Public Law – Walters Law Group

New York Times covers creative use of Google Trends evidence in obscenity case

Sun, 20 Nov 2022 08:56:38 +0000

Lawrence Walters, a Florida lawyer who is an expert in obscenity law, said that there was nothing inherently illegal about cam shows, as long as the models were over 18. There is another risk. ‘There’s a perception that you can be a stealth webcam model,’ he says. ‘That’s not always the case.’” M. Richtel, , Intimacy on the Web, With a Crowd, New York Times (September 21, 2013)“Lawrence Walters, a First Amendment lawyer who has sued Sheriff Judd and his office a number of times, said: “That is the misuse of the criminal justice system. You don’t bring felony charges against a 12-year-old to raise awareness of a social issue, especially if there is not a valid basis for those charges.” [Discussing the constitutional concerns with filing unwarranted cyber-bullying charges after a tragic teen suicide]” L. Alvarez, Charges Dropped in Cyberbullying Death, but Sheriff Isn’t Backing Down, New York Times (Nov. 21, 2013)“Lawrence Walters, a lawyer who specializes in online gambling, said pay-per-head sites operate in a gray area because of those types of meetings and the required third-party element that is inherent in their operations. It is possible that operators of the sites could be prosecuted by United States officials for facilitating illegal sports betting in this country, but with most of the sites based in Costa Rica and other Central American countries where gambling is legal, extradition would be unlikely, he said.” S. Borden, Neighborhood Bookies Putting Lines Online, New York Times (March 29, 2012)Some advocates for legalizing online poker pointed to the complaint as another reason that the activity should be federally licensed and regulated. “This is a system that has been forced into place by the failure of the U.S. to regulate online gambling,” said Lawrence Walters, a Florida lawyer who specializes in gambling and First Amendment law, arguing that players had to send money to risky overseas accounts. “The prohibitionists have gotten their way so far.” [Discussing issues allegations of misuse of player funds by online poker sites] Poker Web Site Cheated Users, U.S. Suit SaysWe are asking a federal judge to put a stop to this madness, Mr. Walters said. We want to try to stop a rogue sheriff who is abusing his authority as a law enforcement officer to punish a vocal atheist in town for her viewpoint and political beliefs. L. Alvarez, Florida Suit Says Arrests are Retaliation for Atheism, New York Times (June 24, 2011) [discussing a suit filed against Polk County Sheriff Grady Judd, for violating the separation of Church and State]“Lawrence Walters, a lawyer who represents online gambling operations, though not those involved in these cases, said the indictment might raise an even more fundamental question: Is online poker actually illegal? “This appears to be a precedent-setting case,” Mr. Walters said. “It will be the first time the Department of Justice takes on the looming question of whether federal law prohibits online poker.” –Lawrence Walters offers insight into the federal crackdown on Internet Poker sites“[T]he defense lawyer, Lawrence Walters, is arguing that the evidence is sufficient to demonstrate that interest in the sexual subjects exceeds that of more mainstream topics — and that by extension, the sexual material distributed by his client is not outside the norm.” –New York Times covers creative use of Google Trends evidence in obscenity case June 24, 2008 [discussing the use of google trends data in the Clinton Raymond McCowen obscenity case]“Lawrence G. Walters, a Florida lawyer who is part of the defense team for Ms. Fletcher, argued in a court pleading that the stories had scientific value…” — A Prosecution Tests the Definition of Obscenity, Sept. 28, 2007 [discussing the government’s case against Karen Fletcher, prosecuted for writing violent and sexually charged stories]“Lawrence G. Walters of Altamonte Springs, Fla., said the development was disconcerting because the prevailing wisdom had been that investment in a company that is legal and licensed in its jurisdiction was not grounds for prosecution. ‘It would be the first time that that kind of liability has been imposed, ‘ Mr. Walters said.” — Gambling Subpoenas on Wall Street, January 22, 2007 [discussing the issuance of subpoenas to Wall Street banks by the Justice Department]“‘This is a shot across the bow,’ said Lawrence G. Walters, a Florida lawyer who specializes in Internet gambling law. ‘They’re letting the industry know, ‘We’re about to come after you.’” — Arrest Made in Crackdown on Internet Betting, July 18, 2006 [discussing the arrest of David Carruthers in the first major crackdown against offshore gambling by federal authorities]“The government has floated these legal theories without having to prove anything,’ said Lawrence G. Walters, a Florida lawyer who specializes in Internet gambling law. ‘But they’ve achieved their end result: scaring the players and the industry.’” — Companies Aiding Internet Gambling Feel U.S. Pressure, March 15, 2004 [referencing federal investigations into media advertising of online gambling businesses]“‘The chilling effect is working,’ said Lawrence G. Walters, A lawyer who represents American media companies that accept advertising on behalf of offshore casinos. He said that American companies ‘are buckling under pressure and threats of prosecution and litigation.’” — Electronic Arts to Stop Advertising for Online Casinos on Its Web Site, June 12, 2004 [discussing corporate decisions to stop advertising for online gambling interests]

