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Taking Wagers on Sports Betting & Online Gambling

– Joe Rosenbaum

The Professional and Amateur Sports Protection Act of 1992 prohibits most states from authorizing sports betting (the law grandfathered a few states, such as Nevada) and New Jersey has been fighting to convince the Federal government to allow the State to legalize and license sports betting.  The latest attempt to circumvent the Act was the repeal of New Jersey’s own sports betting prohibitions at racetracks and casinos.  That effort was derailed by a series of court decisions, culminating in a 9-3 en banc decision of the Third Circuit Court of Appeals, which then led to the State of New Jersey petitioning the Supreme Court of the United States.

Last month, the Supreme Court refused to deny New Jersey’s challenge to the Federal ban (see, Christopher J. Christie, Governor of New Jersey, et al, Petitioners v. National Collegiate Athletic Association, et al; and New Jersey Thoroughbred Horsemen’s Association, Inc., Petitioner v. National Collegiate Athletic Association, et al) and left the door open to grant certiorari in the case if the Office of the Solicitor General (which is part of the U.S. Department of Justice) argues the case raises serious issues and questions of Federal law. They could, if they so choose, seek to revisit the long-standing position of the DOJ holding sports betting illegal.  To some extent, with the new administration of President Trump in place, many see this as an opportunity to do just that, since many of you may remember that as owner of casinos in Atlantic City, New Jersey, then businessman Donald Trump was a proponent of the legalization of sports betting.

Clearly, as States look to generate other sources of tax revenue, many view this as an opportunity to increase revenues and regulate an activity that has long been associated with organized crime. Indeed, the American Gaming Association estimated well over $4 billion in bets were placed on the Super Bowl last Sunday, virtually all of it, illegally. President Trump has consistently said he is in favor of eliminating or reducing legislation and regulation that restricts what States may or may not do and that encumber businesses needlessly beyond necessary Federal oversight. This may well fit right into that category, although there have been no comments as yet from the Administration.

Former Alabama Senator Jeff Sessions, just confirmed last night as Attorney General of the United States, has voiced opposition to any expansion of online gambling in the past, although when questioned during Senate hearings, did indicate he was willing to take another look at how and to what extent online gaming is being enforced by the Federal government.  There is also the possibility that in deciding to allow sports betting and an expansion of online gaming generally, the Federal government may choose to adopt some form of federally regulated or licensed betting and gambling scheme. While the path ahead is far from certain and opposition remains, some things do seem clear: attitudes are changing, the present administration is not averse to controversial new ideas, is favorably disposed to the elimination of any unnecessary Federal regulation that stands in the way of creating jobs and stimulating the economy and, notably, is likely to welcome finding an opportunity to enable States to find ways to increase tax revenue – and taxing so-called ‘sin’ industries may not be such an objectionable idea.

Stay tuned and, of course, if you have any questions, want further information or need help, don’t hesitate to contact me, Joe Rosenbaum, or any of the attorneys you regularly work with at Rimon.

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A Brief History of the U.S. Income Tax

Although income taxes were imposed for a brief time during the Civil War and again in the 1890s, it was not until 1913, upon passage of the 16th Amendment to the Constitution of the United States, that federal income tax became a permanent fixture for U.S. citizens and residents. Since Congress then was invested with Constitutional authority, they acted quickly to legally formalize taxes imposed on the income of individuals and corporations.

If you are a U.S. citizen or resident (indeed, if you reside anywhere income taxes are collected), consider what it takes to comply and make the necessary filings today.

Now take a look at the form that individuals were required by the Internal Revenue Service to file in 1913, the year permanent taxation started: 1913 Form 1040.

Do we really need to say anything more? Happy April 15!!

If you need advice or guidance about income taxes, in the United States or anywhere, please don’t contact me, Joe Rosenbaum.

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Operation Full Disclosure – The FTC Targets Advertising

Earlier today, the Federal Trade Commission issued a press release indicating that after a review of many national television and print advertisements, warning letters have been sent to a number of companies – including some of the largest advertisers in the United States – noting that they had failed to make adequate disclosures in at least some of their advertising. The initiative, entitled Operation Full Disclosure, is intended to enforce regulations that prohibit advertising that misleads consumers.

