Online Gambling & Federal Law
Internet gambling has gained a lot of attention with rogue offshore Internet website owners flaunting their international freedom, and college students bragging about making thousands of dollars from their dorm rooms at night. However, the federal government has been trying to define and assert control over the matter. The problem is in the definitions. Financial law has become so technical, it is not nimble enough to catch each nuance of how Internet/electronic wagering grows.
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General Gambling Law
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The general laws regarding gambling in the U.S. are a combination of federal and state legislation both limiting and regulating gaming. The federal umbrella that provides the general parameters of law is framed within federal control of interstate commerce. This vague authority allows the federal government vast control over protecting the means and traffic of business between U.S. states and territories.
Unlike federal law, state laws are much more specific and, as long as they don't conflict with federal laws or regulations, state legislation can outright ban or restrict gambling much more than national oversight. Further, each state has the freedom to be unique or different than its neighbors, resulting in local regulations that vary by state. This can include types of gambling allowed, minimum age to play and splitting of revenue collected.
Internet Gambling
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As of May 2010, electronic gambling over the Internet was a fairly new phenomenon using websites and computer programs to generate gambling environments similar to real gambling. The gaming is for real dollars, frequently funded by players using credit cards or electronic transfer deposits.
With the ambiguity in the current federal law on specific Internet gambling, a player betting on an Internet gambling site is technically not in violation of federal law. However, that doesn't mean that state laws are silent on the matter. Many states specifically prohibit gambling of any form, which is applicable to Internet gaming, regardless of where the website is housed in terms of a server. The state laws can either punish the player, the website owner or both. However, enforcement is difficult since many of the major websites tend to operate offshore and outside U.S. national borders. -
Current Activity
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The scope of what federal can be applicable to is huge. By some estimates, according ABC News, PokerStars.net alone generates a half billion dollars in revenue a year. With a potential range of 3 to 15 million players accessing websites on the Internet, the amount of money movement is tremendous just in online poker.
Recent Legislation
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As of June 1, 2010 the Unlawful Internet Gambling Enforcement Act is expected to begin implementation. This Act was originally passed in 2006 by Congress, attempting to stop utilization of any U.S. banking tool to move funds into Internet gambling. That included credit cards, transfers, checks or any form of U.S. payment.
The Question of Legalization and Taxes
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Some political positions would rather see Internet gambling regulated so that revenues can be taxed. One estimate from the Joint Committee on Taxation in Congress pegs $42 billion in new taxes possible over ten years if applied to Internet gaming. However, much of this estimate and larger ones from other federal proponents depends on all the states cooperating with a federal regulation model, which they don't have to agree with.
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References
Resources
- Photo Credit gambling image by MateiA from Fotolia.com
