Online gambling is defined as using the Internet to place bets or receive bets. This includes casinos, sports betting, and virtual poker. It is illegal under the Illegal Gambling Business Act and the Wire Act.
The federal government has seized a number of casinos and betting sites over the past decade, and has prosecuted those who have engaged in illegal gambling activities. Many state officials have raised concerns about the potential for the internet to be used for illegal gambling, which may in turn bring such activities into their jurisdictions. However, the question of whether the government has the power to enforce federal gambling laws on a constitutional basis has not been settled.
First Amendment free speech concerns have been raised regarding the regulation of gambling that occurs partially outside the United States. These concerns have prompted questions about the government’s power under the Commerce Clause. In addition, the issue of due process has been raised as well.
Federal criminal statutes implicated by illegal Internet gambling include the Wire Act, the Illegal Gambling Business Act, and the Travel Act. Other federal statutes also may be relevant. For example, the Racketeer Influenced and Corrupt Organizations (RICO) provisions are designed to prevent individuals or organizations involved in illegal gambling business activities. Additionally, the Lopez Amendment to the Criminal Code of 1994 prohibits accepting financial instruments for the purpose of unlawful Internet bets.
The Lopez Amendment primarily focuses on commercial activities, as opposed to recreational ones. However, it does contain elements designed to weed out low-level gambling cases. As a result, the Lopez Amendment is often cited by prosecutors in these types of prosecutions.
The UIGEA, which focuses on financial transaction providers, is another federal law that is relevant in these kinds of crimes. In fact, the Attorney General has prohibited any person from accepting financial instruments from any individual or organization who has engaged in illegal Internet bets.
In a report published in December 2002, the United States Government Accountability Office (USGAO) provided an overview of issues surrounding online gambling. It found that there were a number of constitutional objections to the government’s power to prosecute such activities, but that the commercial nature of the gambling industry seems to address any such doubts.
Some attacks against federal enforcement of the Gambling Enforcement Act, based on the Commerce Clause, have not been successful. While the First Amendment provides some protection for criminals facilitating speech, the limitations of that protection do not extend to activities that facilitate speech outside of the United States.
For example, the case of United States v. Heacock was decided by the Fifth Circuit, which argued that state officials could not constitutionally prohibit Internet bettors from placing bets on the outcome of a sporting event. Similarly, the United States v. Mick and Nicolaou cases from the Fourth and Sixth Circuits dealt with the same question.
Despite these challenges, the federal government has pursued a course of action. Specifically, the government has charged several individuals with money laundering and violating the Illegal Gambling Business Act.