The FTC’s targets in this operation are disclosures in fine print, those that were hard to read – even though they contained important information for the consumer. The letters warned advertisers they need to make sure disclosures are clear and conspicuous, and reminded advertisers the disclosures should be close to the claims that are being made. They must not be obscure or disguised with font sizes or colors that make it difficult to read, and on television, they should appear for a long-enough period of time and in a manner that will allow them to actually be read and understood. Consumers should not have to search for them!

Included within each of the FTC letters was a request that each of the advertisers respond back to the FTC with specific actions they individually intended to take regarding their particular advertising, in order to remedy any deficiencies.

You can read the full FTC Press Release and, as always, if you have questions, need help, want guidance, or want to know how best to ensure your advertising and marketing is in compliance with legal and regulatory requirements, just contact me, Joe Rosenbaum, any lawyer in our Advertising, Technology & Media law practice group, or the lawyer with whom you regularly work at Rimon.

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Bond Meets Bond Street: Mannequins are Watching You Shop

An Italian company, Almax S.p.A., is selling a mannequin (price tag about $5,000) in a development that is being closely watched – literally – by retailers, consumers and, of course, regulators and privacy gurus. The new product, marketed as the EyeSee Mannequin, contains a camera embedded in the mannequins eyes, and according to the company’s website: “This product will do much more; it would make it possible to ‘observe’ who is attracted by your windows and reveal important details about your customers: age range; gender; race; number of people and time spent.”

In Europe and the United States, the mannequins are making sporadic appearances – perhaps in showrooms and even in street-side display windows, gathering data as people saunter by the store gazing into the windows. According to reports, Almax may also be testing auditory capabilities that would allow a mannequin to not only see, but to hear what customers are saying as well. Hey, did you just call that mannequin a dummy?

 


(Image from Almax Website)

 

The EyeSee Mannequin has a camera placed as an “eye” that includes facial recognition technology that records information about passersby, such as their gender and race, and the software guesstimates the approximate age of each person scanned by the camera. Typically, cameras can be used in retail stores for security, but in many jurisdictions the shop owners are required to post signs alerting consumers browsing the aisles that they are subject to being recorded. Now, the EyeSee Mannequin gives retailers the ability to collect and store information for marketing purposes – a commercial purpose that may put the technology squarely under a microscope (these vision puns really must stop), since it collects personal data about individuals without their consent. That said, the current product is only supposed to record information, not any actual photographs or image scans, but . . . it could, couldn’t it?

Need to know more about the legal implications of technology in advertising and marketing? Concerned about your rights (and wrongs) in deploying surveillance equipment and gathering data and information about customers and consumers? Are you up-to-date on the latest privacy and compliance requirements? Not sure? Need to see these issues more clearly? OK, don’t be a dummy (I mean mannequin) and consult your lawyer. Don’t hesitate to contact me, Joseph I. Rosenbaum, or the Rimon lawyer with whom you regularly work. We would be happy to see you, hear you and help you.

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Social Media Risks and Rewards

On February 18, 2010, the International Law Office (ILO) published an article authored by Gregor Pryor and Sachin Premnath in the London office of Rimon, and Joe Rosenbaum in New York. It discusses the benefits and pitfalls of social media, and raises issues and concerns applicable to global companies—not just those on either side of the pond!

The article was derived from one published in Legal Week, and you can download your own PDF copy of “Commercial risks and rewards of the social media phenomenon” right here.

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FINRA Issues Guidance in New Social Media Websites Notice

In November, Legal Bytes reported (Regulators Poised to Give Financial Institutions a Slap in the Facebook) that Richard Ketchum, Chief Executive of the Financial Industry Regulatory Authority (FINRA), acknowledged Wall Street is eager to use social media to interact with customers. In the course of his remarks at a recent meeting of the Securities Industry and Financial Markets Association (SIFMA), he noted, “We continue to witness the advent of technologies that will challenge your ability to ensure compliance with regulatory requirements,” and “Social networking is one such innovation.”

