Whether online gambling is legal or illegal largely depends on the jurisdiction in which the activity takes place. In some states, online gambling is not prohibited, while others have passed laws to ban such activities. However, it is important to understand the legality of this activity before deciding to open a business. This can help you choose the right region for your betting venture.
The Unlawful Internet Gambling Enforcement Act (UIGEA) is a federal law that prohibits financial institutions from accepting financial instruments from people who place bets using the Internet. This statute was created to enforce the law against Internet poker operators, and it also reinforces state laws in cases where the activity is prosecuted.
The federal government has charged several Internet poker operators with violations of 18 U.S.C. 1955, including money laundering and UIGEA violations. In one case, the United States marshals seized $3.2 million from Discovery Communications for advertising a web gambling platform. In another case, the 10th Circuit held that a bartender and manager of an establishment with video poker machines were subject to enforcement of the UIGEA.
Various attacks have been made against the UIGEA based on the Commerce Clause, which is a clause in the Constitution that states that Congress can enact laws only to benefit the United States. These attacks have not been successful. But a commercial nature of the gambling business may satisfy these doubts.
Generally, a state is defined as any territory or possession of the United States. This includes the District of Columbia and the Commonwealth of Puerto Rico. The Fifth and Sixth Circuits have addressed the question of whether the use of an interstate facility for unlawful gambling is a violation of the Commerce Clause.
According to the United States v. Heacock decision, the act of transmitting information from New York to a foreign country via the Internet constitutes gambling activity in New York. Other courts have discussed the issue of whether a player who uses an interstate facility for unlawful gambling is liable for tax evasion.
A report from the General Accounting Office (GAO) found that nearly three thousand Internet sites provided several types of gambling activities. It is unclear whether this is a case where the law is clearly broken, or where there are issues of fairness.
The CRS Report RS21984 addresses the UIGEA and provides citations to many of the statutes mentioned in the report. It also outlines Congressional findings on the impact of the legislation on interstate commerce. The report is available in abridged form, and includes the text of the statutes cited.
The CRS Report RS21984 is available in abridged form. RS21984 also cites several state gambling laws. This report has been compiled to assist those interested in the legality of Internet gambling.
The Lopez Amendment regulates commercial activity and weeds out low-level gambling cases. It also contains elements to prevent the appearance of an Internet gambling operation that may be used by the federal government to conceal or disguise the operation of an illegal gambling operation. The report notes that state officials have expressed concerns that the Internet could bring illegal gambling into their jurisdictions.