Several federal statutes are implicated when it comes to illegal online gambling. The most notable one is the Illegal Gambling Business Act, which has resulted in the indictment of several individuals for their participation in illegal Internet gambling. This law has prompted state officials to worry about the internet bringing illegal gambling into their jurisdictions.
Other federal statutes that have been invoked include the Travel Act, which prohibits interstate gambling, and the Wire Act, which forbids betting or gambling on sports contests. However, these laws have not resulted in widespread prosecutions. In fact, a recent study showed that most states have yet to enforce these laws, with the exception of Pennsylvania. These laws have been challenged in court on the basis of the First Amendment, the Commerce Clause, and other federal statutes.
The best defense is to make sure that your state laws are in sync with federal statutes. In fact, federal statutes often reinforce state laws. For example, in December 2002 the Department of Justice warned PayPal that it could face prosecution for accepting financial instruments for illegal Internet bets. It also seized $3.2 million from a U.S. marshal from a company named Discovery Communications, which was found to have advertised for Tropical Paradise, a Costa Rican casino operation.
It is also worth noting that some states are not well-equipped to deal with illegal gambling activities. For example, in New York State, an act of entering a bet or transmitting information from New York through the Internet is a gambling activity. It is also not hard to imagine that federal laws pertaining to online gambling could impede state enforcement policies. For example, the Federal Communications Commission has jurisdiction over common carriers. It could decide to stop providing, leasing, or maintaining such facilities. This could have the unintended consequence of hindering prosecutions in the name of a lack of statewide resources.
While the Illegal Gambling Business Act and the Wire Act are not particularly complicated, the best defense is to ensure that your state laws are in sync with the federal statutes that could be used to bust a gambling ring. Some states have already taken a stand, with the likes of New Jersey enforcing their own state laws on Internet gambling. This is a smart move, and one that will help protect the integrity of the Internet as well as ensure that the Internet remains a safe place to gamble.
There is also the UIGCOA, or Unlawful Internet Gambling Enforcement Act, which was enacted in October of 2006. This law is the least ominous of all the statutes mentioned above, but it’s still a useful tool in the fight against online gambling. Besides, UIGCOA will have a positive effect on online gaming businesses, which is good news for consumers and bad news for the companies that participate in illegal gambling activities. If you are thinking of setting up an Internet gambling business, you may want to check out the UIGCOA website to get an idea of what steps you need to take.