Using the internet to gamble is illegal in the United States. Whether it’s virtual poker, sports betting, casinos, or horse racing, there is a hefty federal criminal statute implicated in the illegal activities of gambling on the Internet. A number of cases have been brought to the courts challenging the enforcement of these federal laws. Some have been successful, while others have not.
Section 1956 makes it illegal to launder or disguise money from illegal gambling. It also makes it illegal to evade taxation, and it creates a variety of distinct crimes. Other statutes that may be implicated include the Racketeer Influenced and Corrupt Organizations (RICO) Act, which bans illegal gambling business activities, and the Travel Act, which makes it illegal to engage in unlawful gambling on interstate commerce.
Several states have enacted online gambling laws. Illinois, for instance, has legalized online sports betting, which will expire in 2022. Illinois residents can wager on sports games and contests, and wager on in-state colleges, but they can’t do it on non-sports events. The state also recently passed a law requiring sportsbook operators to register with the state, and it’s possible that Illinois will legalize online casinos in the future. However, many states are a few years away from allowing legal online gambling.
Section 1957 also makes it illegal to spend more than $10,000 of illegal gambling proceeds at once. It also prohibits gambling businesses from accepting financial instruments from illegal Internet bets. A state’s law can reinforce a federal law in cases like this, so prosecutors can warn PayPal that it may face prosecution. The Illinois state government also passed legislation in May requiring that sportsbook operators register in person. The law requires that at least five persons be involved in the gambling business, and it requires that the business operate at least two days a week for a period of thirty days. It also requires that the gambling business be conducted in a jurisdiction with a higher minimum wage than the jurisdiction in which the bets are being placed.
Section 1956 has also been cited as raising First Amendment concerns, especially when financial transactions take place in the United States. However, the commercial nature of a gambling business may be sufficient to satisfy the Commerce Clause. Several attacks on the right to free speech based on the Commerce Clause have been unsuccessful. Nevertheless, the law’s impact on interstate commerce is regulated by the Lopez Amendment.
The Lopez Amendment contains elements to weed out lower-level gambling cases, and Congressional findings about the impact on interstate commerce are cited. It also contains elements to protect free speech objections. It is also possible that the state enforcement policies may be frustrated if interstate or foreign elements are involved.
Online gambling is often tacked on to bigger gaming expansions. However, there are a number of state laws that restrict the types of online gambling that are allowed, and these laws are enforced by the states.
