Is Online Gambling legal?
While there are laws throughout the world that relate to land-based gambling,
there are very few that relate to specifically to online gambling. In the event
that someone was to get into trouble for being involved in online gambling, it
is far more likely that the casino owner and not the gambler would be targeted.
Generally speaking, online casinos will automatically block you from opening an
account with them if they are not allowed to accept bets from you.
Attempts in the US to criminalize online gambling activities The rapid
increase in the number of gambling websites (well in excess of 150 at the time
of writing) has resulted in an increased focus on the laws that govern online
gambling.
At present, the 1961 Interstate Wireline Act (18 U.S.C. section 1084) is the
primary US regulator of online gambling. This Act makes it illegal for providers
to take or offer wagers from gamblers over phone or fax lines or through other
wired devices unless otherwise authorized by a particular state.
In March 1998, 14 owners/managers of international sports gaming sites were
charged with violation of the Wire Act by the US. Department of Justice. In June
1999, the National Gambling Impact Study Commission recommended to Congress that
online gambling be prohibited in the US. These anti-gaming developments aside,
the question arises: can existing laws be properly applied to new technologies?
After all, The Wire Act doesn't explicitly mention the Internet.
Would the ban on offering or taking wagers from gamblers over wired devices
extend to offering wagers via satellite-based transmissions, which are not
considered wired devices? The law reflects changes in society. But clearly,
gambling law is just not keeping up with online gambling developments?In the
words of Sue Schneider, chairman of the Interactive Gaming Council, in testimony
to Congress in Feb 2004. "As history has demonstrated, prohibitions do not
work."
In July 1998, the Internet Gambling Prohibition Act of 1997, which aimed to
amend the Wire Act and more clearly ban online gambling, was promulgated. It
would effectively penalize bettors and operators. But the bill got held up in
the House because, amongst other reasons, there was pressure from special
interest groups to have their exemptions added to the bill and there were calls
to let the National Gambling Impact Study Commission make recommendations before
voting on the bill. Despite the criticism of the bill wording as being too broad
and non-specific, there is little doubt that this bill will be put forward again
to Congress. Because gambling is controlled under state law, and online betting
often crosses state lines and jurisdictions, there is legal confusion over
Internet regulation. In addition, many online casino operators are situated
offshore.
These casinos maintain that they are not governed by US laws. The states
respond that if they can prove that a site is specifically targeting their
residents, then their state courts would have jurisdiction over the matter. It's
a very grey area. Mark W. Rickard, of the University of Miami School of Law,
poses the question: "Can a gambling casino, located in a state where the
operation of such a casino is legal, maintain a site on the World Wide Web for
the purpose of accepting wagers?
He proposes the following view: Although gambling is generally considered a
matter of state concern and each state has regulated its own gambling activities
independently, when gambling activities cross state lines, the federal
government also has regulatory jurisdiction under the Commerce Clause of the US
Constitution. He makes the point that the law in inconsistent if applied to
online casinos because it doesn't take into cognizance the internet
technological advancement.
Yes, online casinos "knowingly" use high speed wire communications
technology in engaging in their business of betting and wagering. And yes, the
use of such interstate communications facilities provides the basis of federal
jurisdiction. However, the law further states that "nothing in this section
shall be construed to prevent ... the transmission of information assisting in
the placing of bets or wagers on a sporting event or contest from a State or
foreign country where betting on that sporting event or contest is legal into a
State or foreign country in which such betting is legal." It is the nature
of the internet that web sites are available for access in all states and
foreign countries whether or not betting is legal. Congress clearly did not
consider the impact of new technologies when adopting the interstate gambling
statutes!
Could a state with anti-gambling legislation assert jurisdiction over an
online casino for gambling activity on the internet? Analysis of the law shows
that there is not exclusive federal jurisdiction over online gambling in the US,
although it is generally accepted that there is a legitimate state interest in
regulating gambling.
In the past, states have regulated gambling activities as a function of the
state police power, while the federal government has regulated interstate
gambling activities primarily to assist those states in the enforcement of their
gambling laws. In practice, should such a case go to court, it would probably be
likely that the courts would apply the law on a case by case basis. They would
assess how a site was constructed, its disclaimers and warnings, the measures it
took to exclude possible illegal transactions or notify residents of
non-gambling states that they may be in violation of their state or federal law.
These kinds of considerations would probably influence the decision on the
legality of the site. In practice, many online casinos are located in countries
outside the US to avoid the potential jurisdiction of state and federal
regulations.
These foreign sites continue to operate beyond the jurisdiction of American
law enforcement. As a result gamblers within the US who choose to gamble on-line
risk dealing with a gambling establishment not subject to the licensing
requirements of legitimate gaming establishments within the US. This causes an
increase in potential fraud and misrepresentation. In addition, some regulators
are concerned that on-line gambling will reduce the revenues of legitimate
interests like the State lotteries.
Rickard concludes that it would be desirable that Congress, under the
constitutional authority of the commerce clause, amend the interstate wagering
statutes to allow virtual casinos and similar gambling activities to exist on
the internet, provided they conform to standards and licensing qualifications
set out by the State or territory within which they are established.
Disclaimer. This author takes no responsibility for the actions of any
individual or corporation who may initiate or operate an online gaming club
based on the information provided in this article.
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