Internet Gambling Legality In The U.S

The legality of online gambling remains a bone of contention in the United States. The simple reason for this is that the government is still pretty much against it. Many countries outside the U.S have started regulating it. In this article I’m going to explore the nuts and bolts of cybergaming’s progress in the world’s greatest economy.

Why So Slow?

One of the reasons why Internet gambling is progressing at a snails pace in the U.S is because of the AGA (American Gaming Association). This organization is well-funded, a behemoth and makes no bones that it opposes cyber gaming in all its formats. Proponents of online gambling feel it’s each individuals right to do with their money as they please and don’t want to be prescribed by a totalitarian government what to do with it. Although the Constitution guarantees free speech and the Bill of Rights privacy and freedom of association, this is not always the case.

If someone wants to gamble online from the privacy of his own him, he is merely exercising his right to free speech, right to freedom and association. Some experts feel that the United States Congress can outlaw online gambling based on the following:

• Operating an online casino on or from U.S soil.
• Gamblers are not allowed to access online casinos. However, before the U.S government can accomplish this they must either scrap the Constitution and the Bill of Rights. In other words, a constitutional amendment must be passed, which is highly unlikely. The legislature has tried many attempts to curtail online gambling by imposing federal law enforcement. Problem with this legislation is that it clashes with the Constitution and Bill of Rights.

As it is there is no law against gambling over the Internet. Even if the government uses the Wire Act and the RICO act against gamblers who wager online, this is not going to work. Reason being it’s not illegal; the Wire Act and the Racketeer Influenced and Corrupt Organization Act were designed specifically to combat the mob-the likes of Al Capone and bootleggers during Prohibition. The various law enforcement agencies in conjunction with the U.S legislature, state and federal are out to get anyone who fires up their computers to place a bet online. Even if the players accessed the site accidentally this is considered a criminal act. Ironically neither the legislatures nor the law enforcement agencies can figure out what’s so illegal about it. Talk about a storm in a tea cup!

Powerful Lobby’s

Let’s start with the AGA. The aim of this organization is to keep money flowing into land-based casinos in the United States and not into the pockets of virtual casinos. The motivation is simple, greed! Can one blame them? To a certain extent no. Why? They’re simply looking after their own business interests. However, it fails miserably because it fails to protect the U.S gambling industry whether it’s income derived from land-based establishments or online casinos. This level of thinking also led the AGA and various casino lobbies to oppose tribal gaming on Indian reservations and riverboats in the early 1990s.

Also, the reason why ”Vegas Style Casinos” were never allowed to gain a foothold in California and Arizona, casino kingpins and lobbyists were afraid that it will take customers away from Las Vegas, Nevada and Atlantic City. They claimed that it will damage the economy of the state and even the country. At the end of the day this notion once again shriveled like a paper in a bonfire. The general casino lobby and the AGA realized their mistake and started pushing internet gambling initiatives. 

The general casino lobby and the casino gaming businesses soon realized that the potential yield of online gambling in the United States is just simply too big to ignore. Instead of spending millions of dollars on lobbying efforts against it they must just legalize it. The moment the U.S government okays online gambling, U.S-based casino companies will be reaping the rewards from it. It still remains to be seen if the U.S government will receive its share of this billion-dollar tax pie.

Moral Values

The so-called ”moral lobby” is one of the main reasons why online gambling has not been legalized in the United States. Even though the AGA and the gambling lobby has seen the light, this loosely structured group continues to propagate what they call the ”moral dangers” of gambling. They are made up of religious groups, self-styled populists who’s intention is to save the American public. Yet when it comes to raising money for their futile efforts then gambling is good enough. They use ”Bingo nights” and ”Vegas nights” as a platform to raise money for the church or for various charitable organizations. The moment they’ve raised the cash, all bets are off and gambling is a sin again.

They’re often described as intellectually challenged, yet they allow themselves to be lied to by zealots who only want to further their own personal agendas. Unfortunately, it’s these same zealots who have the government’s ear. The sooner the U.S government realizes that internet gambling is not going to go away the better. Also, legislators can’t make it illegal since it moves at a prodigious pace that the guys in congress can’t keep up. Plus, most of the legislators on whom the public has to rely on for the country’s national laws don’t know the difference between a server, browser or even a processor.

The United States is still plagued by congressional, national, legislative and pseudo-moralistic issues. By prohibiting online gambling, the United States is not going to protect its citizens. By blocking it they are losing billions of dollars worth of income that could benefit the country’s economy. Using a computer to place a wager online is not a social ill.

Offshore Operators Are Coining It

According to the latest research estimates, the majority of the online gamblers reside in the United States. It also explains why most offshore operators base their affiliate programs in the U.S to better serve their customers. Due to gambling laws, they are not licensed in the United States but in foreign based jurisdictions such as Alderney, Costa Rica, Caribbean, Curacao, Gibraltar, Isle of Man and Kahnawake Mowhawk Nation. In principal these offshore gambling operations and the countries they’re licensed in are reaping the rewards on the back of the U.S player. It’s a win-win situation. Why?

