling Business Act of 1970, as part of the Organized Crime Control Act of 1970. This Act was meant to target large-scale illegal gambling operations that funded organized crime.

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With the advent of virtual currency, consumers can now conduct entire transactions online without the burden of having to seek a common currency. Bitcoin has spread across the world as a popular form of this currency. In turn, transactions can now take place without switching from one form of currency to another (e.g., conversion from U.S. Dollar to Euro). On March 25, 2014, the Internal Revenue Service (“IRS”) issued guidelines regarding its approach to virtual currency, such as Bitcoin. Under these guidelines, the IRS will treat virtual currency as property, not currency, for federal tax purposes. Accordingly, the tax principles that typically apply to property will now apply to transactions involving virtual currency.

What Is Bitcoin?

Bitcoin is a form of virtual currency.  An unknown individual using the alias Satoshi Nakamoto created Bitcoin in 2009. This virtual currency allows for online transactions without bank issued transactions fees. People store their Bitcoins in a “digital wallet” on a personal computer or on the cloud. This serves as an online bank account, which can send and receive Bitcoins. Then, people use this currency to conduct transactions. However, unlike funds stored in a traditional bank account, the Federal Deposit Insurance Corporation (“FDIC”) does not insure Bitcoin wallets. Furthermore, transactions can now take place entirely anonymously. Online consumers do not have to provide bank accounts or other financial information. Therefore, it becomes nearly impossible to trace transactions using virtual currency. Bitcoin is becoming increasingly popular and more merchants accept this currency for all types of transactions. International transactions can also take place without fees from foreign countries or conversion fees. Consumers can also “mine” Bitcoin, which involves competitions to solve complex computer-based math problems to win additional Bitcoins. Bitcoin is also a valuable investment, with people purchasing Bitcoin to profit from increases in its value.

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In a recent move to impose stricter restrictions on gun sales, Facebook and Instagram recently announced they would be taking down postings for gun sales. Specifically, they will not allow anyone without a background checks to sell firearms through their social media sites. This comes as part of a larger effort to limit illegal gun sales. Both websites will prohibit minors from accessing any posts advertising or selling guns. In the wake of recent gun-related tragedies, gun safety advocates are turning to all possible avenues to prevent future gun crimes.

What Are The Gun Laws in California?

In California, all sales of firearms must take place through a licensed firearms dealer. Even where one owner is transferring a firearm to another owner, the transaction must take place through a dealer.   In turn, dealers are required to test the ability of the buyer or transferee to safely use and handle a handgun. This includes practices such as safely loading and unloading the bullets into a gun. Anyone convicted of a felony, drug addicts, and former mental patients cannot own a firearm. There are also strict parameters that limit the sale of assault weapons and associated parts or accessories. Any resident of California who owns a gun, or anyone who moves to California, is required to register the firearm with the respective state agency. New residents of the state have sixty days to satisfy this registration requirement. California does not recognize permits from any other state. Therefore, even if a recent resident has a permit for a firearm from another state, he or she must re-register the gun. However, several other states do recognize permits from California. Finally, all gun owners must have a Handgun Safety Certificate, which includes a written test that is valid for five years. The test includes laws regarding ownership, use, handing, and carrying of firearms.

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Identity theft and personal privacy are major issues, as more information is available over the Internet and linked together through social media networks.  However, even as early as the 1970s, legislatures were taking steps to protect personal information from public exposure and marketing schemes.  For example, California’s legislature has passed the Song-Beverly Credit Card Act.   In essence, this law prohibits retailers from collecting personal identification information during a credit card transaction from consumers for marketing purposes.  As the market for consumer goods spreads to the Internet, courts must decide how far protection of personal information will extend.

What Are the Provisions of the Song-Beverly Act?

The Song-Beverly Act is intended to protect consumers from unwanted marketing efforts.  This protects privacy and personal information.  More specifically, retailers are not allowed to request and record customers’ email addresses to complete a credit card transaction.  Furthermore, these retailers cannot later use these addresses for marketing purposes.  However, according to recent case law, this law only applies to “brick and mortar retailers,” or retailers that maintain a physical presence.  As such, the statute only applies to in-store transactions and not web transactions.  This is an important distinction in light of the fact that an increasing number of purchases take place online.

