During the past two years, state officials have been alarmed by the potential of the internet to transport illegal gambling into their jurisdictions. This is not a new issue, as the Internet has been used for betting and gambling activities for a long time. However, state officials are beginning to fear that the internet will provide an easy entry point to criminal activities, which could threaten the integrity of their law enforcement agencies.
Although gambling is primarily a matter of state law, it is a federal crime to conduct an illegal Internet bet. The following are a few of the most notable federal criminal statutes pertaining to online gambling. Using a financial transaction provider to make an illegal Internet bet is strictly prohibited by statute. The most notable statutes enacted in the past couple of years are the Illegal Gambling Business Act and the Wire Act.
Several other statutes are important to the Internet gambling industry as well. The Federal Communications Commission has a regulatory role in common carrier services such as telephony and broadband internet, and it is likely that this agency will play a role in the enforcement of online gambling laws in the near future. The same goes for the Federal Bureau of Investigation. This agency has been a reliable partner to state enforcement agencies, as it has already caught a few Internet criminals before they got their start. Aside from state laws, the United States also has a fair amount of federal legislation on its plate, including the Gambling Devices Transportation Act, or Johnson Act.
As for the law itself, it has been the subject of much debate. One of the more interesting aspects of this debate is that it has been largely driven by the question of whether federal law should play a role in the enforcement of online wagering laws. Despite the debate, federal law does help reinforce state law in cases where the state has no jurisdiction. This is especially true of gambling involving interstate or foreign elements, which can prove to be a double edged sword. The law also reinforces the notion of a unified regulatory approach to the Internet gambling industry.
The UIGEA has been a boon to state law enforcement agencies, as it is the first federal statute to specifically prohibit the use of a financial transaction provider to facilitate an illegal Internet bet. It also has been a boon to consumers, as it has provided a means for individuals to verify the legitimacy of Internet gambling sites. In fact, there are several Internet sites that advertise themselves as legitimate online casinos, but which are in fact gambling dens or rogue operations. In fact, federal prosecutors recently warned PayPal that they could be on the hook for fines and penalties. Fortunately, PayPal is not in the business of illegal Internet gambling.
The UIGEA has spawned several legal challenges. One of the more interesting cases has involved an offshore Internet based sports bookmaking operation, called Tedder. The company had gross revenues of around $2 million, a modest number in the gambling world. This was matched by a few notable arrests, including the company’s co-founder, who was convicted of running an illegal Internet gambling site. Another notable case involved the E.D. Mo., where an indictment was issued against a group of individuals who were operating a high-tech gambling website. The group also included bartenders and managers of establishments with video poker machines.