The
Legalities of gambling online
¡¡
In most
jurisdictions around the world, the law is still a long way behind the
technology and issues applying to online gambling. As a result, the
question of whether or not it is legal to gambling online can rarely be answered
definitively. It is probably fair to say also, that government attitudes
to online gambling vary significantly, from whole hearted support, to strong
opposition, to indifference. What is clear though, is that there is very
little by way of legislation drafted specifically to deal with online gambling,
whether positive or negative, and the application of existing laws is proving
problematic.
The position
in the US
US State
Gambling Laws
Up until
reasonably recently, regulation of gambling in the United States was left
exclusively to the State Legislatures, who determined the legality or otherwise
of gambling activities within their jurisdiction. Some states have
legalized many forms of gambling, while others have legislated to make it
illegal to participate in any form of gambling other then the stats lottery.
Nevada is the obvious example of a State which has embraced gambling as a legal
form of commerce, while Utah is a noted for its strong anti-gambling stance, and
laws deeming all forms of gambling within its jurisdiction illegal.
US State gambling
laws were all drafted long before the advent of the Internet, and they do not
have provisions dealing specifically with online gambling.
US Federal
Gambling Laws
Specific
online gambling legislation
So far, US
Government attempts to pass legislation dealing specifically with online
gambling have been unsuccessful. Separate Bills sponsored by Sen. Kyle and
Rep. Goodlatte, which both attempted to ban online gambling both failed to
attract the required 2/3 majority Senate vote required to become law. And
while it is likely that there will be more attempts to pass legislation dealing
specifically with online gambling (to regulate or ban), until such legislation
is passed existing federal legislation serves as the only guide on this issue.
Existing
Federal Laws
Federal laws
relating to gambling were passed by Congress more recently (than State laws) to
deal with inconsistencies in State based gambling laws, especially as they
applied to interstate commerce. Although passed recently, US federal laws
applying gambling activities were all drafted before the advent of Internet
gambling. There are a number of current federal laws that have indirect
application to online gambling. These are discussed below.
1. The Wire Wager
Act
The Wire Wager Act is the statute that may be applied most directly to restrict
the use of the Internet as to gamble. It prohibits the use of a wire
transmission facility to foster a gambling pursuit. It provides, in part:
"Whoever being engaged in the business of betting or wagering knowingly
uses a wire communication facility for the transmission in interstate or foreign
commerce of bets or wagers or information assisting in the placing of bets or
wagers on any sporting event or contest, or for the transmission of a wire
communication which entitles the recipient to receive money or credit as a
result of bets or wagers, or for information assisting in the placing of bets or
wagers, shall be fined under this title or imprisoned not more than two years,
or both."
Exactly how this
Act applies to Internet wagering is hotly debated. One school of thought
in legal circles is that the Wire Act broadly covers any interstate use of the
Internet that is related to placing or receiving bets. A second school of
thought is that the Wire Wager Act cannot be applied to online gambling
generally for two reasons. First, the words "wire communication
facility" only apply to transmissions that use wires and the proliferation
of wireless Internet access would therefore fall outside the scope of the Act.
Second, reference to "bets or wagers on any sporting event or contest"
implies the Act might only apply to wagering upon sporting events (not card
games or other games based upon chance).
The above issues
aside, it is clear that whether or not the Wire Wager Act can be applied to
Internet gambling, it can only be applied to those "being engaged in the
business of betting or wagering." It cannot apply against the online
gambler or Internet service providers.
2. The Travel Act, The Interstate Transportation of Wagering Paraphernalia Act,
The Professional and Amateur Sports Protection Act, The Federal Aiding and
Abetting Statute
The above 4
Statutes all contain provisions that could be construed to apply to internet
gambling. However, as for the Wire Wager Act, the appropriateness of their
application is strongly argued, and even if they could be adjudged to apply to
Internet gambling, their application would be restricted to operators only, and
not players or peripheries (ISP's etc).
Given these
Statutes questionable validity with regard to their application to online
gambling, and also the fact that US prosecutors will always have a difficult
time coercing defendants to appear in the United States to stand trial, actual
prosecutions in the US in this area are extremely rare.
