Internet Gambling Laws – US, UK and the World

Legal minds turned to Internet gambling laws as a specialty when the industry went beyond growth and exploded into the public mind. “The law surrounding Internet gambling in the United States has been murky, to say the least,” according to Lawrence G. Walters, one of the attorneys working with gameattorneys.com.

In contrast, Internet gambling laws in the U.K. have made the lives of providers and players a bit easier. The passage of the Gambling Act of 2005 has basically legalized and regulated online play in the U.K.

With the objectives of keeping gambling from promoting “crime or disorder” the U.K. act attempts to keep gambling fair, in addition to protecting younger citizens and others who may be victimized by gambling operation. Unlike the United States, which still clings to the 1961 Wire Wager Act, the U.K. significantly relaxed regulations that are decades old. A gambling commission was established to enforce the code and license operators.

A Whole Other Country

According to Walters and many other observers of the Internet gambling laws scene, the United States Department of Justice continues to view all gambling on the Internet as illegal under the Wire Act. But there are details in the federal law that defy attempts to throw a blanket over all online gambling.

The Wire Wager Act forms the basis for federal action on Internet gambling laws in the United States. The law was meant to complement and support laws in the various states, focusing primarily on “being engaged in the business of betting or wagering” using wire communication to place bets or wagers on sporting events or similar contests. The law also comments on receiving money or credit that results from such a wager. The keys are “business,” “money or credit” and “wire communication facility.”

But as many attorneys and proponents of fair Internet gambling laws emphasize, the federal law does not specifically address other forms of gambling. This has left the law open to interpretation when it comes to online casinos specifically and using the World Wide Web to play online games.

October 13, 2006 is a crucial date in the controversy surrounding the legalization of gambling. For anyone wishing to understand Internet gambling laws, the federal law passed on that day is essential knowledge. President George W. Bush signed the Unlawful Internet Gambling Enforcement Act (UIGEA), which is intended to limit some “financial transactions” used for online gambling.

But even if current federal gambling laws can clearly define something as simple as a legal gambling age, the newer UIGEA has not settled all the dust raised around the issue of online gambling. Attorneys such as Walters (and many others) have pointed out that the UIGEA seems to refer only to financial transactions and wagers that are illegal where the wager or transaction is made. Some wagers may be legal while others may not be legal. It’s as simple as that.

The UIGEA had some effect on Internet gambling, in that many successful companies got out of the business, at least in the United States. In fact, with the passage of the law in 2006, most U.S. online players found they could not play at an online casino or poker room, for a short time. Many of the gambling providers found ways to establish offices and servers outside of the U.S. so that could invite United States players back in.

Break Time

It’s now time to stop, take a deep breath and turn to Internet gambling laws in the various states. Some have passed their own rules and regulations (before and after UIGEA). In a few states, companies cannot operate an online gambling business. In other states it is illegal for an individual to place a bet using the Web. Some legal experts argue that these individual-state rules are unconstitutional since commerce across state lines should only be regulated by federal law, not state law. Commercial online gambling businesses don’t operate in the United States, however. If you want to visit their “home offices” you may have to travel to Malta, Gibraltar or Curacoa.

The 2005 U.K. law generally allows remote sites such as these. The rules are not so relaxed in the U.S. However, a recent appellate court ruling in the U.S. states that, in at least one case, an Web-based gambling site did not violate states laws. Most legal minds urge gamblers and others interested in the issue to stay tuned.

Some have given their attention to finding benefits of legalized gambling, noting that this huge industry might be a key to economic recovery in the United States. At the heart of their argument are examples such as established lotteries run by various states, in addition to the government revenues that flow in to state coffers from riverboats and land-based casinos.

Part of this effort rests on the shoulders of more than 100 legal representatives working for common sense in Internet gambling laws. This hoard of attorneys has the task of trying to keep the World Wide Web/Internet free from government intervention.

Bob Ciaffone is considered one of the experts on the subject of gambling and poker in general, and on the transition to online gambling. He suggests that any regulation of Web-based gambling should reduce competition from outside the U.S., so that the citizens of the U.S. would benefit in legal gambling states. His detailed plan would parallel the U.K. situation since that country passed its 2005 rules. Ciaffone also strongly urges U.S. lawmakers to keep Internet gambling laws separate from the 40-year-old Wire Act, which was passed to control illegal gambling over the telephone.

In essence, Ciaffone writes that the UIGEA attempted to do the right thing, but does it in all the wrong ways. The restrictions have severely handicapped what could be a great revenue source with proper regulation, according to Ciaffone.

