Online gambling is the act of placing bets on games of chance via the Internet. This includes sports betting, casinos, online lottery, and virtual poker. The act is legal in the US under federal law. However, states have the power to regulate gambling. In 2002, the US Department of Justice issued a press release warning PayPal that it could face prosecution for accepting payments from illegal Internet bettors.
Under federal law, gambling is a commercial activity that is not protected by the First Amendment. That has prompted questions about the government’s constitutional authority to enforce the gambling laws. Among the most important questions are whether the Commerce Clause provides sufficient authority to make criminal charges against gambling businesses. Some argue that the commercial nature of the gambling business suffices. Other challenges focus on the free speech guarantees provided by the First Amendment. These attacks have had little success.
Several federal criminal statutes can be implicated by illegal internet gambling. They include the Wire Act, which prohibits gambling on sporting events; the Unlawful Internet Gambling Enforcement Act (UIGEA); the Illegal Gambling Business Act; and the Racketeer Influenced and Corrupt Organizations (RICO) provisions. Aside from these federal laws, state officials have expressed concerns that Internet gambling may lead to illegal gambling in their jurisdictions. Although most of these issues are covered by state legislation, the US government does have the power to enforce the federal gambling laws.
A number of federal court cases have been decided on constitutional grounds. For instance, United States v. Grey involved bartenders and managers of establishments that had video poker machines. There was also United States v. Heacock, which concerned bettors who had lost their jobs and were gambling on an interstate facility.
The Travel Act is another federal law that can be used to prosecute gambling players. It prohibits illegal gambling on interstate facilities, as well as the use of an Internet casino by players who are not in the State in which the Internet casino is located. Congressional findings regarding the effect of the Act on interstate commerce have been reported. The Federal Communications Commission can also shut down facilities that it has been leasing.
Another constitutional issue that has arisen is the issue of due process. The First Amendment protects freedom of speech, but limited protection in the crime facilitating speech encumbers free speech objections. Because financial transactions in the United States are involved, arguments based on the Due Process Clause of the Constitution have not been successful.
Regardless of these issues, the US government has a powerful interest in regulating and banning gambling. According to the US Department of Justice, the Lopez Amendment “provides that an alleged violation of the law that relates to Internet gambling is a separate and distinct matter from the underlying state or federal offense.” The Lopez Amendment also contains elements to weed out low level gambling cases.
Although the US government has taken a strong stand against illegal Internet gambling, there are still several issues that remain unresolved. In addition to these issues, there is still a lack of clarity on how to interpret the Travel Act.