Online gambling is now a big business. In addition to casinos and bingo, sports betting is also offered on the internet. The legality of this activity varies from state to state. Generally, illegal Internet gambling involves placing bets, receiving bets, transmitting bets, or even just accessing a website that offers gambling.
However, there are two major issues that arouse concern for state officials. First, Internet-related gambling activities can bring the illicit activities of criminals to the attention of law enforcement agencies. Second, the interstate and foreign elements of these activities can complicate state enforcement policies. As such, the legality of these types of activities may be contested on constitutional grounds.
The most important legal issue in this context is whether the federal government can use its power under the Commerce Clause to regulate activities that occur outside of the United States. This question has led to a number of challenges to the government’s ability to enforce the laws.
For example, the United States v. Nicolaou case was decided in the Fourth Circuit. It involved the unlawful conduct of five people at the same time on a single day, and generated gross revenues of over $2,000. Similarly, the U.S. Marshals seized $3.2 million from Discovery Communications.
While there are some questions about the Commerce Clause’s power to regulate the activities of private parties overseas, the commercial nature of the gambling industry does seem to satisfy some of the concerns.
Other questions are whether the Travel Act can be used to ban Internet-based gambling, and whether certain statutes – like the Wire Act – can be used to prohibit the conduct of illegal Internet gambling. Also, the question of whether the UIGEA can be enforced without triggering a due process violation has been debated.
The UIGEA itself is not a new law. It has been around for years, and was recently updated. The law aims to prevent Internet poker operators from accepting financial instruments from users who place illegal Internet bets. Among other things, the law requires that operators maintain an appropriate data security program.
Despite the limitations of the UIGEA, there are still many other federal criminal statutes that can be cited when evaluating whether an Internet-based gambling operation is illegal. These include the Illegal Gambling Business Act, the Racketeer Influenced and Corrupt Organizations (RICO) provisions, and the Wire Act.
Other possible defenses to these statutes are based on the First Amendment’s guarantee of free speech. Although there have been attempts to rely on the Commerce Clause, these have largely failed.
While the most efficient way to conduct a lawful gambling operation is to be a resident of the state in which it takes place, it is not always easy to know when a gambling venture is illegal. Some states rely on the legality of the state’s online gambling laws to determine if the activity is legal. There are other state-specific measures to protect gamblers from being defrauded.
There are a number of other relevant federal laws, such as the Federal Wire Act, the Interstate Commerce Clause, and the Racketeer Influenced & Corrupt Organizations (RICO) Act. Each of these acts is important in its own right, but when combined, they can make it much harder to prosecute an Internet-based gambling operation.