Consider a statement on the UIGEA from the most-recognizable poker player in the world, Doyle Brunson. Though is comments apply to his favorite game of poker, they can easily relate to all Internet gambling laws. He said, in essence, that his company received good legal advice that indicates Internet poker is not “expressly” illegal. He encourages U.S. players to learn the laws of their own state.

While this brief summary touches only the high points of a huge and complex subject, there are sources that have already compiled details for the various states. Check these sites:

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Politicians Want to Protect us From the Evils of On-Line Gambling Part 1

This is part 1 of a multipart series of articles regarding proposed anti-gambling legislation. In this article I discuss the proposed legislation, what the politicians say it does, some facts about the current state of online gambling, and what the bills really propose.

The legislators are trying to protect us from something, or are they? The whole thing seems a little confusing to say the least.

The House, and the Senate, are once again considering the issue of “Online Gambling”. Bills have been submitted by Congressmen Goodlatte and Leach, and also by Senator Kyl.

The bill being put forward by Rep. Goodlatte has the stated intention of updating the Wire Act to outlaw all forms of online gambling, to make it illegal for a gambling business to accept credit and electronic transfers, and to force ISPs and Common Carriers to block access to gambling related sites at the request of law enforcement.

Just as does Rep. Goodlatte, Sen. Kyl, in his bill, Prohibition on Funding of Unlawful Internet Gambling, makes it illegal for gambling businesses to accept credit cards, electronic transfers, checks and other forms of payment, but his bill does not address the placement of bets.

The bill submitted by Rep. Leach, The Unlawful Internet Gambling Enforcement Act, is basically a copy of the bill submitted by Sen. Kyl. It focuses on preventing gambling businesses from accepting credit cards, electronic transfers, checks, and other payments, and like the Kyl bill makes no changes to what is currently legal.

According to Rep. Goodlatte “While gambling is currently illegal in the United States unless regulated by the states, the development of the Internet has made gambling easily accessible. It is common for illegal gambling businesses to operate freely until law enforcement finds and stops them.”

In fact, American courts have determined that the Wire Act makes only Sports Betting illegal, and even then only across telephone lines. Very few states have laws that make online gambling illegal, some states and Tribes have taken steps to legalize online gambling, and even the Federal government recognizes some forms of online gambling as being legal.

Goodlatte himself says his bill “cracks down on illegal gambling by updating the Wire Act to cover all forms of interstate gambling and account for new technologies. Under current federal law, it is unclear whether using the Internet to operate a gambling business is illegal”.

Goodlatte’s bill however does not “cover all forms of interstate gambling” as he claims, but instead carves out exemptions for several forms of online gambling such as state lotteries, bets on horse racing, and fantasy sports. Even then, his modifications to the Wire Act do not make online gambling illegal, they make it illegal for a gambling business to accept online bets where a person risks something of value “upon the outcome of a contest of others, a sporting event, or a game predominantly subject to chance”, except of course if it is a state lottery, horse race, fantasy sports, or one of a few other situations.

The truth of the matter is that most online gambling businesses have located in other countries specifically to avoid the gray area that is the current state of online gambling in the US. As a result, there is little that law enforcement can do to enforce these laws. Trying to make the laws tougher, and providing for stiffer penalties, will not make them easier to enforce.

As well, most, if not all, banks and credit card companies refuse to transfer money to an online gambling business now, as a result of pressure from the federal government. As a result, alternative payment systems sprang up to fill the void.

Senator Kyl is equally misleading in his statements. From his proposed bill, “Internet gambling is primarily funded through personal use of payment system instruments, credit cards, and wire transfers.” But as we already know, most credit cards in the U.S. refuse attempts to fund a gambling account.

Also from the Kyl bill, “Internet gambling is a growing cause of debt collection problems for insured depository institutions and the consumer credit industry.” If the credit card companies and other financial institutions in the U.S are not allowing the funding of gambling, how can it be “a growing cause of debt collection problems”. And since when do we need legislation in order for the financial industry to protect itself from high risk debt. If the financial industry was accepting gambling debts and these gambling charges were a problem for them, wouldn’t they just stop accepting them?

Like Rep. Gooddlatte, Rep. Leach and Senator Kyl carve out exemptions for betting on horse racing, for fantasy sports and for buying and selling securities. Unlike Rep. Goodlatte however, Rep. Leach and Sen. Kyl do not exempt state lotteries from their prohibition of online gambling.

In the next article, I will begin to cover some of the issues raised by politicians who are against online gambling, and provide a different perspective to their rhetoric.

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