Now, supplementing existing FINRA Rules, FINRA has released a notice concerning online media rules (you can download and read a copy of the notice below) whose key components include requirements that securities firms:

  • Must develop policies and require its employees to comply with the new regulatory requirements
  • Must retain records of communications (a compliance requirement of the Securities Exchange Act of 1934) when social media is used to communicate
  • Must ensure that recommendations made through social media are suitable to all investors to whom the recommendation is made (e.g., by limiting or filtering access based on investor/consumer qualifications)

FINRA’s notice takes the position that securities firms must adapt existing rules to social media and essentially mirror the 2003 FINRA definition of “public appearance.” This definition noted that chat room postings were no different than if a firm representative was in a room making statements to a room filled with investors. FINRA’s current notice indicates that information posted or content placed online (static information) is subject to these same rules and must be approved by a firm principal – presumably, even information about individuals in the firm that may be part of an individual’s profile on the firm’s website or in social media platforms. But online interactions that are occurring on the fly (e.g., in real time), while subject to supervisory requirements (e.g., they must be supervised, perhaps even monitored), do not require such approvals.

You can read or download the FINRA Regulatory Notice 10-06 (Social Media Web Sites) [PDF] here.

As mentioned in the Legal Bytes November post, SEC disclosure rules apply to Tweets, blog postings, wall postings and other communication platforms provided by social media sites, and other regulatory agencies are seeking to address the use of social media sites by the entities they regulate (e.g., the FCC, the New York State Insurance Department). So if any of this is of interest and if you need to know more or need help, please contact me, Joseph I. Rosenbaum, or the Rimon attorney with whom you regularly work. We are happy to help.

Update:  Rimon lawyers Christopher P. Bennet, Amy J. Greer, Jacob Thride and Kevin Xu have prepared a Client Alert on the subject which you can read by going to: FINRA Issues Notice for Financial Firms Using Social Media.

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Investigating Online & Interactive Advertising

The U.S. Congress appears determined to investigate online advertising. Early this month, the House Energy and Commerce Committee issued a letter to more than 30 companies, and what began as an inquiry into how Internet service providers use network data to target advertising, has morphed into a fishing expedition into all kinds of interactive advertising. Most notably, and despite urging by the FTC to allow self-regulation to take hold, the Committee does not differentiate between personally identifiable information and non-identifying, anonymous data used for traffic metrics, ad insertion and other common advertising purposes. Lumping different kinds of information together could needlessly undermine marketing as it has been practiced for decades. The “tailoring” of advertising, in the Committee’s words, based on consumers’ behavior and media consumption patterns, has been at the heart of marketing for as long as marketing has been around.

More disturbing are presumptions that “privacy” rights are being violated by any and all forms of behavioral or targeted marketing. Advocacy groups opposed to commercial communication seek to promote an implicit, yet fundamental redefinition of personal privacy—i.e., anything that derives from peoples’ activities, no matter how distanced or anonymous. Taken to logical conclusion, any academic, commercial or journalistic observation of consumer activity could fall under regulatory restrictions under such a framework. Not surprisingly, the FTC—with its long history of regulation of advertising practices—has argued before Congress that self-regulation is likely to be an effective means of protecting consumers’ real privacy interests. According to testimony by FTC Consumer Protection Bureau Director Lydia Parnes before the Senate Committee on Commerce, Science, and Transportation this July, the FTC is “cautiously optimistic that the privacy concerns raised by behavioral advertising can be addressed by industry self-regulation.” Nevertheless, in the letter released this month and in three previous inquiries over the past few months, both the House and the Senate seem to be searching for a rationale to regulate. Stay tuned.

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To Collect or Not To Collect, That’s the Dilemma?

This article was contributed by Adam Snukal, Esq.

Surfed the web lately? Seen a banner promoting a product, service or trip to Ireland you priced yesterday? Serendipity? Luck? Cookies? Yes, it’s those tiny files placed on your computer when you visit a website. Advertisers can now parse through cookies on your computer when you visit certain websites and instantaneously serve up advertisements based on your historical online behavior—“behavioral marketing.” For some, this is a great convenience. For others, like New York State Assemblyman Richard Brodsky, this is invasive and should be stopped unless the consumer has given consent.

