Traditionally, U.S. gambling regulations have been reserved for state governments as opposed to ruling at the federal level. A prime example would be the Wire Act. As we all know however, federal law often finds a way to overthrow state legislation. The DOJ (Department of Justice) has expressed on a number of occasions that the act prohibits all variations of internet gambling in the United States.
Enter the Wire Act
Enacted in 1961, the Wire Act was passed to prevent bookmakers from taking sports wagers via telephone. At one time, accusations of violations were typically accompanied by a range of other charges such as conspiracy, money laundering and violations of the Illegal Gambling Business Act. The one key point stressed by gambling proponents is that the Wire Act is enforced towards the gambling operator. There is no language within the law that says it is illegal for the consumer to place a wager.
Because there was simply no way to have predicted online gaming in the early 1960s, from a practical aspect, there is no way the Wire Act could apply to casino gaming over the internet. In recent times, the DOJ has been quite busy tangled up in legal disputes in pursuit of conviction for gambling operators, years before Congress even got involved. In 2000, the DOJ garnered a successful conviction of Jay Cohen, World Sports Exchange president, for violating the Wire Act.
The So-Called Internet Gambling Ban
The UIGEA (Unlawful Internet Gambling Enforcement Act) was enacted in the fall of 2006, a law which states that it is illegal for any financial institution to facilitate monetary transactions between offshore gambling operators and U.S. consumers. However, this legislation has been controversial from the start as it does not state that it is illegal for those consumers to gamble on internet sites. The introduction of the UIGEA has led the online gambling industry’s biggest players away from the U.S. market, even though many private entities continue to service it. These companies are banking that the UIGEA will not be able to block payments, giving them the ammunition to continue operating in jurisdictions in which U.S. authorities have no power.
No-Online Gambling States
Several states, including Illinois, Indiana, Louisiana, Michigan, Nevada, Oregon, South Dakota and Washington have passed laws that prohibit all unauthorized forms of online gambling. Both Hawaii and Utah have also passed similar legislation. Lawmakers in Nevada passed a law that permits intrastate internet gambling but have taken very few steps to introduce a viable system. The argument has always been that implementing such a system would require advanced technologies that have the ability to accurately verify a player’s age and location, a system the DOJ claims would violate federal legislation.
In April of 2008, federal regulators and representatives from the financial industry went before Congress and testified that attempts to enforce the UIGEA would lead to substantial regulatory problems. Resulting from this testimony was a new legislation introduced by representatives Barney Frank and Ron Paul, supporters of the legalization and regulation of online gambling. This proposed legislation would prohibit the DOJ, Federal Treasury and Reserve from enforcing any regulations associated with the UIGEA. To the current day, no official regulations for UIGEA enforcement have been adopted, leaving many still to wonder: what does this law really mean?
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