Offshore wagering is a huge business. Millions of dollars are spent on poker, horse racing, slot machines and sports. The legality of the online gaming industry is questionable and confusing to some people. Recent legislation has tried to clear the air and send a strong message to operators and players alike. The ability for the United States government to regulate transactions in cyberspace is limited. With the popularity of the online offshore accounts, the political cost of enforcement is a high stakes gamble,
Wager Wire Act
Under the Wire Wager Act, it is illegal to use any electronic wire method to transmit bets to places were gambling is illegal. The courts have included the Internet in this decision made in 1961 before the Internet was in existence. If a person in the United States is in a place were betting is illegal, the company offering the service is violating the law. Nevertheless, the U.S. would be reaching beyond its legal authority to prosecute someone in another country. A person who won money from an offshore account could potentially have that money confiscated and forfeited if it were proved to be won by illegal means.
Safe Port Act
The Safe Port Act passed in 2006 contained a clause regulating how offshore bets are funded. This law made it illegal under the attached Unlawful Internet Gambling Enforcement Act, for Americans to use credit cards, electronic funds transfers or checks to finance Internet gambling activity. This act focused on the funding method and not on the betting activity itself. It required banks to block the transactions as well as the sites for refuse to accept the transactions from U.S. banks.
"The bill is interesting, in that it does not make gambling on the Internet illegal. It makes funding your wager on the Internet illegal. The financial transaction is what is criminalized here, not necessarily the state of play," said Keith Whyte, executive director of the National Council of Problem Gambling, shortly after the decision was made public.
Healthy Bet Reform
Many U.S. politicians are working on plans to tap into the huge amount of revenue that is lost overseas to the offshore gambling sites. A PricewaterhouseCoopers analysis, shows that in the next decade up to $62.7 billion could be collected in taxes on regulated Internet gambling.
Senator Ron Wyden (D-OR) is proposing to use these funds to solve health care reform. Democrat Barney Frank and Democrat Jim McDermott have also been actively promoting bills since 2007 to tax the offshore betting funds.
World Trade Organization
Two countries, Antigua and Barbuda defended their interest in filing a complaint against the United States with the World Trade Organization (WTO). They claimed that the ban on Internet gambling violated their rights. The WTO agreed. This decision was upheld in March, 2007. The WTO found it confusing that the U.S. allows betting on horses but not on other kinds of sports or games. The U.S. conceded that it was in violation of the rules of the WTO.
The bottom line is that you may place bets on the Internet in places where gambling is legal on such events as horse races. If betting on sports or playing poker for cash is illegal in your state, you are in violation of the law to place a bet on the Internet. The way you get the money to the company is also a concern. Banks are prohibited from sending money to offshore gambling companies for wagers that are prohibited in the United States. Enforcement of these laws is virtually non-existent and economic and social pressures are making the option of taxing the revenue more and more attractive to politicians.
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