Audit, Compliance and Risk Blog

With casinos and other forms of legal gambling proliferating in the United States, you would think that there would be emerging clarity in the laws and regulations regarding gambling online. You’d be wrong. Instead, the law governs Internet gambling in the United States that is still a confusing morass of state and federal laws. Making this even more problematic is that both the federal government and state governments have prosecuted Internet gambling companies, making navigation of the confusing and contradictory rules a dire journey in which a misstep can have major consequences.

We all—well, almost all of us—have devices with us at all times, which track and keep a record of our location. This isn’t some government mandate or a dystopian sci-fi novel. Indeed, we do this willingly, and even pay for both this device and the service that tracks us.

The old maxim states that the only two things that cannot be avoided in life are death and taxes. While there still does not seem to be any way to escape our ultimate fate, until recently there was one way to legally avoid certain taxes.

Facebook and its chief executive, Mark Zuckerberg, are being criticized far and wide for the company’s lax privacy practices after it was revealed that the political data firm Cambridge Analytica had used a seemingly innocuous personality test to collect data on 87 million Facebook users, which it combined with data from other sources to develop psychological profiles that were used in support of President Trump’s 2016 campaign. A number of lawsuits have been filed against the site over privacy issues and the Cambridge Analytica incident in particular.

On December 14, the FCC voted to rescind its “net neutrality” rules barring Internet service providers from either favoring or disfavoring certain online content over other content by providing faster, prioritized access to the favored content. As expected, the changes came in a three-to-two vote of the commission members.

This issue has had a convoluted history, dating back to when dial-up was the primary means to access materials online. In 2002, the commission decided that then-emerging broadband access should be classified under the law as an “enhanced information service,” which is subject to little regulation, rather than as a “basic telecommunications service,” which is more highly regulated, like a public utility.

For example, the regulation of old-fashioned telephone service as a basic service means that telephone companies cannot keep their customers from calling customers of other phone companies, or from receiving such calls.

The commission then tried to enact “net neutrality” rules in 2008 and in 2010, both of which were struck down by the courts because of the prior classification of broadband access as an enhanced service. So in 2015, the FCC reclassified Internet access as a “basic service” and imposed new net neutrality regulations on the basis of that classification. With the reclassification in place, the commission’s net neutrality rules were upheld by the courts last year.

Now the commission has voted to again classify Internet access as an enhanced service and rescind the net neutrality regulations. FCC Chair Ajit Pai has said that if Internet service providers unfairly favor some online content over others, the issue should be handled by the Federal Trade Commission as an anti-competitive business practice.

It is important to note that many of the concerns of net neutrality advocates are so far primarily theoretical. But without net neutrality regulations, Internet service providers could favor content from their corporate siblings or subsidiaries, or from content providers that have paid for such priority.

Without net neutrality rules in place, the accessibility of an individual business’s website or cellphone app could depend on the specific circumstances in their markets. Large companies may, for example, be able to afford prioritization from ISPs and dominant businesses may have enough customer support to avoid being deprioritized, so that customers would object if an ISP blocked or limited access. But smaller and independent businesses may not have the clout, in terms of either funds or user demand, to avoid having access to their online material slowed.

The FCC’s vote eliminating the net neutrality rules is not likely to be the last word on the issue. Several state attorney generals have already announced a court challenge and other groups are likely to file separate lawsuits. The changes will probably be put on hold until the court challenges are resolved. Some members of Congress have endorsed legislation on the issue.

In the Internet era, we’ve become used to instant answers and results, but it appears that the question of net neutrality, like many legal issues, will be resolved the old-fashioned way: slowly.

This column is for educational purposes only; it does not constitute legal advice.

The Federal Trade Commission’s guidelines for testimonials and endorsements require disclosure of any payment or benefit that endorsers receive for their endorsements.

If bloggers and other social media posters need a reminder that they can be held accountable for their online musings, a $600,000 jury verdict against an online poster in Georgia is such an example.

The Internet continues to develop and evolve at lightning-fast speed, with new sites and platforms bursting into prominence as others lose their popularity and fade away. Meanwhile, the law, which is not known for its rapid acceptance of new ideas and technology, struggles to keep up, and so do those who must keep up with both the technological and legal developments.