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In recent years, there has been an increase in cyber-attacks directed towards usernames and passwords for online banking accounts.  Through these attacks, outside parties have been able to misuse banking information for fraudulent wire transfers.  Hackers have starting using foreign accounts because it is more difficult to recover funds when dealing with some foreign banks.  Online banking fraud has led to over $40 million in stolen funds from small and mid-size companies.  Recently, the nature of these attacks have become more complex as regulatory agencies, e.g., FDIC, and enforcing agencies, e.g., FBI, scramble to keep up with changing technologies.

How Have Online Cyber-Attacks Changed In Recent Years?

In recent years, online banking fraud has become dramatically more sophisticated.  Now, hackers have the capacity to infect not only small, local sites, but also high-volume webpages all across web.  These hackers infect popular websites with Trojan viruses, which latch onto users’ computers when they visit the website.  The virus then directs to online banking information, such as account numbers and login information, allowing the hackers to access these accounts and conduct fraudulent transactions.  The virus may even have the capacity to record and hold this information itself.  To carry through the cyber-attack, criminals only need to setup funds transfers without the respective bank noticing.  Banks learned to watch for transfer activity from unknown computers, so now hackers steal victims’ IP addresses to avoid detection.  With this information, the transfer looks like a typical transaction from the user’s computer.  The hackers may obtain the ability to take control of a computer and use it to conduct fraudulent transfers.

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One of the fundamental constitutional protections is the freedom of press.  Under the First Amendment of the United States Constitution, the press (i.e., journalists, reporters, newspapers) enjoys freedom from government censorship.  However, this right must be balanced against the individual right to privacy.  Furthermore, as an added protection for privacy, state laws provide protections against defamation.  Generally, defamation proceedings have included claims against traditional journalists—namely, journalists working for newspapers and other printed publications.  However, since a 2011 Ninth Circuit decision, the free press standards have been expanded to include bloggers as well as traditional print journalists.  The growth of the Internet empowers more people to discuss and spread the news.  Therefore, this expanded protection will need to continue balancing free press considerations with individual privacy considerations.

What Are the Principles Considerations for a Defamation Claim?

To establish a claim for defamation, a party must show a: (1) knowing, (2) publication, (3) of a false statement of fact, (4) concerning the party, (5) that tends to harm the party’s reputation.  Generally, there must also be evidence that the publication was a result of negligence or malice.  For example, a claim for defamation likely would not stand if the party did not know that the information was actually false.  There are two forms of defamation—libel, which applies to written defamation, and slander, which applies to oral defamation.  Defendants who are accused of defamation may raise a defense if the publication is true.  However, it is often difficult and expensive to litigate and prove truth since it requires extensive discovery into the facts of the publication.  Additionally, publications that are opinions may also be free from the threat of defamation.  Still, simply labeling a publication an “opinion” will not automatically protect it from defamation.  The courts will look to see whether a reasonable reader or listener would consider the publication as fact or opinion.  As this example demonstrates, defamation claims often turn on the specific circumstances of the cases—i.e., the nature of the statement, the parties involved, whether the truth of the statement can be proven, and how a reasonable person would perceive the statement.

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In recent years, social media networks have proven to be an outlet for individuals to share personal views and opinions with the world.  However, Twitter’s new censorship laws could dramatically change whether individuals can actually express their viewpoints over this social media site.  Early in 2012, Twitter announced that it would allow for country-specific censorship laws.  Accordingly, Twitter content would be censored based on the country the individuals are located when reading content.  This will allow Twitter to comply with local government requests to remove or block content based on that country’s laws.   So, what censorship laws apply to the material on the web?  Interestingly, the law of the jurisdiction where material on the web is read, not written, governs the content.  This is the basis of Twitter’s new censorship laws.  They aim to cater to individual countries’ internet laws.

How Will This Affect American Laws and the Freedom of Expression?

The freedom of expression allows for a broad right for individuals to voice ideas and opinions in public without the fear of retaliation from opponents or the government.  Twitter argues that this new standard does not implicate the constitutional right freedom of expression.  Under Twitter’s new system, a tweet that is erased for breaking a law in one country may still be accessible in another country where the same legal standard does not apply.  Nonetheless, commentators point to how helpful Twitter has been during international crises (e.g., civil war in Syria).  Allowing governments to censor these posts may threaten lives.  This controversial policy deals with the conflicts of domestic and international laws.  Indeed, the fear is that the differences in laws will lead to high degrees of censorship in some regions.  Unfortunately, this will result in overall digression in the freedom of expression that societies have worked hard to protect.