Hopefully
legislation on point will soon be enacted to clear up what is currently a very
gray legal area.
Other
Countries
The UK
The following
summary of the current legal situation with respect to Internet gambling in the
UK is extracted from a report to the Home Secretary issued by The Gaming Board
of Great Britain. For the full paper, click
here .
"British
gambling legislation - apart from that setting up the National Lottery - is all
over a quarter of a century old and was enacted at a time when the power of the
Internet could not have been imagined. Unsurprisingly therefore, that
legislation impinges on Internet gambling in ways which were unintended and are
erratic. In broad terms, the position, as the Board understands it, is as
follows.
-
Betting
Bookmakers have for many years been able to accept telephone bets from
clients with credit accounts. There is therefore nothing to prevent them
accepting such bets by e-mail. Likewise, football pools have always been
able to accept entries by post and can therefore also use e-mail. The reason
why bookmakers have been choosing offshore locations for their telephone and
Internet betting operations is because taxes are lower and not because such
operations would be illegal here.
As for casinos,
bingo and gaming machines, such gaming can only take place on licensed and
registered premises and, in particular, the persons taking part in the gaming
must be on the premises at the time when the gaming takes place. Hence no
licence could be obtained by an operator who wished to offer such Internet
gaming here and to set up such a site would be illegal. The Board has stated
that it would seek to take action against anyone who did so.
-
The position
with lotteries is more complicated. Tickets for lotteries can be sold almost
anywhere other than in the street. They can be sold for instance at
people¡¯s homes including over the telephone. But they cannot be sold by
means of a machine. The Board¡¯s view is that a lottery run entirely by
computer via the Internet amounts to selling tickets by means of a machine
and it has refused to authorise such lotteries. However, the Board has been
approached by lottery managing companies with proposals to use the Internet
to run lotteries in much the same way as someone might use the telephone.
With these, the Internet is simply used as a means of communication by which
one person offers another a lottery ticket and that second person agrees to
buy. Two such proposals have been approved.
-
There is
nothing in the legislation which makes it illegal, or seeks to prevent,
British residents gambling on the Internet from their own homes. The
position in respect of public places such as Internet cafes is less clear
and more difficult.
-
Overseas
gambling operations are subject to restrictions on the extent to which they
can advertise here. In the case of casino and similar gaming, this does not
amount to a total ban but prevents advertisements which, to paraphrase,
invite the public to subscribe money or to apply for information about
facilities for subscribing money. Some Internet casino operators have begun
to advertise within these constraints. Added complications arise because the
whole question of what constitutes an advertisement on the Internet, and
then what can or cannot be done if it is, remains far from clear. "
Although the
above summary represents the law as it currently stands in the UK, it should be
noted that moves are afoot to introduce legislation dealing specifically with
online gambling.
In March 2002, a
British Government reply to an independent review of Britain's restrictive
gambling laws by Sir Alan Budd, a former chief economic adviser to the Treasury,
said that the prohibition of online gambling to British consumers would be an
entirely unrealistic objective, even if it were thought to be desirable.
"Instead, we
will as the review body has proposed, move towards legalising the provision of
the full range of online gambling services by operators located in the UK,
including gaming," it said.
We eagerly await
the release of this new legislation.
Australia
Australia is one
of the few countries in the world to have already enacted legislation aimed
specifically at online gambling.
On 28 June 2000
the Interactive Gambling Bill became law.
The legislation:
-
Makes it illegal
for any interactive gambling service provider based outside Australia
(including online casinos, sportsbooks, race betting sites, lotteries etc)
to offer its product to Australian residents;
-
Makes it illegal
for any Australian based online casino to offer its product to:
a) Australian residents, and
b) residents of any country around the world that chooses to opt in on the
Australian Government¡¯s ban;
-
Makes it legal
for Australian licensed online sports books, race betting and lottery sites
to offer their product to Australian and international customers;
-
Makes the
advertising of any interactive gambling service on any medium within
Australia (including ¡®Australian¡¯ web sites) illegal;
The legislation
is clearly aimed at the casino/sportsbook operators and not players. The
Australian Government is now faced with the very onerous task of trying to
enforce this legislation.
For a PDF version
of the full legislation click
here.
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