• The casino’s servers are based in the country where it’s licensed.
• The country’s economy benefits from the tax and license fees it charges the operators.

Why Internet Gambling Is A Grey Area U.S

The current state and federal laws in the United States that address the transportation of wagering information over telephone lines and wires (the Interstate Wire Act, the Travel Act, the Crime Control Act and the Interstate Transportation Act) were legislated in the pre-Internet era. Many proponents contended that they are outdated since they don’t take the Internet into account. Their applicability to online gambling is strongly questioned, especially when it comes to offshore operations, since these laws provide exceptions to gambling activities between two states or countries that allow gambling.

Legislative efforts initiated by U.S representative Bob Goodlatte and Senator Jon Kyle claim that existing laws don’t cover gambling over the Internet. Even if these laws render Internet gambling illegal, the question remains whether they apply to offshore gambling operations outside the United States. As it is no international agreement currently exists that regulates the Internet.

Presently, operators licensed in other jurisdictions are perfectly legal since foreign governments license them lawfully. Many offshore sites add a disclaimer to their player agreement, stating that players must make sure that gambling is legal in their jurisdictions. 

Internet Gambling Prohibition Act of 1999

This act no longer applies and has gone the way of the Dodo, it was drafted by Senator Kyle. It aims to ban online sports betting and casino games, it specifically refers to businesses without containing penalties for individual gamblers. The bill stipulates, operators of online gambling sites will be fined $20,000 or face imprisonment of up to four years. The bill bans Internet gambling with the intention of dealing with the following dangers:

• Try and stop minors from accessing the Internet.
• Families and communities can suffer as a result of addictive gambling behavior.
• Cause irreparable damage to businesses and the economy at large.
• In an unregulated field innocent gamblers might be exposed to fraud where unlicensed operators manipulate the house edge and odds.
• Pathological gamblers trying to pay of their wagering debts.

What The Experts Say?

I had the privilege of interviewing Professor Rachel Volberg, principal investigator of SEIGMA (Massachusetts Gaming Commission’s Social and Economic Impacts of Gambling in Massachusetts). ”Online gambling is the next ”new frontier”. Have you written any papers on it? To a certain extent the cyber gaming world is still very unregulated. If you ever decide to do a paper on this market which recommendation/s will you make?”

She is co-author of the article titled: “Defining the Online Gambler and Patterns of Behavior Integration”. In The United States, Professor Volberg is an expert witness before two federal legislative committees which considers the legalization of online poker. She pointed out that online gambling is a fluid and dynamic market and there’s still not enough research done to properly legalize and regulate it. She also pointed out that extensive research indicates that problem gambling rates are higher among online gamblers compared to their land-base counterparts. She said that the relationship between online gambling and problem gambling is still very much a grey area.

Professor Volberg argues that the regulatory framework proposed by the federal government is not very effective since it does not protect online gamblers from harm. In addition to responsible gaming policies (self-exclusion), she noted that play management systems and self-assessment tests plays a pivotal role to provide to individual players via a third-party organization rather than via the operators or the government.

I asked Professor Lia Nower, (Director of the Center of Gambling Studies at Rutgers University, School of Social Work) the following question: ”In the United States many Christians and other right wing activists oppose gambling in all its formats. Do you think gambling venues in the United States are growing at an alarming rate?”

”She said that gambling provides a convenient mechanism for channeling disposable income into subsidies for deficient state budgets in economically unstable times. How much non-disposable income is channeled is debatable. She’s of the opinion that gambling is neither “good” nor “bad.” It’s here to stay and continues to expand in new and innovative directions. The crux of the matter is to educate people to set healthy limits and remember that gambling is entertainment not an income-generating activity.”

Conclusion

Where to from here? The U.S Federal government is busy passing Internet gambling legislation which specifically focuses on poker, but it will also allow de-facto internet casino-styled games. If this passes, it will supersede the state legislation and finally allow all forms of Internet gambling to U.S residents. Hopefully online gambling will again be available to U.S players as it had been before the passage of the UIGEA (Unlawful Internet Gambling Enforcement Act) and the subsequent heavy-handed enforcement by the DoJ under the 1961 Wire Act.

In the meantime, some U.S states aren’t prepared to let billions of dollars of taxable revenue go uncontrolled while the Feds are arguing over semantics. No one in the U.S legislature is going to stem the tidal wave that is cyber gambling. Either the United States embraces it as a source of generating income, or it will lose out as it engulfs the rest of the world.

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Very Informative Article That Provides a Holistic View on the Topic: Is Online Gambling Legal in the U.S?