Using the Internet to gamble is a federal crime under the Illegal Gambling Business Act. It is also illegal under the Wire Act and the Travel Act. The Federal Communications Commission (FCC) has the ability to stop the leasing or furnishing of facilities to operators of unlawful gambling operations. The FCC is a good place to start if you are interested in establishing a federal standard of conduct for Internet gaming.
There are many laws on the books and more are likely to be enacted over the next several years. The federal government has seized millions of dollars from operators of offshore gambling operations. However, state officials have expressed a fear that the internet could be used to lure illegal gambling operations into their jurisdictions. Some state laws prohibit gambling in one’s home, while others prohibit the use of electronic devices such as cell phones to make in-person wagers. Some of the laws are based on federal law, while others rely on state law. While some state laws are clearly enumerated, others are more opaque, and it is often difficult to determine what is legal in one jurisdiction and illegal in another. Using the Internet to gamble is also illegal under the Racketeer Influenced and Corrupt Organizations (RICO) provisions of the Federal Criminal Code. The act of entering a bet is a gambling activity in New York State.
Several other federal laws are implicated. The best known example is the Unlawful Internet Gambling Enforcement Act (UIGEA). The statute prohibits the provision of financial instruments to a person engaged in an illegal Internet bet. A related statute, the Gambling Devices Transportation Act (also known as the Johnson Act), also prohibits the shipment of gambling devices. Other federal statutes are not as comprehensive, but they are still on the books.
The most effective way to curb illegal gambling is to enact tougher penalties for those involved. The most effective penalties include fines, jail time and probation. In one case, a company called Sporting News agreed to pay a $4.2 million fine and launch a public service campaign to educate consumers about the dangers of online gambling. In another case, the FCC suspended the leasing of Internet facilities to operators of illegal Internet gambling operations. Another case involved the use of an interstate telephone number to facilitate an illegal Internet gambling operation. The FCC also has jurisdiction over common carriers. The aforementioned FCC regulations are not perfect, however, and state enforcement policies are occasionally stymied by interstate or foreign elements. The federal government has also warned PayPal that it may be subject to prosecution.
The best way to determine the true cost of an illegal Internet gambling operation is to conduct a thorough audit of the various companies involved. This is an expensive and time-consuming process. However, state and federal officials must be aware of the potential impact of illegal Internet gambling operations on their respective jurisdictions, and should be proactive in enacting laws that are effective in containing illegal gambling operations.