“‘Nobody takes them seriously when they say this is a serious crime,” [Walters] said of the government and anti-gambling laws.’ ‘But there is stuff still on the books, and somebody could go down heavily if government decides to turn its attention to them.’” — Wall St. Bets on Gambling on the Web, December 25, 2005 [discussing the popularity of online gambling in the stock market]“Lawrence Walters says the suit could test the law’s constitutionality.” — Sticker Shock: Should There Be a Law?, August 11, 2000 [referencing the arrest of Walters’ client for an ‘obscene’ bumper sticker, and the eventual First Amendment claims against the police department after dismissal of the criminal case]“Lawrence G. Walters, a lawyer who represents offshore casinos and their American partners, said the industry had been waiting for a test case and was eager to see how the Casino City case turned out. He said the stakes were significant, particularly for the offshore casinos, which do about half their business with American consumers.” — Technology; Lawsuit Claims Free Speech for Online Casino Ads, August 23, 2004“Lawrence Walters, a lawyer who specializes in Internet gambling law, said prosecutors faced serious jurisdictional questions. One central question is whether any illegal activity is taking place on American soil; the bettors, he said, are not breaking the law, because placing a wager is legal.” — The Gambling is Virtual; the Money is Real, July 25, 2006 [discussing the prosecution against BetOnSports.com for racketeering]“Mr. Walters said he did not believe that states had the jurisdiction to regulate Internet gambling, which involves transactions that cross state and national borders.” — Arrest of Second Major Online Gambling Figure is a First for State Officials, September 8, 2006 [commenting on the arrest of Peter Dicks, chairman of Sportingbet.com, on state level online gambling charges]“‘This is a strategy of intimidating anybody who is in the chain of commerce,’ said Lawrence Walters, a lawyer who works with offshore Internet casinos, as well as software companies that do business with the casinos.” — U.S. Steps Up Push Against Online Casinos By Seizing Cash, September 8, 2006 [commenting on the arrest of Peter Dicks, chairman of Sportingbet.com, on state level online gambling charges]

Dear Abby, need advice on censorship

Tue, 20 Sep 2022 09:19:32 +0000

North Carolinian Steve Cooksey writes a diabetes blog peppered with exclamation points and capital letters, a blog that fully encapsulates his zeal for a meal plan that he says saved his life. “I am still a Diabetic, but my blood sugar is NORMAL!!!” Cooksey wrote in a 2010 post. “I WANT TO SHOUT IT FROM THE MOUTAINTOPS EVERY DAY!!! But…since I don’t live near a mountaintop…I post stuff on the Internet.” But the same passion for promoting the diet to other diabetic patients (low carbs, lots of veggies) soon slammed him against the North Carolina Board of Dietetics/Nutrition. Cooksey received a call from the board’s executive director, who warned that his blog was “under investigation” because he was committing a criminal act for practicing dietetics without a license in North Carolina. The one-on-one mentorship with readers, the sale of his “Diabetes-Support Life-Coaching” packages, and even the Dear Abby-style advice columns on his site were all problematic, according to the board. The executive director also mailed him a 19-page printout of his blog with areas of concern marked in red. At first, Cooksey complied. Then he became angry and sued. The media soon picked up his story. “My guess is the board thought that I would ‘roll over’ after an official reprimand,” Cooksey said of the board. “I don’t think in their wildest dreams they thought that this shit storm would occur.”

