As with any business, there are state laws on the books that prohibit unlawful online gambling. There are also federal laws that apply to illegal gambling on the Internet. For example, the Wire Act of 1961 aims to prevent the illegal transport of wagering information over the internet. However, there are other factors that have fueled debate on the issue of whether or not the federal government has the power to enforce such statutes.
The Commerce Clause supposedly lays the groundwork for the federal government to enact laws to regulate the activities of business outside of state borders. These laws, including the Wire Act, are designed to combat racketeering and illegal activity. When it comes to a business such as online gambling, however, there is little evidence to support the theory that the government has a monopoly on law enforcement. This is because the state jurisdictions that oversee gaming are often located within or near the state’s borders, meaning that they may not be able to enforce the state’s gambling laws.
Currently, there are twenty states that allow residents to participate in some form of online gambling. These include casinos, lotteries, and fantasy sports. Other states, such as Hawaii and Idaho, are anti-gambling. Several federal laws have been proposed to regulate Internet gambling. In fact, the US Supreme Court has recently overturned a ban on sports betting.
The Department of Justice (DOJ) has taken a hard stance on the issue. Although there are no federal laws specifically designed to prosecute or punish unlawful online gambling, several federal criminal statutes have been implicated. Among these are the Wire Act and Section 1956. While the latter does not apply to online gambling, it creates the crimes of laundering, concealing, and evading taxes. Additionally, it creates several specific criminal offenses.
Interestingly, the first major online gambling venue for the general public was operated by the Liechtenstein International Lottery. It was modeled after the traditional lotteries that had been popular in the United States in the past. During the 1990s, it appeared that the advent of the internet would serve as an end run around government control. Unfortunately, the federal government’s legal authority over such activities has been challenged on constitutional grounds.
One of the most prominent arguments against the federal government’s ability to enforce gambling laws is based on the dormant Commerce Clause doctrine. If the federal government is prohibited from regulating gambling in non-state territories, it could be said that it is unconstitutional to allow players to use interstate facilities for unlawful activities.
Other arguments against the federal government’s ability to prosecute illegal online gambling are based on the Free Speech Clause of the First Amendment. Though these arguments have enjoyed a small degree of success, they do raise concerns about the free speech protections of the First Amendment.
Another important question is whether or not state law may preempt federal law. For instance, the Indian Gaming Regulatory Act, which governs gambling activity on Indian reservations, has been obstructed by the federal preemption doctrine.