Audit, Compliance and Risk Blog

Clarity in Online Gambling Regulation? Don’t Bet On It

Posted by Eric Robinson on Tue, Mar 05, 2019

Online gamblingWith casinos and other forms of legal gambling proliferating in the United States, you would think that there would be emerging clarity in the laws and regulations regarding gambling online. You’d be wrong. Instead, the law governs Internet gambling in the United States that is still a confusing morass of state and federal laws. Making this even more problematic is that both the federal government and state governments have prosecuted Internet gambling companies, making navigation of the confusing and contradictory rules a dire journey in which a misstep can have major consequences.

There are four major federal laws which regulate online gambling. The federal Wire Act, passed in 1961 as an antiracketeering measure, severely limits transmitting wagering information in foreign or interstate commerce, which would presumably include the Internet. The Indian Gaming Regulatory Act was passed in 1988, to allow Native American tribes to operate casino-type gambling operations on their reservations, with permission of the state in which they are located. The Professional and Amateur Sports Protection Act bars most states from allowing any gambling, including in casinos, on competitive sporting events, or to sponsor, operate, advertise, or promote such gambling. And the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) bars the use of credit cards and other financial instruments for online gambling.

But each of these laws has numerous qualifications and exceptions that actually allow certain forms of online gaming. While the Wire Act places severe limitations on online gambling, it does allow it in states that have specifically allowed it, and in 2011, the Justice Department released a memo allowing online state lottery ticket sales, and apparently allowing interstate non-sports gambling. The Indian Gaming Regulatory Act allows traditional tribal games and betting games such as bingo and poker without state permission. And the Professional and Amateur Sports Protection Act exempts pre-existing sports gambling in Nevada casinos and in Delaware, Montana and Oregon,  and New Jersey was given the opportunity to allow such gambling within one year.

Recent developments have confused this even more. In May 2018, the U.S. Supreme Court’s decision in Murphy v. NCAA held that the Professional and Amateur Sports Protection Act’s bar on states allowing sports gambling is unconstitutional. And in January 2019, the Justice Department issued a memo reversing its prior position in the 2011 memo, and concluded that the Wire Act actually did in January 2019 the department released a new memo reversing this position, concluding that the Act does indeed ban non-sports gambling online.

These changes are described in more detail in the latest updates to Internet Law: The Complete Guide. And while the long-term impacts of these developments are unclear, the Guide will help readers understand the changes.

Specialty Technical Publishers (STP) provides a variety of single-law and multi-law services, intended to facilitate clients’ understanding of and compliance with requirements. 

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Tags: Business & Legal, Internet