The Federal Government’s Role in Online Gambling Enforcement

online gambling

The internet has become a major platform for online gambling. This includes virtual poker, sports betting, and casinos. However, some states have expressed concern about the possibility of the internet facilitating illegal gambling in their jurisdictions. For this reason, the federal government has stepped in with several laws. These include the Illegal Gambling Business Act and the Wire Act.

One of these statutes, the Travel Act, applies to all players who are using facilities in interstate commerce for unlawful activities. The other statute, the wire act, prohibits the transmission of information relating to gambling, including contests and sporting events. It is also prohibited to provide financial instruments or facilities for an illegal bet.

The UIGEA, or the Unlawful Internet Gambling Enforcement Act, is a set of federal statutes that ban the use of financial instruments for gambling conducted outside of a licensed casino or lottery. Additionally, the UIGEA contains a number of factors to help weed out low-level gambling cases.

As with other aspects of the law, the UIGEA has been challenged on constitutional grounds. In particular, there are questions about the constitutional authority of the Commerce Clause to authorize a law regulating the gambling industry. Also, the presence of an interstate component in the law may be frustrating for the enforcement policies of state law.

The UIGEA has generated several lawsuits. There have been two significant federal prosecutions of Internet poker operators. These prosecutions involve allegations of fraud and money laundering. Another major case involves a Costa Rican casino operation, Tropical Paradise. Both operations agreed to pay large sums of money for advertising on the sites, including a $3 million public service campaign and a $4.2 million fine.

The UIGEA also has been the subject of a number of Congressional investigations. For instance, in December 2002, the General Accounting Office issued an overview of the UIGEA. Among its findings was that the UIGEA had a negative impact on interstate commerce. And, in the same month, the U.S. marshals seized $3.2 million from a Discovery Communications subsidiary.

On the other hand, there have been few successful attacks based on the free speech and Commerce Clause arguments. Despite the presence of these two statutes, state officials have not taken the same measure.

Although the UIGEA has helped to halt the flow of illegal gambling from state to state, the problem remains. State officials have not been willing to accept the federal government’s enforcement of this law. Some have suggested that the federal government’s limited First Amendment protection of free speech encroaches on the free speech objections of those with concerns about privacy or home-based gambling.

One of the more interesting issues related to the UIGEA is the extent to which it has affected the legal environment for Internet casinos. For example, the United States v. Nicolaou involved five persons in a thirty-day period and a gross revenues of over two thousand dollars. While this was not a particularly big issue, the fact that the statute was so specific about the number of persons involved made the statute very difficult to enforce.