Whether you’re planning to start a betting or gambling business, you should understand the legality of the activity. This will help you determine where you should locate your business and what type of region is most appropriate for your needs. Some countries have banned gambling, while other have legalized it.
Some states have been expressing concerns that the Internet could be used to carry illegal gambling into their jurisdictions. While the commercial nature of the gambling industry seems to satisfy the Commerce Clause, the First Amendment has raised questions about whether the federal government has the power to regulate it. Using the Internet to facilitate gambling activities has been a focus of criminal investigations. However, the First Amendment does not prevent the state from enforcing its own law.
In addition to state laws, the federal government has a number of criminal statutes that may be implicated in cases involving online gambling. These include the UIGEA (Unlawful Internet Gambling Enforcement Act) and the Travel Act. The statutes make it a crime to use an Internet site to transmit bets or to accept financial instruments in connection with such transactions. These laws have been used to bring charges against various individuals, including PayPal.
Another example of a successful attack on the federal government’s power under the Commerce Clause is United States v. K23 Group Financial Services. This case is a money laundering prosecution against several Internet poker operators. The Attorney General’s office is trying to charge those operators with violating 18 U.S.C. 1955, which prohibits accepting financial instruments in connection with illegal Internet bets.
In this same vein, the Fourth Circuit ruled in United States v. Heacock that a state can levy taxes on Internet wagers that originate from a state. The court emphasized that the statute was a good example of the Commerce Clause being used to protect state’s rights.
Section 1956, which creates a new crime of laundering with intent to promote illicit activity, has also been implicated in gambling cases. The crime of laundering involves concealing, evading, or deceiving in order to disguise or to avoid taxes. In addition, the statute allows the Attorney General to impose penalties for the laundering of money from an Internet gambling account.
The CRS Report RS21984 includes the text of many of the cited statutes. The report includes citations to state gambling laws as well. The report is also available in a shortened version.
In addition to the aforementioned statutes, the CRS Report R41614 covers the legality of remote gaming. This report is based on an abridged version of the Unlawful Internet Gambling Enforcement Act. The report provides an overview of gambling issues and highlights the various statutes that are related to this area of law.
Another important aspect to understand is that a gambling site doesn’t need to be in a state to be considered illegal. Under the law, a “state” is any territory or possession of the United States. This includes the Commonwealth of Puerto Rico, the District of Columbia, and other states.