In 1999, the Internet Gambling Prohibition Act was introduced to the US Senate as a bill to ban online gambling in the U.S. In December 2002, the Government Accountability Office (GAO) published an overview of online gambling issues. The report noted that the online gambling industry is expected to grow by 11% annually, but that the market is also susceptible to money laundering, cyber attacks, and account takeovers.
Since that time, many state governments have expressed concerns that the internet could be used to bring illegal gambling into their jurisdictions. While most states have enacted laws to prohibit online gambling, several have been hesitant to make the move. That is because the presence of an interstate element in a law has prevented its enforcement.
Among the many statutes and rules that govern online gambling, the Travel Act and the Wire Act are two important pieces of legislation that can be utilized to halt and prosecute a gambling operation. These statutes apply to Internet casinos as well as online sports betting. If you are a gambler, or run an online casino, it is best to familiarize yourself with the law and its implications.
Another piece of legislation that may help your company stay out of trouble is the UIGEA, or the Unlawful Internet Gambling Enforcement Act. This act was created to combat money laundering on the Internet. It aims to ensure that the operators of online casinos do not allow money launderers to use their applications, and it also regulates commercial activity.
Other than the UIGEA, there are a number of federal statutes that can be leveraged against illegal gambling operations on the Internet. Those statutes include the Racketeer Influenced and Corrupt Organizations Act (RICO), the Illegal Gambling Business Act, and the Wire Act. Each of these statutes contains specific factors that can be used to identify low-level gambling cases.
The First Amendment may provide a certain measure of protection for speech, but it does not protect the privacy of individuals engaged in gambling. Online casinos, for instance, serve only individuals, not corporations. Therefore, they must meet the same legal standards as other businesses. As more states legalize online gambling, the regulatory environment will become more complex.
For example, the FBI has found an increase in online gambling fraud and money laundering. Aside from the obvious threat of account takeovers and cyberattacks, companies must also confirm the source of funds to keep their customers from falling prey to fraudsters. Even if a customer places themselves on a self-exclusion list, hackers may try to break into their accounts, stealing their information and using it for malicious purposes. To minimize the risks associated with these types of activities, a company should conduct regular external audits and screening for self-exclusion lists.
The CRS Report RS21984 is another example of a legislative document that can be used to inform your decision making process. This document includes a summary of the aforementioned statutes, as well as citations to state gambling regulations and laws.