The popularity of online gambling has grown exponentially over the past decade. In 1998, the revenues associated with online gambling reached $830 million, while in 2006 the total was nearly $21 billion. Although gambling is primarily a state matter, some federal laws are applicable to those involved in the industry. These include the Wire Act, the Travel Act, and the RICO statutes.
Gambling is a broad term that includes casino games, sports betting, lotteries, and pool-selling. However, it can also include virtual poker. There are many websites that allow users to participate in various forms of gambling, including casinos, sportsbooks, and fantasy sports. Depending on the site, users may be required to create an account, download software, and make a deposit.
As a result, state officials have voiced concerns about the potential for illegal online gambling to enter their jurisdictions. This is in spite of the fact that there are a number of state statutes that prohibit such activities. A recent study found that more than a third of the online gambling market comes from online casinos. Several state legislators and law enforcement officials have noted that the internet is not an effective means of enforcing state gambling laws. Some states have even enacted legislation that would ban online gambling.
The United States government has made several attempts to enforce laws against online gambling. These have included the Unlawful Internet Gambling Enforcement Act (UIGEA) and the Racketeer Influenced and Corrupt Organizations (RICO) statutes. Both of these statutes are aimed at regulating and prosecuting online casino operators.
For example, the UIGEA prohibits financial transaction providers such as PayPal from processing transactions for illegal Internet bets. Additionally, the Wire Act prohibits betting on contests. Similarly, the Travel Act aims at players who use interstate facilities for unlawful activities. Finally, the RICO statutes are designed to stop organized crime members from running a gambling business.
While there are a number of federal laws governing online gambling, the most sweeping is the Illegal Gambling Business Act. That legislation was enacted in 1992. Its main provisions include: (1) prohibiting illegal gambling on any Internet gambling sites; (2) requiring online casinos to certify their age and location verification; and (3) requiring online casinos to adopt appropriate data security standards. Another federal law, the Interactive Media Entertainment and Gaming Ass’n Act, outlines the requirements for a website to offer an “instant game” for the Internet.
On the other hand, there are plenty of other statutes limiting the types of activities that can take place on the Internet. Those who are interested in the legality of the Web can check out CRS Report RS21984 or CRS Report RS22749. Other notable statutes in the realm of online gambling are the UIGEA, the Illegal Gambling Business Act, and the Racketeer Influenced And Corrupt Organizations (RICO) statutes. All of these laws are designed to combat the growing threat of illegal gambling on the Internet.
Despite the federal government’s best efforts, it is unlikely that online gambling will ever be completely legal in the U.S. As a result, the industry is likely to continue to evolve.