Choice Online Gambling

The legalities of gambling online...

Because most gambling law relates to land-based gambling and doesn't fully address issues that relate to online gambling. As such, the question of whether or not online gambling is legal in various jurisdictions, is something of a grey area. Throughout the world, the law has lagged technological advances, and despite the rapidly growing number of online gaming clubs, there is very little legislation that is drafted specifically to deal with online gambling.

a. Legality of online gambling in the UK

Below is a summary of the legality of internet gambling in the UK, taken from a report issued by The Gaming Board of Great Britain.

British gambling legislation - apart from that setting up the National Lottery - is all over a quarter of a century old and was enacted before the advent of the internet. Broadly speaking, here are the main points:

Tickets for lotteries can be sold almost anywhere other than in the street. They can be sold in shops and from people?s homes, and may also be sold over the telephone. But they cannot be sold "by means of a machine", however there are two instances where lottery managing companies have been given permission to use the Internet as a means of communication by which one person offers another a lottery ticket and that second person agrees to buy it.

Football pools are allowed to accept entries in the post. Bookmakers are able to accept phone wagers from clients with credit cards. Both could also accept such bets via email. Often bookmakers select an offshore location for their phone or internet betting operations not because their operations are illegal, but rather because of the lower taxes applicable.

Anyone playing bingo or gaming machines can only do so on licensed and registered casino premises and, in particular, the individual taking part in the gaming must be on the premises at the time when the gaming takes place. This obviously precludes online betting. Anyone wanting to operate an online casino would clearly not obtain a license and could expect action to be taken against them because to set up such a site would be illegal. However, there is nothing in the legislationwhich suggests that it is illegal for a British resident to gamble on the Internet from his or her own home. The position in respect of public places such as Internet cafes is not as clear.

Offshore gambling operations are restricted in terms of how and where they can advertise. They may not invite the public to subscribe money or to apply for information about facilities for subscribing money. Some Internet casino operators are beginning to advertise within these constraints. There is the added question of what constitutes an advertisement on the Internet, and what can or cannot be done if an operator does transgress, remains unclear.

There are moves afoot to introduce legislation dealing specifically with online gambling.

b. Legality of online gambling in the US...State versus Federal Gambling Laws

Regulation of gambling in the US was, until recently, exclusively left up to the various State Legislatures, who determined the legality of gambling activities within their jurisdictions. Positions on gambling ranged from strident anti-gambling stances to embracing gambling as a legal form of commerce. Either way, US State gambling laws were all drafted long before the advent of the Internet, and they do not have provisions dealing specifically with online gambling.

More recently, though, the US Government has attempted to promulgate legislation banning online gambling on two occasions, both of which have failed. No doubt, we haven't heard the end of this debate, but until such time as legislation which regulates or bans online gambling is passed, federal gambling laws are our best guide on the issue.

A number of Federal laws passed recently directly or indirectly relating to gambling, have been passed by Congress (although all of these laws were drafted before the advent of online gambling!) These Federal laws were passed more recently than State laws, and deal with some of the inconsistencies in State based gambling laws - especially as they apply to interstate commerce.

The Wire Wager Act

The Wire Wager Act prohibits the use of a wire transmission facility for gambling or wagering, and is the one statute that may be applied most directly to restrict the use of the Internet as to gambling platform. It provides, in part:

"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 in 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."

There are a couple of schools of thought on exactly how this Act applies to online gambling.

One says that the Wire Act broadly covers any interstate use of the Internet that is related to placing or receiving bets. Another school of thought maintains that Wire Wager Act cannot be applied to online gambling because the words "wire communication facility" only apply to transmissions that use wires and would therefore not apply to wireless Internet access. Secondly, the reference to "bets or wagers on any sporting event or contest" implies the Act might only apply to betting on sporting events and not card games or other games based upon chance.

Whichever view you choose to follow, one thing that is clear is that the Wire Act can only be applied to those "being engaged in the business of betting or wagering" - not the online gambler or the internet service providers.

Other Acts:

The Interstate Transportation of Wagering Paraphernalia Act, The Travel Act, The Federal Aiding and Abetting Statute, and The Professional and Amateur Sports Protection Act all contain provisions that might be construed to apply to internet gambling. However, the appropriateness of their application is strongly debated. Even if they were applied to Internet gambling, their application would be restricted to operators, and not players or internet service providers.

Given the debate around whether or not these Statutes actually apply to online gambling, and given the fact that US prosecutors struggle to get defendants to appear in the United States to stand trial, actual prosecutions in this area in the US are extremely rare. No doubt, legislation which clarifies this grey area, will soon be enacted.

c. The World Trade Organisation Ruling

Just as the US is doing what it can to criminalise online gambling, the small Caribbean nation of Antigua Barbuda has recently won a World Trade Organization ruling, finding that US legislation outlawing online gambling violates WTO commercial services accords. Who knows how this ruling will impact on any future attempts by Congress to outlaw online gambling!!

On 28 June 2000 the Interactive Gambling Bill, which applies specifically to online gambling, became law. In Australia it is illegal for any interactive gambling service provider based outside Australia (including online casinos, race betting sites; sportsbooks and lotteries to offer its product to Australian residents. It is also illegal for any Australian based online casino to offer its product to Australian residents or residents of any country around the world that chooses to opt in on the Australian Government?s ban. Finally, it is illegal to advertise of any interactive gambling service on any medium within Australia (including ?Australian? web sites).

However, it is legal for Australian licensed online sports books, race betting and lottery sites to offer their product to Australian and international customers.

This legislation is clearly not aimed at players, but rather at the casino/sportsbook operators. That aside, it is an onerous task to enforce this legislation!