Following up on my post about internet gambling bans and the dormant commerce clause, I noticed that Santa Clara University law prof Eric Goldman had this to say on the issue:
I continue to believe that any state regulation of the Internet presumptively violates the dormant commerce clause, especially when the statute does not contain any geographic limitations in its express terms.
It's true that a gambling website can block a state's residents if the site asks the user to report the geography and if the user accurately self-reports. However, a state law requiring websites to ask users to self-report geography governs conduct wholly outside the state because websites located outside the state who serve non-state residents would still have to comply. This extraterritorial reach, in turn, makes the law presumptively violative of the DCC, negating the applicability of the Pike balancing test. So from my perspective the court badly whiffed this ruling.
Also included in the post are some additional thoughts from IP lawyer John Ottaviani:
After rereading a number of dormant Commerce Clause Internet cases, I just come down on the side that the Internet is an inherently interstate entity, incapable of regulation by the states, as did the courts in Pataki and Dean (Am. Libraries Ass'n v. Pataki, 969 F. Supp. 160 (S.D.N.Y 1997); Am. Booksellers Found. v. Dean, 342 F.3d 96 (2d. Cir. 2003)). So I never get to the Pike balancing test. Even on the Pike balancing test, the Washington court gives short shrift to its treatment of the burden on interstate commerce, and is overly glib in its assertion that the websites can simply block the Washington users by refusing to register users with a Washington zip code. One of the reasons state lotteries and other "legal" forms of gambling have not proliferated on the Internet in the United States is the fear of criminal prosecution due to the inability to restrict users by geographic location to the degree felt necessary to avoid criminal prosecution. Users can lie about their address, or can be using service providers located in a different state than the user. The problem is exacerbated now with the proliferation of mobile devices, as users are no longer even tied to a particular fixed location. If a Washington resident is gambling on his Blackberry while on vacation in San Francisco, is that considered a violation of the Washington statute? What if the user lies and provides a California address and zip code?
The Rousso decision is consistent with the Washington court's decision in State v. Heckel, 24 P.3d 404 (Wash. 2001), where the Washington court rejected a dormant commerce cause challenge to its anti-spam law (prior to the enactment of the federal CAN-SPAM law). In Heckel, the court also gave a cursory treatment to the burden on interstate commerce, finding the only burden was the burden for spammers to refrain from deception, which the court found did not burden interstate commerce at all.
I'm not sure how the case would come out if the Supreme Court accepts a cert petition. Scalia is on record as not liking the Pike balancing test.
They seem to take a pretty hard line on internet regulation under the dormant commerce clause. Basically, it just doesn't work. Are there people (more specifically, WTO panelists) who would take that view under the parallel WTO provisions?
