US Federal Gambling Laws Governing Online and Offline Gambling in America

Many people question the whether or not the US federal laws governing gambling in the United States have been justifiable. There is a general feeling amongst gamblers and online gambling operators alike that the government intends to control and curtail gambling in general within the US. Public opinion was initially not favorable towards events such as online poker's Black Friday, leaving a 'big brother is watching' environment. Now that the dust has finally settled from this event, it is a little clearer to the public that the government is not targeting players but rather attempting to curtail illegal financial practices that are sometimes associated with the online gambling industry. The UIGEA, Federal Wire Act and PASPA are all directed at gambling business operators and payment processors, and do not target players at all. The UIGEA has in fact resulted in a safer and more reliable regulated online casino environment as far as financial transactions are concerned. This law has driven operators and payment processors to improve their standards, policies and practices in order to comply with these regulations.

Is Online Casino Gambling Legal in the United States?

The answer to this question relies heavily on where you desire to engage in online casino gambling. New Jersey has established a state licensed online casino gambling industry that provides regulated online casino access to residents and visitors in the state. However, players who do not reside in NJ do not have any state licensed casino gambling options as of this writing. In order to access legal casino gambling, these players can visit legally licensed and regulated online gambling sites that are located outside of the United States. There are not any US federal laws which prohibit US players from visiting and enjoying casino gambling for real money at these types of regulated Internet casino destinations. Outside of New Jersey, it is not legal to own or operate any type of online casino gambling website within the US. Land based brick and mortar casino gambling legality is determined by each individual state.

What Is Internet Gambling?

Internet gambling -or iGambling- is interactive gambling that takes place on the internet through established website businesses. The industry spans a variety of gambling venues, including casino, poker, skills games, bingo, horse racing, sports betting and financials wagering, among others. Mobile gambling has also been integrated into the online gambling industry, and provides mobile access to these types of online gambling services. The applicability of US federal laws as they relate to online gambling largely depend on where you are considering placing your bets. There is very little state licensed online gambling opportunities, hence most legal online gambling opportunities lie with licensed and regulated online casinos that are based outside of the United States. US Federal laws do not apply to businesses that are not based within the US, which means that legitimately licensed gambling sites that are located offshore are able to legally offer their services to US players.

The Federal Wire Act And Related Laws

It is evident from the wording that the Federal Wire Act seeks to monitor wire communications in the sporting arena linked to betting, via telephone, e-mail or any other means of passing information through a regulated service. While there is a great deal of disagreement on the interpretation of the Act as to whether it applies to internet gambling or simply to communication exchanges for sports betting, the final say is really in the hands of those with the necessary authority of applying the law. The US DOJ has officially declared that the Federal Wire Act does indeed prohibit US based online sports betting activity. This means that it is illegal to own or operate an online sportsbook gambling business within the USA. The law does not however prohibit US residents from participating in legally sanctioned online sports betting that is located outside of the United States and that is operating legitimately within the industry. The Federal Wire Act does not apply to any type of casino gambling.

The Unlawful Internet Gambling Enforcement Act (UIGEA)

The Unlawful Internet Gambling Enforcement Act regulates banking transaction between banks and online gambling websites. Online financial transactions associated with wagering and betting were previously unsupervised prior to the passing of the UIGEA, something which led to the corruption of these money lines by money launderers and organized crime families who wished to operate under the radar. The UIGEA bill administers regulatory practices concerning how online gambling transactions can be processed. While this did cause some payment processors and gambling site operators to exit the US gambling market, things have stabilized significantly and there are multiple options for US players looking for viable and legal online payment methods for funding their online gambling accounts. The UIGEA required operators and payment processors to improve their services and raise their standards in several ways, which in turn fostered a safer financial environment within the industry.

PAPSA (Professional and Amateur Sports Protection Act)

The Professional and Amateur Sports Protection Act is the federal law which governs sports betting throughout the United States. This law effectively combines with the Federal Wire Act to ban US based sports betting both online and offline in most of the United States. There are four regions which are exempt from PASPA (but are not exempt from the Wire Act), including Nevada, Delaware, Montana and Oregon. The law allowed for a one year grace period upon its implementation in order to provide states with an opportunity to add sports betting to their existing gambling industries should they so desire. Everyone was surprised when New Jersey did not take advantage of this opportunity. PASPA does not apply to any type of casino gambling.

Crippling A Billion Dollar Industry Or Simply Regulating It

The question that will always be on everyone's lips is why the Department of Justice continues to ignore the fact that an expansion of the land based and online gambling industries in the US could dramatically impact the US national budget in a very positive way. It is expected and hoped that the interests sought to be protected by these laws will one day be balanced together with the various freedoms these laws are guilty of infringing upon in a free market environment. US states and residents pushing for the legalization of online gambling has increased the pressure on US legislators to reconsider their tough stance on gambling on the internet. In our opinion, it is only a matter of time until the applicable US federal laws are relaxed as is evidenced by the progress made in New Jersey, Nevada and Delaware.

Links Of Interest

Unlawful Internet Gambling Enforcement Act

Professional and Amateur Sports Protection Act

Federal Wire Act