Assemblyman Brodsky sees the acquisition of Doubleclick by Google as a step backward for consumers since the combined company could tap into a reservoir of consumer behavior and search data on an individual basis. So he introduced a bill aimed at restricting Internet behavioral marketing—The Third Party Internet Advertising Consumers’ Bill of Rights Act of 2008—that would prohibit advertisers from collecting and using sensitive, personally identifiable information from users online; require websites to clearly and conspicuously disclose behavioral policies and practices; give consumers the right to opt-out of profiling practices; prevent their online behavior from being collected and used to deliver targeted advertisements; and police how advertisers are permitted to merge and synthesize such information with other data (e.g., merging personally identifiable information collected offline with information collected online). Opponents—some of the largest interactive advertising and media companies—have voiced their opposition in a letter to Assemblyman Brodsky, noting, “Time after time, state laws that have attempted to impose this sort of broad Internet regulation have been struck down by the courts, doing nothing more than making taxpayers bear the expense both of defending the lawsuit and paying the successful plaintiffs’ attorneys fees.”

Continue reading “To Collect or Not To Collect, That’s the Dilemma?”

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It’s a Dyanmic Environment Out There: Yes, You Can Still Avoid Being a Target

Most of us know the law tends to lag behind the marketplace. It is in the nature of most legal systems to try and balance statutory and regulatory authority—which makes rules based on experience or potential issues that will apply to future conduct—with judicial and regulatory decisions—cases that are adjudicated, create precedent and help shape the contours and boundaries of what is or is not permissible behavior within the statutory authorities.

In such a framework, we are often asked to counsel clients as to what is or is not acceptable when there may be little law, few regulations and sometimes no precedent. What to do? Well, as you may imagine, there is no simple answer. But there are some guideposts. A key guidepost is to consider common sense, best practices and some lessons learned from analogous legal precedent.

Continue reading “It’s a Dyanmic Environment Out There: Yes, You Can Still Avoid Being a Target”

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New E-Discovery Rules

With file sizes growing, you would think computers that can rapidly process large files and storage capability would be all the rage. For compliance officers, record managers and lawyers, it’s retrieving the information that is the hot issue and hardly a trivial one. New Federal rules relating to civil litigation took effect at the end of last year, requiring companies involved in federal litigation to produce electronically stored information as part of the pre-trial discovery process. The new rules apply to employee e-mails, instant messages and other electronic, digitally stored information. In the event the companies are sued, legal experts say, companies will need to start worrying about everything in electronic form—from digital photos on employee cell phones to text (“SMS”) messages.

Companies need to have sound record retention and destruction of records policies to ensure compliance with regulatory record-keeping requirements and to avoid potentially massive costs of searching and retrieving information that could and should have been purged. Absent actual or an expectation of specific litigation or a subpoena requiring production of data, companies can purge their systems of information that may no longer be relevant or necessary to their business operations. As the cost of storage has come down, however, companies routinely store information and don’t bother to delete unnecessary information—because it’s easy and affordable to simply keep everything!

The opposite is also an issue. Communication between lawyers and technology folks is less than perfect. A lawsuit arrives, but no one tells data management or systems. Tapes and disks continue to be routinely erased or written-over, with corresponding loss of data. Lots of companies don’t have policies and don’t know what information they have, where it is stored, and who may have, have kept or destroyed copies of information in electronic form. Lack of information is a weakness for lawyers. If you remember the adage, “never ask a question you don’t already know the answer to,” imagine how a litigator for the company will feel blindsided by records she was unaware of or cited by a court for destroying records he didn’t know his client had.

Why pay attention? Because by exercising preventive care, you can avoid potentially huge legal and operational expenses. By crafting and enforcing compliant and well-thought-out record retention and destruction policies, you can avoid high-priced lawyers sorting through email messages about the staff luncheon, and the pitfalls associated with a “smoking gun” needlessly showing up in that pesky lawsuit. Call us. The ATM Legal Team can help!