Photo provided by Ronald S. Hines The Texas veterinary board shut down Ronald S. Hines’ paid pet care advice website. But the North Carolina Board’s move to fix Cooksey’s actions isn’t automatically oppressive, said Marcia McCormick, a constitutional law professor at Saint Louis University in Missouri. The government’s goal when it polices certain fields is to protect the consumer. “There are often good reasons that states do regulate these professions, especially in areas that are potentially dangerous to the public and . . . especially if you accept money,” said McCormick. “Bad things can happen,” such as plumbers installing faulty pipes, or surgical malpractice. “But once boards start regulating what members of the profession can and can’t say, then there are problems,” McCormick added. Jeff Rowes, who represents Cooksey, said the lawsuit is one in a series of cases that could squarely determine whether, and to what extent, the First Amendment protects individualized advice. The legal tango that ensues between a censored plaintiff and a government licensing board is actually common, and almost expected. Comparing the match to “schoolyard bullying,” Rowes said government agencies expect compliance when reprimanding ordinary citizens without legal recourse. Cooksey’s case is one of three lawsuits in three separate judicial districts currently before the courts. In the last two years, a psychologist, veterinarian and diabetic blogger have all sued their respective states after government licensing boards requested or ordered each to stop publishing. Together, the cases could force courts to decide if and how much government agencies can regulate advice. Does a licensing board have the right to censor advice spoken or written to a reader, friend, neighbor if the giver is not licensed by the state? And if state agencies are censoring writers like Steve Cooksey, Ron Hines and John Rosemond, then are national columnists like Dear Abby and TV personalities like Dr. Phil and Dr. Oz breaking the law as well because they are not licensed in a particular state? According to media lawyers, those questions involve two constitutional issues. First, the courts must decide if advice is speech protected by the Constitution, or whether it is conduct completely regulable by licensing boards. And then if it is speech, they must decide if all advice is protected or if the state has an interest in regulating its profession to protect consumers from fraud. “We’ve reached a tipping point,” said Paul Sherman, an attorney for the Virginia-based Institute for Justice representing Cooksey and Rosemond. “And we want to be certain that courts have the guidance they need to reach a resolution that is consistent with the First Amendment and protects the rights of Americans.” Is advice speech or conduct? Herein lies one of the “cutting-edge” issues that courts have left largely unexplored: are the words published by Cooksey, or Ronald S. Hines who shares advice on pet care to international readers, or John Rosemond who writes a parenting column syndicated in over 200 newspapers across the country considered speech or occupational conduct? In other words, Sherman said, should the courts even consider free speech arguments in these cases? Whether the cases touch on First Amendment issues is important in determining the standard of review — known as the level of scrutiny — courts must apply in judging the constitutionality of a government law that censors individualized advice. If the courts find that advice is conduct and not speech, then state boards will not need to jump as high to prove there is a legitimate governmental reason for a licensing law. The court will apply the lowest, default level of scrutiny. But, if the courts find that the cases do in fact involve First Amendment issues, then it must apply the most stringent level of protection known as strict scrutiny. Under that standard, the government must prove there is a “compelling government interest” in limiting speech. Those types of restrictions are historically rarely upheld. According to the boards, advice can be likened to personal assessments or counseling that could steer people into danger if the advice is wrong. In its brief to the U.S. Court of Appeals (4th Cir.), the North Carolina dietetics board said Cooksey’s efforts to steer the court’s review into “the deep waters of unrelated First Amendment principles” was unfounded. “Professional regulations are not subject to First Amendment scrutiny simply because they regulate activities that include communications,” the board said. Like the Texas State Board of Veterinary Medical Examiners and the Kentucky Board of Examiners of Psychology, the North Carolina board cited a concurrence written by Justice Byron White in the Supreme Court case Lowe v. SEC. White wrote that regulations on professions necessarily involve communication and therefore cannot be defeated solely on a free speech argument. But some media attorneys disagree completely, and say that advice provided through a blog, through speaking, or through a column where no conduct follows is inherently speech. “There’s a difference between saying, ‘I think you should have your appendix removed’ and actually removing it,” said Rowes. At the same time, Rowes said the Lowe case that is often cited by the boards is “bad law” because it has no precedential value. Concurring opinions are not binding, and later cases contradict the Supreme Court’s decision. “The conduct speech argument is routinely made by a defendant in First Amendment cases as almost a knee-jerk reaction to try to get out of a First Amendment analysis,” said Lawrence Walters, at attorney at the Florida-based Walters Law Group focusing on free speech rights. In Cooksey’s case, the only lawsuit that has moved past the district courts, the U.S. Court of Appeals (4th Cir.) agreed with the blogger that not only is advice speech, but the state dietetics board “chilled” Cooksey’s speech when the board warned that his site was under investigation and sent the red pen review of his site. The appeals court reversed and returned the case to the district court for a retrial that would include consideration of the First Amendment. Advice and the First Amendment If the courts decide that advice is speech and protected from licensure laws, the next big question is how far that protection reaches. Rosemond was asked by the Kentucky psychology board in May to terminate his columns and stop calling himself a psychologist in the end tag of his columns. While Rosemond was licensed in North Carolina, he was not licensed in Kentucky where his column is syndicated, and therefore he violated Kentucky’s licensing laws, according to the board. His case, media lawyers say, is the most egregious of the three. “It is the extreme example of the government using occupational licensing laws to ban free speech,” said Rowes. “He’s writing a garden-variety advice column . . . and the advice column has been a staple of Anglo-American journalism for hundreds of years.” Combined with a case in Texas where the state veterinary board shut down Hines’ website because it allegedly provided illegal paid advice to pet owners located around the world, media lawyers say the courts have split the fact patterns into three different types of advice. First, a practitioner’s self-labeling as a licensed professional when they are not licensed in that state; second, advice provided for free; and third, advice that is obtained for a fee. In all of its briefs, the Institute for Justice cited Holder v. Humanitarian Law Project, a 2010 Supreme Court case that held by a 6-3 vote that legal advice to a government-designated foreign terrorist is afforded full First Amendment protection and held to a strict scrutiny standard. If counseling for terrorists is protected, Sherman argued, then surely advice to change a person’s diet or fix a child’s temper tantrum is too, regardless of whether advisers are paid. However, the North Carolina board argued, if the court ruled in favor of publishers, then licensing laws could be simply be circumvented by an expression argument because licensing laws don’t apply to speech. “I produce cars, and that’s my expression,” said William Marshall, a law professor at the University of North Carolina.”If the federal government wants to regulate, too bad.” The Institute has countered by clarifying that the plaintiffs aren’t pressing the courts for all laws that restrict spoken or written advice to be ruled unconstitutional. Rather, in all cases involving advice, the government should be required to meet a necessarily high bar in justifying its regulations. “It is the duty of an engaged judiciary to ensure that the government has met that burden,” said Sherman. “The government has to meet a high burden of showing that its laws are necessary.” The key, First Amendment Center President Ken Paulson said, is creating a balancing test that courts can use to weigh the government’s interest with First Amendment rights. It’s a sliding bar. If advice is paid for, then the government interest of protecting consumers will hold more weight against First Amendment protections. The more specific the advice, the greater the weight of government interests. Walters agreed, saying each state law must be considered on a case-by-case basis. “It’s really a matter of looking at any particular law,” said Walters, “and evaluating whether or not there are less speech-restrictive alternatives that can be applied.” In regards to the third type of speech where Rosemond named himself a psychologist in his end tag, even though he was not licensed in Kentucky, Rowes said it was the easiest issue to argue and cited the recent Supreme Court case United States v. Alvarez, also known as the Stolen Valor case. “The Supreme Court said the government cannot have a monopoly on truth, which means you have a First Amendment right to lie about yourself,” said Rowes. “Not that the Supreme Court approved of lying about yourself, but it just said that we’re not going to begin the process of allowing the government to monopolize the truth.” However, a number of media lawyers agree that it is still too early to tell what the courts will rule. But the strong precedents that favor free speech protections will ensure that publishers are not strangled by the government. “In a worst case scenario you’ll see more efforts to prosecute bloggers who share opinions about health and medicine and law,” said Paulson. “I don’t see it happening.” Regulating in the Internet age The Internet, Walter said, has created a boundless platform for bloggers and columnists to reach a patient or questioner in another state, country or continent. The same regulations that previously monitored brick-and-mortar doctors, lawyers, vets, and psychologists can’t be sustained. As state licensing boards try to keep up, they end up building higher walls to contain a system that is spilling over. In Hines’ case, the Texas Veterinary Licensing Act at the center of the board’s defense was amended in 2005 to forbid veterinarians from establishing a doctor-patient relationship solely by electronic means. In 2006, the North Carolina dietetics board adopted an administrative rule that made practicing dietetics via electronic communication illegal for those without a license. But the exhaustive restrictions boards are advocating for is not the solution, Walters said. And even if courts find that boards can regulate individualized advice, the practicality of government agencies monitoring the sites of all citizens unlicensed by their state is impossible. “We need to adjust as a society,” he said. “The First Amendment requires breathing space to survive.” Whether online advice will be included under the Constitution remains to be seen. For now, Rowes and Sherman are fighting for an audience before the U.S. Supreme Court. “I think there is a chance,” said Walters. “We are as a society wrestling with this issue of everyone becoming a publisher. The Supreme Court always takes a few First Amendment cases each year and I think it has what it takes to make it to the Supreme Court.” – See more at: http://www.rcfp.org/browse-media-law-resources/news-media-law/news-media-and-law-summer-2013/dear-abby-need-advice-censo#sthash.0M20wIQl.dpuf

