Online Gambling Laws
Online Gambling is the act of playing gambling games and wagering on them, either on the Internet or by telephone, for money. It includes casinos, virtual poker, sports betting, and lottery gaming. Some jurisdictions, such as New Jersey and Florida, regulate online gambling. However, many nations around the world do not. A large percentage of internet gambling involves horse racing bets. In addition to regulated markets, some provinces in Canada and several Caribbean nations allow online gambling.
Federal law prohibits illegal gambling. The Wire Act and Illegal Gambling Business Act, two laws of the federal government, are relevant to illegal internet gambling. Other laws, including Racketeer Influenced and Corrupt Organizations (RICO) provisions, also restrict illegal gambling business activities. These laws have been challenged in court on constitutional grounds.
Many of the federal laws that are relevant to illegal Internet gambling involve financial transactions in the United States. This complicates enforcement policies in state jurisdictions. Also, the law can be a source of tension between state and federal governments. Because of this, the Commerce Clause and due process issues have come up.
The Commerce Clause is the part of the Constitution that grants Congress the power to regulate interstate commerce. Several states have argued that the law is unconstitutional because it infringes on their state’s right to regulate gambling on a state-by-state basis. Despite these challenges, the law is now enforced in most cases.
The Internet Gambling Prohibition Act was introduced in the Senate in 1999. At the time, there were more than 200 gambling websites on the Internet. That number grew substantially in the late 1990s. According to a Frost & Sullivan report, revenues from online gambling exceeded $830 million in 1998. As a result, the U.S. Department of Justice announced that the Wire Act applied to all forms of Internet gambling.
Another piece of legislation is the Unlawful Internet Gambling Enforcement Act, a law that was enacted in 2007. The UIGEA prohibits Internet poker operators and other entities from receiving bets and receiving or transmitting bets. Furthermore, it prohibits providers of financial transaction services from accepting financial instruments from Internet bets.
Since then, several similar bills have been introduced in the House. HR 2046, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act, would amend the UIGEA. Specifically, it would require Internet gambling facilities to be licensed by the director of the Financial Crimes Enforcement Network. While it has been a success in terms of blocking illegal online gambling, it does not address other challenges to the law.
Another federal law is the Travel Act, which prohibits gambling activities on interstate facilities. It applies to Internet casinos and other facilities that offer gambling to players in different states. Even though it does not explicitly address online gambling, it has been used as a defense in many cases.
One of the most prominent challenges to the laws is the First Amendment. There are questions about whether online gambling activities are protected under the First Amendment’s guarantee of free speech. If they are, then the commercial nature of the gambling business would seem to satisfy the Commerce Clause. But attacks based on this guarantee of free speech have been unsuccessful.