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Often times legal disputes can involve foreign entities or even foreign laws.  Where these disputes also deal with the United States, domestic laws will come into play.  In 1958, the United Nations adopted the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which is also called the New York Convention.  It requires contracting state courts to give effect to agreements to arbitrate and to recognize arbitration awards.  Indeed, parties can enforce international arbitration awards in the United States through federal courts.  However, as Toho Towa, Ltd. v. Morgan Creek Productions demonstrates, state procedural laws can help parties collect international awards.

What Did the Court Hold in Toho Towa, Ltd. v. Morgan Creek Productions?

In this case, the Second District Court of Appeal applied an international arbitration award and allowed the claimant to enforce the award against a parent company that did not participate in the initial arbitration.  The claimant in this case was Toho Towa, Ltd., a Japanese corporation.  Morgan Creek International B.V., a Dutch entity, and Morgan Creek International Ltd., a Bermuda corporation were the original respondents.  The dispute involved an agreement among Morgan Creek International BC, the signatory; Morgan Creek International, Ltd., the guarantor; and Toho Towa, Ltd.  The agreement dealt with the right to distribute the movie “The Good Shepherd” in Japan.  The original arbitration award rewarded over $5 million to the claimant.  Toho Towa then petitioned a California state court to confirm the award.  According to California law, (Code of Civil Procedure § 1287.4) the international arbitration award effectively became a court judgment.  However, Toho Towa soon learned that the subsidiary companies did not have the resources to satisfy the judgment.  Once again, Toho Towa petitioned the California courts to add the parent company, Morgan Creek Productions, as a debtor on the judgment.  This meant that the parent company would now be liable for the full judgment.

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The expansion of social media networks has helped connect people and ideas all over the world. However, it has also raised substantial privacy concerns as more people store personal information on the web. Congress has enacted legislation in an effort to circumvent the dangers associated with online networks–for example, the Electronic Communications Privacy Act, the Child Online Privacy Protection Act, and the Stored Communications Act. States have also passed their own legislation to help protect cyber activity within their jurisdiction. For example, California passed “Do Not Track” legislation in November 2013 requiring websites to disclose their tracking practices. These laws, along with several others, work to protect individuals, entities, and their related private information as they continue to operate and conduct business over the Internet. Recently, a federal court applied the Stored Communications Act and found that it is applicable to a user’s wall posts.

What Are The Provisions of the Stored Communications Act?

In 1986, Congress passed the Stored Communications Act (“SCA”) which is codified under 18 U.S.C. §§ 2701 et seq.  The SCA aims to protect privacy interests implicated throughout electronic communications. Various court holdings have interpreted the SCA to apply to non-public electronic communications that take place over electronic communication services in an electronic storage medium. Violations of the SCA may carry potential criminal penalties, including serving time in prison. The penalties and liabilities will generally depend on the circumstances of the violation. The SCA does allow Internet service providers to share “non-content” with another person or entity. This includes log data and recipients’ email addresses. Still, this is a limited exception to the general rules and the SCA is still prohibited with sharing any information with a government entity. The government may compel Internet service providers to provide stored information. For electronically held communications, the government is required to have a probable cause and obtain a search warrant. For communications stored remotely, the government only needs a subpoena or a court order. Hence, remotely stored data enjoys a lower level of protection since it is easier to submit a subpoena rather than to obtain a search warrant.

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In recent years, electronic spam has become a public nuisance. In response, several states, including, but not limited to, California, have enacted statutes to prevent electronic spam. As with most legislation that deals with the constantly-changing nature of the web, these statutes struggle to define the extent of their application while staying current with trends. Therefore, courts are charged with the responsibility of interpreting the intent of these laws.

What Are The Provisions of California’s Anti-Spam Statute?

In fact, California’s Business and Professions Code section 17529.5 prohibits any person or entity from sending commercial email advertisements, or spam, in three defined circumstances. First, spam is prohibited if an email advertisement uses a third-party domain without the third-party’s permission. Second, the statute prohibits email advertisements that use misrepresented information in the header. Finally, it is unlawful to use a subject line that is reasonably likely to mislead a recipient about the content or subject of the message. This section applies if the email is sent from California or if it is sent to a California email address. Accordingly, the reach of California’s legislation into other jurisdictions is also an issue for courts to interpret. Furthermore, a party bringing suit may recover both actual damages and liquidated damages. Liquidated damages are limited to $1,000 for each unlawful email and may go up to $1,000,000.

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