The Federal Government’s Role in Regulating Online Gambling
Gambling is an activity involving wagering something of value on a random event. This can include sports betting, gambling on lottery tickets, and playing casino games. To engage in this activity, the gambling business owner needs to establish three basic criteria. These requirements include: a prize, a risk, and consideration.
State laws have the power to regulate gambling. However, these laws usually do not go into as much detail as federal law. Therefore, state officials have been concerned about the potential for illegal Internet gambling to bring illegal betting into their jurisdiction. The Unlawful Internet Gambling Enforcement Act (UIGEA) addresses this issue by prohibiting financial institutions from processing transactions to unlicensed websites that offer gambling.
Federal law is also implicated by the activities of unlawful Internet gambling. Several criminal statutes are used to prosecute such conduct. These include the Wire Act, the Travel Act, the Racketeer Influenced and Corrupt Organizations (RICO) provisions, and the Illegal Gambling Business Act.
The Department of Justice has issued an advisory opinion on the interpretation of the Wire Act. While the opinion is a welcome one, the legality of the act is still uncertain. It has been interpreted as applying to only sports betting, but the department believes it applies to all forms of gambling. If the wire act did not apply to all forms of gambling, then it would not be effective to enforce the law against illegal gambling online.
A few years ago, the United States Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) as an infringement on the First Amendment. In the aftermath of this decision, many states began to explore the legality of legal sports betting. Although the majority of states have legalized this form of gambling, many have limited the ability to do so. As a result, there are many gaps in the federal betting law. Some of these have been filled by states enacting their own rules.
In addition, several of these states have legalized online poker. Others, like Delaware and Nevada, have embraced online casino gaming. And the list of states that have legalized gambling continues to grow. Even the District of Columbia has a two-tiered system for online sports betting.
While federal and state laws interact with each other, it is important to understand the limitations and exceptions of each. For example, while the Travel Act does apply to online casinos, it does not apply to sportsbooks. On the other hand, the Professional and Amateur Sports Protection Act is a federal law that prohibits sports betting in all states, except for Nevada. Thus, while federal law is important, it is the state laws that set the general tone of gambling.
Since the passage of the UIGEA, the Department of Justice has issued a legal opinion that has changed the way that it interprets the Wire Act. Now, the Department of Justice considers the law to apply to all forms of gambling. This is because the Wire Act was enacted to target sports betting organizations run by mafia groups.