Using the internet to make gambling transactions is illegal. This is primarily a matter of state law, but federal law reinforces state law in some cases. The Illegal Gambling Business Act (IGBA) is a federal statute that prohibits a number of business activities associated with illegal gambling. For example, a business may be barred from accepting financial instruments from illegal Internet bets. Another is the Wire Act, which prohibits gambling on sporting events.
The Travel Act (TCA) is another federal statute that prohibits gambling in interstate commerce. This act also provides the United States Attorney General with the power to prevent online gambling from occurring within the United States. Another statute is the Gambling Devices Transportation Act (GDTA), also known as the Johnson Act. A third is the Racketeer Influenced and Corrupt Organizations (RICO) Act, which prohibits the business of illegal gambling. In addition, the Federal Communications Commission has the power to impose certain restrictions on the use of facilities. It may also discontinue providing such facilities or renting them out. In the United States, the Federal Communications Commission also has the authority to regulate telephone service providers.
The UIGEA is another federal statute that regulates the illegal gambling industry. In addition to prohibiting gambling operations that receive financial instruments in the United States, it requires that financial institutions report transactions made in violation of the statute. This statute has also been challenged on constitutional grounds. Although there are not any significant cases on the matter, the Commerce Clause has been challenged and the Due Process Clause has been questioned. However, these arguments have not been successful.
The United States Supreme Court has not weighed in on the question of whether or not the federal government can regulate internet gambling. In addition, some state officials have expressed concern that the Internet may be used to bring illegal gambling into their jurisdictions. Other issues have been raised on the basis of the Commerce Clause and the First Amendment. However, the commercial nature of the gambling industry seems to satisfy the Commerce Clause, while the First Amendment question is more ambiguous.
Other areas of interest are determining whether the federal government can regulate remote gaming, the Internet gaming industry, and the legality of betting on sporting events. While these areas are complicated, the best defense is to limit state prosecutions to activities that have the most constitutional value. Some cases have shown that gambling on the Internet does not necessarily have to be the legal or moral equivalent of gambling in a state’s jurisdiction. However, these questions are difficult to answer because of the interstate and foreign nature of the Internet. These are issues that will need to be explored in the future.
Finally, the CRS Report RS21984: Internet Gambling: Overview of Issues, published in December 2002, provides a good overview of the issues surrounding Internet gambling. It includes citations to state laws, as well as the text of the various statutes that have been cited. It also offers an abridged version.