Quick 2257 App: Record-keeping Goes Mobile

Tue, 20 Sep 2022 09:03:00 +0000

LONGWOOD, Fla. — Industry attorneyLawrence Walters has released Quick2257, a new iOS app that simplifies the process of generating and transmitting performer records required by 18 U.S.C. § 2257 using an iPad or iPhone. Quick2257, approved this week by Apple for sale in the App Store for 99 cents, simplifies the process of creating Section 2257 records for performers, web cam models, escorts, dating site members and anyone who produces depictions of actual or simulated sexually explicit conduct. Quick2257 allows anyone with an iPhone or iPad to create the necessary performer records and transmit them to the records custodian in minutes, Walters told XBIZ that the Apple app, selling at a nominal introductory price of less than a buck, is a first-generation release that will improve in functionality over time. He also said that there’s hope to eventually offer the device on multiple platforms in addition to iTunes. The Florida attorney, who also has invented and patented other technology designed for the adult entertainment industry, got the idea from new mobile options banking consumers are now using. “While depositing a check using my mobile phone banking app one day this summer, it occurred to me that the process of compiling and sending 2257 records could be greatly simplified for the average erotic performer, webcam model, or escort advertiser,” Walters said. “All that would be required was an app that included all the relevant fields, the ability to capture a legible image of the front and back of the picture ID card, a verification of the accuracy of the information, and a way to conveniently send the information to the 2257 records custodian. “So I got to work developing the app, and released it today, for the nominal, introductory price of 99 cents. While the fee will probably not even cover the cost of development of the app, I feel that it is important to give back something to the adult industry which I’ve had the honor of representing as a lawyer, for many years.” The Quick 2257 app allows users to create a form containing the performer’s legal name, stage name, and/or aliases; record the date of original production of the depiction; identify the title of the work associated with the depiction; capture the front and back of the performer’s picture ID card using the device camera; sign and verify the accuracy of the information using the touch screen; compile all information into a convenient .pdf file; and, send the 2257 records file to the records custodian using the mobile device’s email function. Walters said the hope is for Quick2257 to be simple enough to create the required performer records in a matter of minutes, so that users can email them to the records custodian. “With more and more amateur performers getting into the industry, such as cam models and escorts, I felt that it was time to simplify the process of creating the required records,” Walters said. “We do not act as the records custodian, or maintain copies of any 2257 information, but merely allow the performer to create a .pdf file containing the necessary performer information, and email it to the custodian of their choice. “Depending on how the content is used, the custodian may be required to maintain some additional records, and the compliance process should still be overseen by a competent adult entertainment attorney.”

FIRE and Broad Coalition File Brief Defending Free Speech in Student ‘Facebook Collage’ Case

Tue, 20 Sep 2022 09:00:14 +0000

ATLANTA, December 17, 2013—Yesterday evening, 11 organizations joined the Foundation for Individual Rights in Education (FIRE) in filing an amici curiae (“friends of the court”) brief in the caseof Barnes v. Zaccari. The brief asks the United States Court of Appeals for the Eleventh Circuit to reverse a federal district court’s September 2010 ruling dismissing former Valdosta State University (VSU) student Hayden Barnes’ First Amendment claim against former VSU President Ronald M. Zaccari. In May 2007, Zaccari expelled Barnes for peacefully protesting Zaccari’s plan to construct two parking garages on campus, calling a collage Barnes posted on his personal Facebook page a “threatening document” and labeling Barnes a “clear and present danger” to VSU. The brief was jointly submitted to the Eleventh Circuit by FIRE, the American Booksellers Foundation for Free Expression, the American Civil Liberties Union Foundation of Georgia, the American Council of Trustees and Alumni, the Cato Institute, the Electronic Frontier Foundation, the Individual Rights Foundation, the National Coalition Against Censorship, Reason Foundation, the Southeastern Legal Foundation, Students For Liberty, and the Student Press Law Center. Attorney Lawrence G. Walters of Walters Law Group represented FIRE and all signatory organizations in the brief’s filing. Barnes has already prevailed on a separate due process claim. A federal jury awarded Barnes $50,000 in compensatory damages this February, holding Zaccari personally liable for violating Barnes’ constitutional right to due process by expelling him without notice or a hearing.

Bit by Bit

Tue, 20 Sep 2022 08:59:15 +0000

The virtual currency Bitcoin has been making headlines since its inception in 2009. Billed as a secure, non-regulated, decentralized currency[1]with the added benefit of user anonymity[2], Bitcoin has grown dramatically in the past several years, with more businesses accepting the form of payment (and more of the populace aware of its existence) every day. How will the online gaming industry be affected by the proliferation of Bitcoin? As yet, its future is uncertain, but the impact of this virtual currency is being felt throughout the world.

Bitcoin Overview

Bitcoins have been around since January 2009, when the first Bitcoin block, known as the “Genesis Block” was mined. Even before that, however, in November of 2008, a design paper was published online entitled “Bitcoin: A Peer-To-Peer Electronic Cash System,” under the pseudonym “Satoshi Nakamoto.” To date, no one is certain of Nakamoto’s identity[3], but theories abound, from Nakamoto being an individual cryptographer or game developer to the possibility of Nakamoto as a computer collective.

Bitcoin is meant to be an anonymous, peer-to-peer currency that is self-regulated by the community at large. Bitcoins cannot be created or destroyed: there is a finite number that can ever exist. More Bitcoins are brought into circulation through “mining.” Bitcoin “miners” assist in the processing of transactions (known as blocks) on the public ledger and are rewarded with a certain number of the newly issued (or “mined”) Bitcoins. Users can keep track of all the Bitcoins currently in circulation on the public ledger, known as the block chain.

Bitcoin transactions take place on virtual markets known as exchanges and are stored by users in unique “wallets,” which contain private keys that allow users to prove ownership of their Bitcoins and protect themselves against dual transactions.

Where is Bitcoin headed?

