Federal Statutes Implicated by Online Gambling

Online Gambling

Whether you call it poker, blackjack, or sports betting, online gambling is a hot topic in the United States. The question has prompted many state officials to ask whether the internet can be used to bring illegal gambling into their jurisdictions. There are several federal criminal statutes implicated by illegal online gambling. These statutes include the Unlawful Internet Gambling Enforcement Act, the Wire Act, and the Racketeer Influenced and Corrupt Organizations Act.

The aforementioned UIGEA provides a legal basis for prohibiting financial transactions between an Internet gambling business and a consumer. In addition to prohibiting financial transactions, the law prohibits the acceptance of financial instruments from illegal Internet bets. Aside from federal criminal statutes, there are also state gambling laws to consider. In fact, nearly half of the states allow some form of online sports betting.

The UIGEA has caused a lot of controversy because of its sheer complexity. Its various provisions, including the “labeling” provisions, can confuse the public, and in turn cause confusion as to whether they apply to all Internet gambling. For example, if a state law prohibits sports betting, but does not make it illegal to gamble on sports, then the UIGEA does not apply. Similarly, if a state law prohibits the sale of lottery tickets but not the offering of them, then the UIGEA does not cover those sales.

The UIGEA is not without its flaws, however. For example, it is hard to tell whether the law was intended to make it difficult for Internet gambling businesses to operate. This law also includes provisions relating to location verification and data security. These laws can be difficult for law enforcement to enforce, especially when the owner of an illegal gambling business is not in the jurisdiction in which he operates. Additionally, the law requires that an illegal gambling business be in operation for thirty days or more.

In addition to UIGEA, the Wire Act, and the Racketeer Act, several other federal criminal statutes are implicated by illegal Internet gambling. These include the Wire Act, the Wire Morise Marker, and the Racketeer Influenced Organizations Act. The latter prohibits the establishment of racketeering organizations, which can include gambling businesses. Other federal statutes include the Interstate Commerce Act, the Travel Act, and the Gambling Devices Transportation Act, or Johnson Act. These federal laws are intended to keep gambling out of interstate commerce. In addition, they are intended to rein in states that might not be able to police Internet gambling effectively.

Nonetheless, the UIGEA does have some advantages over its competitors. For example, the law provides for fines and imprisonment for illegal gambling business owners. The law also includes a definition of unlawful Internet gambling. The definition is fairly broad, however. It states that “unlawful Internet gambling” means using or facilitating the use of the Internet for the purposes of placing, receiving, or wagering money or anything of value on a sporting event, contest, or other activity.

The aforementioned CRS report is a good source of citations to various state gambling laws. This report also provides an abridged version of the CRS Report RS21984 that covers all of the above.