Online Gambling Laws In The United States

Though online gambling in the USA had gone unregulated for a number of years, the USA online gambling laws have been solidified as of 2006. For an industry that has its roots in 1995, it took quite some time for the government to write some laws pertaining to the industry. When it came down to have these laws actually set up, they became a source of great confusion for the player.

The legality of online gambling in the United States comes down to the federal versus the state implementation of the laws. By working from the bottom up, you will look at the state side first. State laws are more specific, and these are what have had the greatest impact on the player. Few states have written laws pertaining to online gambling, so this is not always a problem. There are some very broad laws on the federal level, but these laws are also open to some interpretation that has led many legal minds, gambling enthusiasts and outside observers to form their own opinions on what is legal or illegal.

If you look on the legalities of online gambling by way of a state-by-state basis, there are some states that have written bans against online gambling. These states are few and far between. They include Illinois, Indiana, Louisiana, Montana, Nevada, Oregon, South Dakota, Washington State and Wisconsin. This begs the question over whether or not the states that have not written explicit bans against online gambling can use their existing gambling laws to spread to Internet gambling sites, perhaps with the issue of licensing, but this is an issue that has been predominantly ignored due to the offshore location of these online gambling sites. It is difficult to say whether or not players will be prosecuted for gambling online, as few states have really spoken out against online gambling. Washington State is one example a state that has taken a firmly aggressive stance against online gambling, as they have made gambling online a felony of equal consequence to the possession of child pornography or arson. Only one "state" has actively legalized online gambling - Washington, D.C. The District of Colombia has recently legalized online poker within the District.

There are currently two major federal laws pertaining to online gambling - the Wire Act of 1961 and the more current Unlawful Internet Gambling Enforcement Act of 2006. The Wire Act was written back in the 60's in order to combat racketeering and organized crime, while the Unlawful Internet Gambling Enforcement Act was attached to the SAFE Port Act in an almost surreptitious manner. There are main points to take from each of these laws, and they are as follows:

The Wire Act of 1961 states that "whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.

The Unlawful Internet Gambling Enforcement Act, as per the Department of Treasury, "prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law."

If you read these two laws, it is somewhat difficult to really see what is legal or what is illegal. The Wire Act only really placed its ban on sports betting, while the Unlawful Internet Gambling Enforcement Act, which was sneaked in on a port security act, had made it so the financial portion of online gambling had become somewhat more difficult. As such, depositing into and withdrawing from your gambling account had become somewhat more difficult. Whether or not either of these laws could be used against the player has been a subject of great debate. Both laws also have their own caveats in terms of online gambling. Courts have determined that the Wire Act is only valid with sports betting, leaving online poker and online casinos unaffected by the legislation. The UIGEA has been challenged on numerous occasions, with some stating that it is unconstitutional and more of a law that should be left up to the states. This has led courts to decide that the UIGEA would be up to the states to enforce, so each state can decide whether or not online gambling is legal on an intrastate basis. To clarify, individual states would be allowed to pass laws legalizing online gambling sites open only to residents within their borders.

There have been many consequences due to these laws, including a mass migration of some gambling companies out of the United States, as well as several essential deposit options. The industry of online poker has been targeted above any other, though online sportsbooks had also been chipped away. Though we have not heard of a player who has been arrested for online gambling, these laws are definitely food for thought. Legislators are working toward repealing the UIGEA or making sure the Wire Act would not tamper with the online gambling industry, but little progress has been made. With the World Trade Organization stepping in and a need of new sources of revenue, it is not entirely unlikely that these laws will change.

Current Gambling Statutes Going Through Congress

HR 1174 - Internet Gambling Regulation Protection Enforcement Act

HR 2230 - Internet Gambling Regulation Tax Enforcement Act

HR 2366 - Internet Gambling Prohibition Poker Protection UIGEA Strengthening Act