Online gambling includes sports betting, casinos, and virtual poker. Many countries regulate or allow it while others prohibit it entirely. Gambling is generally illegal unless a person is licensed or registered. However, some states have passed laws allowing it to occur.
The US Supreme Court has ruled against federal bans on sports betting and online gambling in several cases. Some have questioned the Commerce Clause and the due process protections of the First Amendment. While attacks based on the Commerce Clause have had limited success, attacks based on the First Amendment guarantee of free speech have had little success.
In 1996, there were only fifteen gambling websites in the US. By 1999, there were over eight hundred. There were also online poker rooms and multiplayer gaming. According to a Frost & Sullivan report, there were revenues from online gambling that exceeded $830 million. These figures include horse racing wagering, which accounts for a substantial proportion of the online gambling market.
In 2007, two bills were introduced in the US Senate that would have restricted online gambling. One bill was authored by Senator Bob Goodlatte and the other was authored by Senator Jon Kyl. Both of these bills would have prohibited most online gambling activities except for those involved with state lotteries. They would have required internet gambling facilities to obtain a license from the director of the Financial Crimes Enforcement Network.
A number of bills have been introduced in the House. HR 2046, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act, was introduced in April 2007. This bill is aimed at regulating and enforcing the Unlawful Internet Gambling Enforcement Act, or UIGEA. It requires internet gambling service providers to obtain a license to advertise their services and to verify their age. Additionally, it prohibits the acceptance of financial instruments from illegal Internet bets.
The Department of Justice has allowed states to pass legislation on online gambling. However, the agency warned PayPal that it could face prosecution for transactions made through the company’s e-wallet.
Other federal laws, including the Wire Act of 1961, are also applicable to illegal Internet gambling. The Wire Act has been in existence for the longest time. When it was drafted, the Internet was not yet a widely used tool. As a result, it was intended to work in conjunction with anti-racketeering laws. Similarly, it was intended to prevent online gambling on sporting events.
In addition, the Travel Act, which is applied to interstate commerce, also applies to Internet gambling. Although the Travel Act prohibits any activity that facilitates the transmission of a criminal offence across state lines, it is unclear whether it imposes a similar restriction on gambling conducted in another state.
As a result, it is unclear how the UIGEA will affect the flow of interstate commerce. One possible consequence would be that the Federal Communications Commission (FCC) would be forced to discontinue the leasing and furnishing of gambling facilities. Another possibility would be that the FCC would be required to regulate the provision of these services.