Online gambling has gained popularity, particularly in states where it is legalized. Currently, about half of the country can play poker, or place bets on sports, online. Several states have approved online casinos and sportsbooks. The first state to offer online betting was Nevada. Since then, Maryland, Massachusetts, Pennsylvania, and New York have joined the list. However, only a few have actually enacted laws.
In December 2002, the General Accounting Office (GAO) published an overview of the issue. This report outlines the issues involved and cited the relevant state gambling laws. It identifies certain factors that should be used to weed out low level gambling cases.
There are two main federal statutes that govern illegal Internet gambling. One is the Wire Act. The other is the Illegal Gambling Business Act. Both of these act to regulate the commercial activity of gambling businesses. These statutes include Racketeer Influenced and Corrupt Organizations (RICO) provisions that prevent unlawful gambling business activities.
Under the Wire Act, there are three major ways to commit illegal gambling: placing a bet, transmitting a bet, and receiving a bet. As a result of these laws, it is possible to be fined or even imprisoned for committing these crimes. Alternatively, a gambling business may be subject to a cease and desist order. A gambling business is also subject to criminal prosecution under a number of other federal statutes.
The first case involving federal prosecution of online gambling was United States v. O’Brien. In this case, the plaintiff was a former employee of Sporting News who was involved in a gambling business that had received approximately $2,000 in gross revenues. Although the plaintiff was not charged with any specific crimes, the court agreed that the business constituted unlawful Internet gambling under 31 U.S.C. 5362(10).
The Wire Act is the most widely recognized federal statute governing the issue. Section 1956 makes it a crime to “launder” money. In addition to laundering for tax purposes, Section 1956 creates several distinct crimes, including laundering with intent to promote an illicit activity. Other crimes include laundering for law enforcement stings, concealing an illegal gambling operation, and laundering for international purposes.
Another federal statute, the Travel Act, makes it a crime to use an interstate facility for unlawful activities. Whether the Commerce Clause permits the enforcement of these laws remains an issue. While the arguments based on the First Amendment guarantee of free speech have not produced much success, questions regarding the commercial nature of the gambling business have been raised.
Several other federal criminal statutes are implicated in the illegality of Internet gambling. However, the five most prominent are the Illegal Gambling Business Act, the Racketeer Influenced and Corruption Act, the Wire Act, the Interstate Commerce Act, and the Interstate Transportation of Gambling Wages and Expenses Act.
Finally, the federal government is able to enforce the laws on gambling on the internet by issuing warrants. To obtain a warrant, probable cause must exist. Nevertheless, despite the presence of an interstate element, state officials have expressed concerns that the Internet could be used to bring illegal gambling into their jurisdictions.
