The
Legality of Internet Gambling in the United States
Leslie
K. Penny
Module
3 Research Assignment 2
Chancellor
University
Abstract
Many Americans sit in
their darkened dens, their musty basements, their brightly lit kitchens, their
busy living rooms, what have you, to play their favorite online sport of
gambling. Many Americans play it safe
staying within the means of their economic status winning here and there while others lose a significant chunk aiding in the profit margins of online
casinos. The following essay will dive
into the legal realm of internet gambling asking the question, "is it
legal and if so, where?" while using the Unlawful Internet Gambling
Enforcement Act of 2006 for support.
The
Legality of Internet Gambling in the United States
Many people do it.
Some find it a way to release frustration and stress. Many find it fun. And many find it addicting. But is it legal? Many Americans sit in their darkened dens,
their musty basements, their brightly lit kitchens, their busy living rooms,
what have you, to play their favorite online sport of gambling. Many Americans play it safe staying within
the means of their economic status winning here and there while others lose a
significant chunk aiding in the profit margins of online casinos. The following essay will dive into the legal
realm of internet gambling asking the question, "is it legal and if so,
where?" while using the Unlawful Internet Gambling Enforcement Act of 2006
for support.
Online gambling is interesting in that it falls into a
legal grey area (Grabianowski, 2013). According to Ed Grabianowski's article,
"while it is technically illegal in most states of the United States, the
prosecution and conviction of individual players is very difficult because
they're gambling from home" (Grabianowski, 2013). He goes on to say that gambling websites are
illegal in the United States, hence why most offices and servers are based in
other countries simply because its legal in about 70 countries such as
Australia, New Zealand, South Korea, Denmark, Finland, France, Germany, and
some provinces of Canada, just to name a
few (Grabianowski, 2013).
Back to the question at hand. According to Michael Bluejay who operates the
website, Vegasclick.com, when it comes to federal law, "there is no U.S.
Federal law against gambling online" (Bluejay, 2013). Fascinating that online gambling is not
illegal federally but it is in some states.
Why is that? Well, according to
U.S. Attorney Catherine Hanaway, back in 2007, explained that "just
placing wagers online doesn't violate federal law" and that "no
American has ever been arrested, indicted, or prosecuted by the feds for
gambling online, because there's no law against it" (Bluejay,
2013). When it comes to case law, there are a small
amount of State cases where players went against state law such as: Jeffrey
Trauman and Roland Benavides (Bluejay, 2013).
Jeffrey Trauman ran into a legal issue in North Dakota
when he had to pay a $500 fine in 2003 for making more than $100,000 in sports
bet winnings (Bluejay, 2013). The other case involved Roland Benavides who
was an Oklahoma police officer that was charged in 2011 with gambling where
"just about any kind of gambling is illegal" (Bluejay,
2013). According to Michael Bluejay, other anti
online gambling states include Illinois, Indiana, Louisiana, Montana, Nevada,
Oregon, South Dakota, and Washington (Bluejay, 2013).
According to James Oliver, in his article U.S. v. Jay
Cohen (2001), Jay Cohen, a U.S citizen, moved to Antigua and set up an online
sports betting operation (Oliver, 2001). Mr. Cohen took great pains to make sure his
operation was legal by contacting lawyers and speaking with accountants but was
prosecuted anyways and successfully convicted "with violating the Wire
Wager Act" which "prohibits the use of a wire communication facility
for the transmission in interstate or foreign commerce of bets or wagers or
information assisting in the placing of bets or wagers on any sporting event or
contest" (Oliver, 2001). Interestingly enough, Justice James Oliver
gave a dissenting opinion that pointed out the "inadequacies of current
laws that deal with the internet, the futility of trying to ban online
gambling, and the mercurial tides of public and political opinion regarding
gambling in general" (Grabianowski, 2013).
Speaking of inadequacies of current laws, which was
stated in 2001, the Unlawful Internet Gambling Enforcement Act of 2006 (codified
at 31 U.S.C. 5361-5367 (2006) (Charles P. Ciaccio, 2010)helps to clarify the
legalities of online gambling. According
to the American Bankers Association, "the act prohibits any person engaged
in the business of betting or wagering (as defined in the Act) from knowingly
accepting payments in connection with the participation of another person in
unlawful internet gambling" (Unlawful Internet Gambling
Enforcement Act, 2012). The last rule of the Act
"requires a strengthened screening process at the time of account opening
to deny commercial entities that may be acting as Internet casinos access to
the payments system" (Unlawful Internet Gambling
Enforcement Act, 2012).
