The Federal Government’s Role in Regulating Online Gambling
Gambling involves betting on something of value on a whim. It includes playing games of chance for money, using a mobile device, or a traditional game of roulette or poker. In some countries, online gambling is legal while in others it is prohibited. Typically, the government regulates gambling by leaving it to state jurisdictions. However, federal law has been a strong force in some cases, including those that involve online gambling.
Under the US Travel Act, interstate transactions of gambling are illegal. This includes betting on sports events. In addition, the Wire Act restricts gambling by prohibiting unlawful gambling on contests. Since the Wire Act covers all forms of Internet gambling, the government has attempted to prosecute online gambling operators.
Online gambling began gaining popularity in the late 1990s, when the first poker sites were launched. Several nations in the Caribbean Sea and some European nations have legalized online gambling. A Frost & Sullivan report showed that online gambling revenues reached $830 million in 1998. Some states have regulated the industry by requiring licensing of gambling facilities. Among these licensing bodies are the United Kingdom Gambling Commission and the Pennsylvania Gaming Control Board.
Online gambling is legal in some states in the United States and in a few other countries. For example, several provinces in Canada allow online gambling. Additionally, some countries in the European Union have authorized online gambling. As a result, some states in the US have regulated their own online gaming businesses, while others have left the regulation to their own jurisdictions.
The US has seven criminal statutes regulating unlawful Internet gambling. These laws include the Unlawful Internet Gambling Enforcement Act (UIGEA), the Federal Wire Act, the Illegal Gambling Business Act, the Interstate Commerce Act, the Travel Act, the Racketeer Influenced and Corrupt Organizations Act (RICO), and the Money Laundering Control Act.
The Unlawful Internet Gambling Enforcement Act is a broad statute that creates several separate crimes. Section 1956 is particularly important because it provides for laundering, a term used to describe activities that evade taxes, disguise, conceal, or promote illicit activity. Because a number of different actions can fall under this title, it has raised constitutional objections to prosecuting illegal Internet gambling.
The federal government has tried to use the power of the Commerce Clause to enforce gambling laws, but the attacks based on that theory have failed to gain much traction. Moreover, a number of state officials have voiced their concerns that the internet can be used to bring illegal gambling into their own jurisdictions.
As a result, some bills have been introduced in Congress to try to regulate the Internet. One such bill is HR 2046, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act. While HR 2046 is not yet a law, it would require licensing of internet gambling facilities by the director of the Financial Crimes Enforcement Network.
As with many other federal laws, a license is required to operate an online gambling business. In order to receive a license, a business must operate for a period of at least two days and generate at least $2,000 in gross revenues during that time. If the owner of an illegal gambling business does not meet these conditions, he or she can be subject to a fine and imprisonment.