The future of Bitcoin as a legitimate currency is still unfolding. Although proponents of Bitcoin are full of faith in the medium’s ability to overcome infrastructure problems, the currency has not been free of flaws. Bitcoin critics frequently cite issues that would hinder development of Bitcoin into a legitimate currency, such as its extreme volatility and vulnerability in the electronic system.[4]As of this writing, the value of Bitcoin plunged dramatically following the halt of withdrawals by major exchange, Mt. Gox.[5]While the exchange promised[6]to resume normal trading after implementation of a “work around,” sceptics expressed deep concerns[7]about the future of the currency. Bitcoin has also received a slew of negative attention due to its use on the online market for illegal goods that was known Silk Road,[8]and other money laundering cases.[9]

Bitcoin as a Recognized Currency?

Although Bitcoin is still currently unregulated by the U.S. government, that may soon change. A recent federal court decision found that Bitcoin is indeed a form of ‘money.’ In that case, the judge noted that because Bitcoin could be “used as money” and “used to purchase goods or services,” and “exchanged for conventional currencies,” that it was, in fact, a currency.[10]

Additionally, at a recent Senate committee hearing, the U.S. Department of Justice found that Bitcoins could be considered a “legal means of exchange.” Although Federal Reserve chairman Ben Bernanke also weighed in, saying the Federal Reserve “does not necessarily have authority to directly supervise or regulate” virtual currencies, legal precedent is still evolving on that issue.[11]

New York’s financial services superintendent, Benjamin Lawsky, has also announced plans to regulate Bitcoins[12]by the end of 2014. Lawsky’s plans begin with issuing licenses to companies that deal in Bitcoins. It is unclear whether this will have a substantial impact on Bitcoin exchanges, as Bitfloor and BitInstant, two large exchanges based in New York, are no longer active.

Some, however, do not believe that Bitcoin regulation would be productive. Bruce Fenton, a member of the Bitcoin Financial Association, believes that financial regulation for Bitcoin could also spell the end of innovation.[13] Fenton doesn’t dismiss all possible regulation, however, noting that consumer protections laws would be most helpful in the Bitcoin arena, as opposed to traditional financial oversight. Consumer protection regulation for Bitcoin would also be the area most germane to the online gaming industry.

Bitcoin & Online Gaming

Bitcoin gaming is surging in popularity. At least one major news outlet for Bitcoin[14]and other virtual currency has suggested that online gaming could be the next great market for Bitcoin. CoinDesk, which analyzes trends in the digital currency world, recently noted that due to Bitcoin’s “privacy, immediacy, and payment finality,” it may be perfect for online gaming.

Users and operators, alike, favor the anonymity provided by the virtual payment system. This anonymity facilitates access to gaming activity that might otherwise be geo-blocked for players – in certain regions – by sites accepting traditional payment methods. The increasing interest in Bitcoin by the gaming industry will force regulators, operators, and service providers to consider how the industry will grapple with the maverick currency.

There are, of course, already online gaming websites utilizing Bitcoin[15]in a variety of ways. SatoshiDice, one of the top Bitcoin-based gambling sites, launched in 2012, but U.S. players are blocked. Recently, Vera&John, a major online gaming site registered in Malta, announced that it would soon accept Bitcoin deposits.[16]Vera&John immediately and automatically converts all Bitcoin player deposits into Euros, thus insulating itself from the market risk of holding Bitcoins over a period of time. Additionally, customers that do make deposits in Bitcoin are required to withdraw funds only in Bitcoin. Vera&John’s strategy is similar to the one announced by WinPoker last year.[17]Importantly, neither website accepts U.S. play.

Legality of Bitcoin-Only Gaming

Recently, NPR journalist Cyrus Farivar spoke on the topic of Bitcoin and internet gambling.[18]The question he posed was about the legality of online gambling with Bitcoins: If the customer bets exclusively in Bitcoin and the winnings are exclusively in Bitcoin, is it still illegal? Jerry Brito, a senior research fellow at the Mercatus Center at George Mason University, says that no one, including the operators of Bitcoin-based online casinos, is really sure. However, the more recognized the virtual currency becomes, the more likely it will be deemed to be a ‘thing of value’ that could fulfil the ‘consideration’ or ‘prize’ elements of gambling.[19]

The legal risks associated with any online gaming activity often boil down to whether the games are knowingly offered to customers in jurisdictions where Internet gambling is illegal. Thus, licensed and regulated gaming operations undertake extensive Know Your Customer (“KYC”) efforts to identify players located in jurisdictions that clearly prohibit online gambling. Ultimately, there is no rational reason to prohibit the acceptance of Bitcoin, or any other reliable virtual currency, from being accepted by an online gaming site that has implemented industry-standard KYC protocols. The location and identity of the customer will already have been verified. Moreover, the site will already have conducted due diligence on issues like age of majority, compulsive gambler exclusion, and location of the player.

The more difficult question arises in the context of Bitcoin-only gaming sites. Theoretically, such sites could accept deposits from minors, compulsive gamblers, and individuals in jurisdictions where online gambling is illegal. However, the increased popularity of virtual currency in general, and Bitcoin in particular, will compel the development of standards and procedures to be employed by gaming sites that accept only anonymous currency. Presumably, gaming regulators could impose existing KYC requirements upon operators that accept virtual currency, and achieve the same degree of compliance generated by those entities which restrict player deposits to more recognized (and traceable) currencies. Once the customer has been identified by the gaming site, the customer should arguably be able to utilize any payment method deemed acceptable by both parties. Some complications are generated by the inherently anonymous nature of Bitcoin, and the inability to reliably trace a particular Bitcoin transaction to a specific individual. However, security features can be built into account management software to enable transaction verification, and ensure that the known customer has initiated a particular deposit or withdrawal. With the use of virtual currency becoming increasingly commonplace, such technology will only improve.

