Using the Internet for unlawful gambling is unlawful under seven federal criminal statutes. These statutes include the Illegal Gambling Business Act, the Wire Act, and Racketeer Influenced and Corrupt Organizations (RICO) provisions. In addition, the U.S. Attorney General may enforce the prohibition on accepting financial instruments from those who conduct illegal Internet bets.
In addition to these federal criminal statutes, gambling is a state-level issue. In New York State, for example, gambling is defined as the act of entering a bet. This includes, but is not limited to, sports betting, bookmaking, and pool-selling. Nevertheless, state officials have expressed concern that the Internet could be used to bring illegal gambling into their jurisdictions. In addition, there are various elements of interstate or foreign law that may complicate state enforcement policies.
Section 1956 of the U.S. Code creates several distinct crimes: laundering, disguise, and intent to promote illicit activity. These crimes include, but are not limited to, laundering to conceal the source of funds, laundering to evade taxes, laundering for international purposes, and laundering to facilitate law enforcement stings. In addition, the statute creates a criminal violation of the Wire Act, which makes it illegal to bet illegally on sports events.
While the First Amendment protects speech, there is limited protection for crimes that facilitate speech. In these situations, there is a constitutional question concerning the legislative power of the Commerce Clause. However, there is little success in attacks on this basis. Moreover, the commercial nature of the gambling business seems to satisfy the Commerce Clause objections. In fact, the commercial nature of the gambling business has been used as a rationale for the law.
For example, in the United States v. K23 Group Financial Services case, the government charged an Internet poker operator with violating 18 U.S.C. 1955. In addition, the government has challenged the Internet gaming operators in United States v. Interactive Media Entertainment and Gaming Ass’n. In these cases, the government charged the operators with violating the Unlawful Internet Gambling Enforcement Act (UIGEA). The operators of the sites charged with violations are accused of operating gambling sites for which they receive bets, and in which they accept financial instruments.
Although the federal law enforces state law in cases, there have been instances in which the federal law has been challenged on constitutional grounds. These attacks have been based on the First Amendment’s guarantee of free speech, but have had limited success. In addition, attacks on the First Amendment have been based on the notion that the Commerce Clause provides the government with the power to regulate gambling in the interest of the public good. While the commercial nature of the gambling business may satisfy Commerce Clause objections, it seems that the First Amendment may also be a relevant constitutional concern.
Other arguments have been based on the notion that state law is inadequate to address gambling, and federal law is required to ensure that players are protected. In these cases, however, the federal law has been reinforced in the state law. In a case from the Tenth Circuit, for example, United States v. Grey, the federal government charged an Internet gaming site with violating the UIGEA because it accepted ad money from a Costa Rican casino operation, Tropical Paradise. In this case, the federal government also charged the site with violating the Wire Act, a law that makes it illegal to bet illegally on sporting events.