Several countries around the world, including most European Union member states, permit online gambling. However, some provinces in Canada and the Caribbean Sea do not. Online gambling is defined as playing casino games, sports betting, and virtual poker online. There are also mobile gambling opportunities, such as using a wireless Internet connection to place bets or play games of skill.
Online gambling gained popularity in the late 1990s. The first online poker room was established in 1998. A Frost & Sullivan report estimated online gambling revenues to be $830 million in 1998. In 1999, multiplayer online gambling was introduced. In the United States, online gambling is currently legal in some states.
Despite these favorable rulings, the question of how online gambling can be lawfully regulated remains a nebulous issue. There are no federal laws currently in place regulating the industry. Most states operate on a state-by-state basis, with each state having its own authority to regulate gambling. State officials have expressed concerns that online gambling could entice illegal activity into their jurisdictions. There are also questions about whether the Commerce Clause gives the government the right to regulate activities on the internet.
While there is no federal statute specifically regulating the industry, there are several federal criminal statutes that can be implicated in illegal internet gambling. One example is the Unlawful Internet Gambling Enforcement Act, also known as the UIGEA. This statute imposes penalties on anyone who transmits, receives, or assists in the transmission of bets online. A separate statute, the Gambling Act, provides penalties for illegal gambling.
The US Department of Justice has also taken steps to enforce federal gambling laws. In November 2004, the Attorney General sent a letter to PayPal warning that it could be subject to prosecution if it accepted financial instruments from people who engaged in illegal Internet gambling. The Wire Act, meanwhile, also applies to online gambling. This statute is also applicable to platforms that rely exclusively on cryptocurrencies for payment, such as Bitcoin. Other laws that are ambiguous include the Public Gaming Act of 1867 and the Bombay Wager Act of Maharashtra.
The UIGEA has been a contested statute and has faced constitutional challenges. The statute is viewed as a violation of the First Amendment’s free speech guarantee. However, it appears that the commercial nature of the gambling business may satisfy some of the concerns about the Commerce Clause. This is particularly true in cases where interstate or foreign elements complicate state enforcement policies.
A bill called the Internet Gambling Regulation, Consumer Protection, and Enforcement Act (HR 2046) was introduced by House of Representatives member Barney Frank in April 2007. This bill would modify the UIGEA and require internet gambling facilities to be licensed by the director of the Financial Crimes Enforcement Network. In addition, it would allow the Federal Communications Commission to discontinue the leasing of facilities.
The most popular form of online gambling is sports betting. There are betting exchanges and horse racing betting markets on the internet. Sports books also offer wagering on sports games.