Online Gaming Regulatory Issues

So, how should gaming regulators respond to the rapid proliferation of Bitcoin? As with any other social change, the most reasonable solution is to adapt. Gaming operators and licensing authorities have the ability to identify the concerns associated with Bitcoin (or other virtual currency) and implement viable solutions to address specified problems. Treating Bitcoin as a “tainted” payment method, merely because of its inherent anonymity and capacity to be used for nefarious purchases, is irrational. As is true of the Internet, itself, Bitcoin has the propensity for good, evil, and neutrality. By isolating the regulatory concerns associated with anonymous payment methods, the industry can work together with regulators to develop a viable solution to the intriguing legal and policy concerns generated by use of virtual money.

Lawrence G. Walters, Esq. heads up Walters Law Group, which represents clients involved in all facets of the online gaming industry. Nothing in the foregoing article is intended as legal advice. Mr. Walters can be reached viawww.FirstAmendment.com, or 800.530.8137.

[1] S. Thomas, “What is Bitcoin?”WeUseCoins(accessed 2/17/2014); available at:http://www.weusecoins.com/en[2] T. Yellin, D. Aratari, J Pagliery, “What is Bitcoin?”CNNMoney(accessed 2/17/2014); available at: http://money.cnn.com/infographic/technology/what-is-bitcoin/[3] J. Biggs, “Who is the real Stoshi Nakamoto? One Researcher May Have Found The Answer,”TechCrunch(12/5/2013); available at: http://techcrunch.com/2013/12/05/who-is-the-real-satoshi-nakamoto-one-researcher-may-have-found-the-answer/[4] “Bitcoin Value Drops Sharply After Tech Issues Continue,”BBC News(2/10/2014); available at: http://www.bbc.co.uk/news/technology-26118002[5] C. Isidore, “Bitcoin Plunges as Major Exchange Halts Withdrawals,”CNNMoney(2/7/2014); available at: http://money.cnn.com/2014/02/07/investing/bitcoin-withdrawal-halt/index.html?hpt=hp_t3[6] Mt. Gox (2/17/2014) Announcement [Press release]. Available at: https://www.mtgox.com/img/pdf/20140217-Announcement.pdf[7] E. Brown, “Bitcoin Bubble Could Burst as Investors Rush to Withdraw Cash,”ZDNet(2/17/2014); available at: http://www.zdnet.com/bitcoin-bubble-could-burst-as-investors-rush-to-withdraw-cash-7000026410/[8] R. Wile, “CEO of Bitcoin Exchange Arrested,”Business Insider(1/27/2014); available at: http://www.businessinsider.com/report-ceo-of-major-bitcoin-exchange-arrested-2014-1[9] “2 Arrested, Charged in Bitcoin Money Laundering Scheme, Miami-Dade State Attorney Says,”6 South Florida (2/7/2014); available at: http://www.nbcmiami.com/news/local/2-Arrested-Charged-in-Bitcoin-Money-Laundering-Scheme-Miami-Dade-State-Attorney-Says-244066451.html[10]SEC v. Shavers,Case No. 4:13-CV-416 (E.D. Tex. August 6, 2013)[11] S. Perlberg, “Bernanke: Bitcoin ‘May Hold Long-term Promise’,”Business Insider(11/8/2013); available at: http://www.businessinsider.com/ben-bernanke-on-bitcoin-2013-11[12] J. Pagliery, “Bitcoin Regulation Coming This Year,”CNNMoney(2/7/2014); available at: http://money.cnn.com/2014/02/12/technology/bitcoin-regulation/[13] P. Rizzo, “Why Life Under Bitcoin Regulation Will Be Worse Than Investors Thing,”CoinDesk(2/13/2014); available at: http://www.coindesk.com/life-under-bitcoin-regulation-worse-than-investors-think/[14] J. Matonis, “Legal Online Gambling is Next Major Bitcoin Market,”CoinDesk(1/30/2014); available at: http://www.coindesk.com/legal-online-gambling-next-major-bitcoin-market/[15] C. Farivar, “Bitcoin-based Casino Rakes in More Than $500,000 Profit in Six Months,”ArsTechnica(1/22/2013); available at: http://arstechnica.com/business/2013/01/bitcoin-based-casino-rakes-in-over-500000-profit-in-six-months/[16] D. Bradbury, “Vera&John Becomes First Licensed Casino To Accept Bitcoin,”CoinDesk(1/29/2014); available at: http://www.coindesk.com/verajohn-becomes-first-licensed-casino-accept-bitcoin/[17] J. Matonis, “WinPoker Becomes First Major Gambling Operator to Adopt Bitcoin,”Forbes(3/13/2013); available at: http://www.forbes.com/sites/jonmatonis/2013/03/13/winpoker-becomes-first-major-gambling-operator-to-adopt-bitcoin/[18] C. Farivar, “Is Online Gambling Legal if Bitcoin, Not Dollars, are at Stake?”NPR(2/6/2013); available at: http://www.npr.org/blogs/alltechconsidered/2013/02/06/171182974/is-online-gambling-legal-if-bitcoins-not-dollars-are-at-stake[19] To constitute gambling, an activity must typically include three (3) elements; prize, chance and consideration.

CONTENT SHARING FAN SITE LEGAL GUIDE

Sun, 20 Sep 2020 09:25:13 +0000

1. Introduction

The world changed quickly in 2020, and many folks found themselves stuck at home with no employment and lots of time on their hands. Some turned to sharing erotic content on “fan” sites which allow content creators to charge fees for users to access their material. The fees can be monthly subscriptions or a la carte access to a single piece of content, such as an image, recorded video, or live stream. This business model quickly grew in popularity as mainstream social media sites started enforcing community guidelines prohibiting erotic or sexually explicit content on their platforms. While fan sites can be profitable, there are substantial legal issues to consider.

2. The Basics

Any online business should be properly structured from a corporate perspective. The best corporate structure will depend on numerous factors such as the size of the operation, tax considerations, anonymity requirements, risk mitigation, and state law. The most popular corporate forms are Limited Liability Companies, S-Corps and C-Corps. Important corporate decisions must be made early on regarding tax treatment and accounting issues. Choosing the right corporate structure from the start can save substantial time and resources down the road.