The Act also "requires that policies and procedures be implemented
to prevent all debit and credit card payments to internet casinos" but
"does not require that checks, ACH payments, or wire transactions related
to internet gambling be monitored or blocked" (Unlawful Internet Gambling Enforcement Act, 2012).
When it comes to the "teeth" of the Unlawful
Internet Gambling Enforcement Act of 2006, I do not think it is something that
the online gambling community is scared of, more like they find it comical and
annoying, and that the individuals who run online gambling casinos are well aware
of how to get around it. I believe the
intentions of the Act were good but many in the online gambling community are
still confused as to what this particular piece of legislation has accomplished (UIGEA, five
years later, 2011). Little "enforcement" has occurred since
this law took effect seven years ago by the Department of Justice (UIGEA, five
years later, 2011). Online gambling has remained as active as
ever with gamblers finding new and creative ways to deposit money and get paid
out what is due to them (UIGEA, five years later, 2011).
So, is online gambling legal or not? The action of betting is completely legal for
U.S. citizens, however, "it is against federal law for a site to take the
bets" (Bluejay, 2013).
Here is where a grey area comes into play. Federal law does not particularly forbid or
permit sites from taking casino or poker bets, just sports bets (Bluejay,
2013). That can be confusing to many and make
absolutely no sense to most. As
mentioned above, "it's against federal law for banks to handle online
gambling transactions" (Bluejay, 2013).
When it comes to ads used for online gambling, according
Michael Bluejay, small publishers like himself "have never faced federal
action taking ads for online gambling" but huge publisher have such as
Google, Yahoo, and Microsoft in 2007 as well as a mid-size publisher in 2006
called The Sporting News (Bluejay, 2013) have paid a price. Mr. Bluejay points that he wishes those major
publishers had contested the charges, especially after legal observers claimed
those companies had never broken any laws (Bluejay, 2013). The good thing is no criminal charges were
ever filed and only a fine was given and paid to end the matter in a timely
fashion (Bluejay, 2013).
To conclude, this writers analysis of the law regarding
internet gambling can be summed up in one word.
Shady. It seems like it is an
issue that the government uses the phrase "out of sight, out of mind"
for. They know they would have a hard
time regulating every single person playing in their homes due to the
"virtual operational environment" (Morse, 2009). One would think with all of the concerns with
online gambling such as:
a.
Lost tax revenue that may otherwise be
imposed on state or tribal-run gambling operations that are subject to state
regulations (Morse, 2009);
b.
Underage gaming, a problem exacerbated
by the absence of robust methods for personal identification in an online
environment (Morse, 2009);
c.
Potential association with money
laundering or funding criminal or even terrorists enterprises (Morse, 2009);
the government would be
more inclined to legalize online gambling for a better approach of regulation
but that has not been the case. Perhaps
in the near future it will become official that online gambling is legal
instead of this indecisive gray area.
Works Cited
Bluejay, M. (2013, 02). Is online gambling legal
in the U.S. Retrieved 07 20, 2013, from VegasClick:
http://vegasclick.com/online/legal.html
Charles P. Ciaccio, J.
(2010). Internet Gambling: Recent Developments and State of the Law.
Retrieved 07 20, 2013, from Berkeley Technology Law Journal: http://www.btlj.org/data/articles/25_1/0529-0554%20Ciaccio_Web.pdf
Grabianowski, E.
(2013). The Legality of Online Gambling. Retrieved 07 20, 2013, from
How Stuff Works: http://entertainment.howstuffworks.com/online-gambling2.htm
Morse, E. A. (2009, 04
16). Barriers to Financing Internet Gambling Under UIGEA. Retrieved 07
20, 2013, from American Bar:
http://apps.americanbar.org/buslaw/committees/CL430000pub/newsletter/200905/chair-barriers.pdf
Oliver, J. (2001, 05
02). U.S. v. Jay Cohen. Retrieved 07 20, 2013, from University of Iowa:
http://www.uiowa.edu/~cyberlaw/cls01/oliver4.html
UIGEA, five years
later. (2011, 12 27). Retrieved 07
20, 2013, from Beyond the BETS:
http://www.beyondthebets.com/uigea-five-years-later-the-intentions-were-good-but-the-results-havent-delivered/
Unlawful Internet
Gambling Enforcement Act. (2012).
Retrieved 07 20, 2013, from American Bankers Association:
http://www.aba.com/Solutions/Compliance/Pages/UIGEA.aspx
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