Several countries are allowing various forms of online gambling, including casinos and sports betting. While online casinos are gaining popularity, there are still some places in the United States where gambling is not legal. For instance, the Wire Act prohibits gambling on sports events.
In addition to the Wire Act, federal law also imposes penalties for illegal gambling. The Illegal Gambling Business Act, the Gambling Act, and the Travel Act prohibit gambling on interstate commerce. Other federal laws may also be applicable, such as the Racketeer Influenced and Corrupt Organizations (RICO) provisions, which prohibit illegal gambling business activities.
There are also state laws that prohibit or regulate gambling. For example, Washington prohibits websites that advertise gambling. Nevertheless, in 1996, there were fifteen gambling websites. In 1998, the revenue from online gambling reached $830 million, according to Frost & Sullivan. While many states have banned or restricted online gambling, the federal government has not.
In April 2007, Representative Barney Frank introduced HR 2046, which is known as the Internet Gambling Regulation, Consumer Protection, and Enforcement Act. The bill would require internet gambling facilities to be licensed by the director of the Financial Crimes Enforcement Network. This would prevent gambling operators from using financial instruments from illegal Internet bets. However, there are some objections to the proposed law. These include the commercial nature of the gambling industry and questions about the government’s authority under the Commerce Clause.
The Internet Gambling Regulation, Consumer Protection, and Enforcment Act would make it illegal to use the Internet for illegal gambling, a felony. It would also make it a crime to advertise gambling on the Internet. The Federal Information Technology Rules would also regulate online gambling.
One of the main issues related to online gambling is that the commercial nature of the industry might be considered aiding and abetting. Google has removed online gambling advertisements from its websites, and state officials have expressed concerns that Internet gambling could be used to facilitate illegal activities in their jurisdictions. While the commercial nature of the industry seems to satisfy Commerce Clause doubts, due process arguments suffer when financial transactions in the United States are involved. Moreover, the law might hinder state enforcement policies, since interstate or foreign elements could frustrate local efforts.
In addition, Section 1956 of the Unlawful Internet Gambling Enforcement Act (UIGEA) creates several separate crimes, including laundering with intent to promote an illegal activity and laundering to conceal illicit activity. It also creates a separate crime for laundering to disguise the source of income. The owner of a poker site, Seals with Clubs, was sentenced to two years probation and fined $25,000 for allegedly using the site to illegally launder money.
In addition to the UIGEA, several other federal laws may be applicable to online gambling. The Wire Act, the Gambling Act, and the Racketeer Influenced or Corrupt Organizations (RICO) provisions also prohibit illegal gambling business activities. For example, federal prosecutors warned PayPal it could be prosecuted for using its website to facilitate illegal Internet bets.