All relationships with vendors should be documented by written contracts including website developers, hosts, billing processors, domain name registrars, and employees. If the company will be owned by multiple investors, a shareholder agreement or operating agreement should be drafted from the beginning and should address issues such as profit distributions, share transfers, disability, retirement, management, salaries, and other critical matters.

Proper books and records must be maintained as they would for any other business, such as the company’s corporate book, share certificates, accounting records, and tax records. Many start-up businesses take short cuts when launching a website as a cost-cutting measure, with good intentions to get their house in order down the road. This approach can lead to disastrous results in the event of an internal dispute, sale, or third-party litigation.

Any required local or state business licenses should be investigated and obtained. While website operations are typically not regulated by local authorities, many jurisdictions require home-based business licenses. Any physical business office location will likely require an occupational license or permit.

3. Intellectual Property

The most valuable business asset of a fan site is its intellectual property. This consists primarily of the brand name, logo, website content, and computer coding. The company should ensure that it can prove clear ownership of all of these rights by maintaining written contracts and records. Registration of the site’s brand name and logo with the United States Patent and Trademark Office is also recommended to help protect the brand from future infringement. Some website content and coding can be registered with the U.S. Copyright Office as well. An overall strategy of intellectual property protection should be developed to maintain these valuable assets and combat infringement.

4. Website Terms and Policies

A fan site requires careful attention to legal terms, policies, disclosures, and disclaimers. Some of these documents are required by federal law and others are necessary to protect the site from legal risks. User Terms should bind all users and content creators. This document will form the primary legal relationship with the site’s customers. A separate performer agreement should be used to acquire the necessary legal rights, licenses, and releases from content creators. Both documents will address important issues such as which jurisdiction’s laws apply, how disputes are resolved, payment and billing issues, limitations on liability, and indemnification. Avoid copying legal documents found on similar websites! Not only is this likely copyright infringement, but documents found on other websites may be completely inapplicable to your specific business model. The documents found on another website may have been copied from a third site or drafted by someone with no experience preparing website terms and policies. Some sites are located in foreign jurisdictions whose laws are very different from those that apply in the United States.

In addition to legal agreements, the site will need to address the handling of personal data obtained from its users through a privacy policy. Data privacy laws are constantly changing, and it is essential that the site’s privacy policy accurately reflects the company’s specific policies and procedures relating to user data. Depending on the number of users and whether the site sells user data, specific policies or disclosures may be required by state law. Development of a robust privacy policy will force the site to consider numerous data privacy, security, retention, and disclosure issues that will be important in future operations.

Any user-generated content site will need to consider becoming compliant with the safe harbor provisions of the Digital Millennium Copyright Act (DMCA). This federal law provides important legal protections to online service providers in connection with copyright infringement claims by third parties. Fan sites will need to develop a DMCA Notice and Takedown Policy and a Repeat Infringer Policy to take advantage of this protection. An important part of DMCA safe harbor is designating a DMCA Agent with the U.S. Copyright Office. This is a relatively inexpensive procedure, but it must be done correctly. One infringement claim can bankrupt a new company. When implemented properly, DMCA safe harbor policies can protect a fan site from infringement claims and generate important legal defenses in the event of a lawsuit.

Other website documents that should be considered by a fan site are a Section 2257 disclosure statement (required by federal law for sites that publish sexually explicit content), an age verification statement, and a subpoena compliance policy.

5. Content Creator Registration

The procedure for users to sign up for a fan site is typically seamless. They click through the user terms, confirm they are over 18, and provide a method of payment. However, content creator registration procedures are more complicated. Any creator who will be uploading adult-oriented material to the site must be verified as an adult to avoid issues with underage content. Depending on the precise business model, additional records may be required by Title 18 U.S.C. § 2257, such as the date of production, stage names, aliases, and URL’s associated with the creator. Some fan sites use third party identity verification services to confirm the authenticity of the name, address, and ID provided by a specific user or creator. Weeding out potential underage users or fraud is essential at this stage, before any content is posted to the site. All creator accounts should be manually reviewed and approved before registration is accepted by the site. Any apparent underage material must be immediately disabled, preserved, and reported to the appropriate authorities in accordance with federal law.

6. FOSTA/SESTA Issues

Any site that allows users to post explicit content should consider the potential risks generated by FOSTA/SESTA, which was signed into law in April 2018. This law imposes substantial criminal penalties and civil liability for any site or online service which promotes or facilitates prostitution, or which is reckless to sex trafficking activities occurring through the site. Many sites shut down or eliminated all adult content after the law was passed. Social media sites have adopted strict community standards or guidelines in response to the new legal environment created by FOSTA/SESTA. A fan site should implement appropriate content moderation efforts to ban any content or communications related to prostitution, underage material, or sex trafficking. While it can be challenging for any online platform to identify any and all communications that might run afoul of these restrictions, given the volume of data flowing through the system, legal compliance is essential in this area.

7. Infringement

Any successful website will eventually face issues with trademark infringement. Cybersquatters will register confusingly similar domain names or use the site’s brand name in an infringing way. Registering the brand as a trademark will make it much easier for the site to pursue infringers and enforce its rights. A separate issue exists regarding copyright infringement. Online pirates will attempt to steal and republish content posted by creators. While the creators typically retain the copyrights to their content and are in the best position to enforce their rights, the site can offer a variety of services to help protect its customers’ copyrights. These services include watermarking content, sending infringement notices, crawling the web to search for infringing content, or technologically preventing users from screenshotting content on the site. The site will need to make a business decision on how to best assist its creators in enforcing their copyrights to content stolen from the site. This cooperative effort will keep creators happy while helping the site retain paying users.

8. Conclusion

The popularity of fan sites continues to rise and shows no sign of slowing. Operating this type of site requires careful planning and ongoing management of legal risks. Understanding and addressing the legal concerns is an essential part of a fan site’s business. Nothing in this Legal Guide is intended as legal advice. Lawrence Walters can be reached at https://www.firstamendment.com/contact-us/ or on social media @walterslawgroup.

California May See ‘Revenge Porn’ Bill Sequel in 2014

Sun, 20 Sep 2020 09:02:05 +0000

SACRAMENTO, Calif. — After spearheading the successful “revenge porn” bill passed by the Legislature in October, Sen. Anthony Cannella has announced his intention to introduce new legislation and expand on the existing law. The revenge porn sequel — or, as Cannella’s office is calling it, “Revenge Porn 2.0 Act” — will redact the original law to include pictures taken by the victim as protected material. Currently the law only addresses photos taken by the individual posting them. Cannella also plans to clarify the bill’s language to expedite prosecution. “Omitting ‘selfies’ from the original legislation was an obvious oversight that I, along with other commentators, mentioned before the bill was passed. So it makes sense to fix that portion of the law,” Adult industry attorney Lawrence Walters told XBIZ. He continued, “However, I have continuing concerns over the criminalization of speech that does not fall within the historical exemptions to First Amendment protection (i.e., obscenity, child porn, defamation, etc.) Civil penalties make more sense in this realm.” The American Civil Liberties Union (ACLU) has voiced similar concerns about preserving First Amendment rights in the wake of revenge porn legislation, in California and across the country. Both Walters and the ACLU call for laws to be drawn with “narrow precision.” Under existing California law, those who commit revenge porn face a misdemeanor charge and one year in jail and/or a $1,000 fine. Prosecutors must prove that the perpetrators electronically distributed the victims’ explicit photos “with the intent to cause serious emotional distress.” Cannella plans to introduce Revenge Porn 2.0 when the Legislature returns in January. He will be making a public announcement about the forthcoming bill at the Old Courthouse in Madera this morning. A high-profile arrest has already been made under the umbrella of California’s freshly minted revenge porn law. Last week saw the arrest of UGotPosted.com site operator, Kevin Bollaert, who was charged with 31 felony counts of conspiracy, identity theft and extortion.

Emerging Legal Developments in Sports Betting Law

Sun, 20 Sep 2020 08:38:56 +0000

Sports Betting

Sports betting is reaching a fever pitch in the United States. With recent legal developments in the sports wagering field, gaming entrepreneurs across the nation are racing to get a piece of the action. Numerous states have legalized some form of sports betting, and legislation is pending in many others. However, the nuances of sports betting law are tricky, requiring careful attention to detail.

Prior to 2018, the Professional and Amateur Sports Protection Act (“PASPA”) made it illegal for a person or state to sponsor, operate, advertise, or promote a betting, gambling, or wagering scheme based on amateur or professional athletes or games, except in certain locations. In layman’s terms, the law prohibited all states except Nevada, Oregon, Delaware, and Montana from offering legal sports betting. As a practical matter, only Nevada took full advantage of the exemption in a timely fashion and held a virtual monopoly on U.S. sports betting for decades. That began to change when New Jersey passed a law to begin offering legal sports betting, but the NCAA sued to enjoin the law under PASPA. New Jersey fought back and argued that PASPA unconstitutionally violated its state sovereignty and the anticommandeering principle, which says that the federal government cannot require states or state officials to adopt or enforce federal law. In 2018, the Supreme Court of the United States agreed with New Jersey and invalidated PASPA on constitutional grounds, holding:

The legalization of sports gambling requires an important policy choice, but the choice is not ours to make. Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own. Our job is to interpret the law Congress has enacted and decide whether it is consistent with the Constitution. PASPA is not. PASPA regulates state governments’ regulation of their citizens. The Constitution gives Congress no such power.

Legal Intrastate Sports Betting

In striking down PASPA, the Supreme Court opened the door for states to begin offering legal sports betting within their borders. Many states now offer legal intrastate sports betting in some form, including Nevada, New Jersey, Delaware, Mississippi, West Virginia, Pennsylvania, Rhode Island, Arkansas, New York, Iowa, Indiana, New Mexico, and Oregon. Other states including Illinois, Montana, New Hampshire, North Carolina, Tennessee, Colorado, Michigan, Maine and Washington D.C. have passed bills to allow legal intrastate sports betting in the future. Opportunity awaits as each state develops the necessary licensing and regulatory scheme sufficient to allow sports betting operators to begin offering legal sports betting services.

In the select few states with legal intrastate sports betting, regulations vary widely. Each state imposes different rules as to what sports and leagues may be bet on, what taxes are imposed on bets, whether bets may be placed in-person or online, and more. Those looking at business opportunities in this developing area must be familiar with the variety of statutes, rules, regulations, and enforcement polices of each jurisdiction.

Interstate and International Sports Betting

The Supreme Court’s ruling in Murphy v. NCAA was limited to the validity of PASPA and did not impact other federal laws that may be used to prohibit interstate and international sports betting, including the Wire Act and the Unlawful Internet Gambling Enforcement Act (“UIGEA”). In other words, interstate and international sports betting are still subject to additional restrictions.

While federal law does not specifically prohibit individuals from placing bets on sporting events, the Wire Act makes it a crime for a company or individual to engage in the business of sports betting or wagering while using the Internet, telephone, or other interstate wires to transmit bets or wagers. The statute also prohibits transmitting certain information that assists the placement of bets or wagers but makes exemptions for news and entertainment services. The courts have specifically held that this law applies extraterritorially. For example, in 2006, the offshore BetOnSports was indicted on twenty-two counts of racketeering, conspiracy, and fraud, and the founder was arrested less than a year later. In 2013, an indictment was brought against thirty-four individuals and twenty-three entities that operated another offshore sports betting site. Furthermore, the UIGEA prohibits the acceptance of money for purposes of illegal Internet gambling, though an exemption exists for intrastate gambling that is authorized by state law.

Conclusion

With PASPA overturned, states are free to begin offering legal sports betting in-person and online within their borders, and many states have passed laws to do just that. With each passing day, more and more Americans are legally able to place sports bets at licensed casinos in their state or from mobile apps and websites in the comfort of their own homes. Many others seek out betting opportunities with offshore sports books. While the licensing rules and regulations are evolving, this new era is opening a wealth of new opportunities for individuals and businesses that seek to expand into the world of sports betting.