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Is online gambling legal or illegal?

Is online gambling legal or illegal?

In the U.S., online gambling is federally illegal. In the states of Mississippi, Louisiana and Texas, online sports betting is illegal, while other types of online gambling are legal.

Federal and state laws for online gambling

Currently, internet and online gambling in the United States falls under the jurisdiction of both state and federal laws. In the past, all gambling laws have been a matter of state law, which vary considerably among the states. To make things clear, The Department of Justice has said all online gambling is illegal. This judgment is based on the Wire Act of 1961, which makes it illegal to bet online. However, the law is highly subject to interpretation and is nearly impossible to enforce. This is because nearly 80 other countries allow wagers online. So, people find ways to get around state and federal laws that make online gambling illegal.

How people get around online gambling laws

1. Taking bets on a server located outside state or US jurisdiction.

Although federal law recognizes the wide variations among state gaming laws and seeks to ensure that people cannot get around state statutes, people still circumvent the law. Internet gambling typically occurs through interstate or international means, with a website located in one state or country and the gambler in another. In fact, most internet gaming websites are located in other countries where it’s legal for them to operate. (The U.S. government maintains that it’s not legal for them to serve U.S. players, but that’s another story.) So when online gambling takes place within one state where it is legal, that state law officially predominates although the gambler may be breaking the law in his/her home state.

2. Online gamblers go under the radar

Although online gambling is illegal in the U.S., gamers rely on the lack of internet tracking tools by governments and also on the fact that they are the “little fish” in a big pong. State attorney generals generally go after internet gambling entities or institutions that facilitate gambling over the internet, and not the players themselves. This makes sense on a systemic level. Going after financial groups that process gambling transactions for big online poker companies or betting communities makes more of an impact than going after the users themselves. The idea is to stop gaming on the supply end, rather than affect the demand.

3. Legal loopholes for online gambling

The Supreme Court has not yet ruled on the meaning of the Federal Wire Act as it applies to online and internet gambling. However, the U.S. Fifth Circuit Court of Appeals with jursidiction in Mississippi, Louisiana and Texas, has ruled that the Wire Act applies only to sports betting and not other types of online gambling, thus setting a legal precedent in the industry.

Reference source: Special research help and thanks to Marilyn Lancelot
U.S. House of Representatives 2002 Interim Report on Internet Gambling

Photo credit: Samantha Decker

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4 Responses to “Is online gambling legal or illegal?
Honey Bunny
2:24 am March 12th, 2011

I see the Feds going after the big guys (the financial transaction people) and not the little guys as perhaps being motivated by efficiency. But shouldn’t they nab a few people who are gambling online A LOT just to make a point? Or just to play the cards evenly?

Bob Stultz from the other side
2:43 am August 18th, 2011

Online gambling is not illegal in the U.S. There are no federal laws forbidding online gambling. What is forbidden is the use of credit cards and US banks in facilitating the means by which deposits and withdrawals are made. It was part of a Port Securities Act slipped in at the last moment by unscrupulous Congressmen on the Republican side during the second Bush term.

The Federal government is losing TRILLIONS of dollars by not regulating online gambling and collecting revenue.
Ever wonder how much of the $10 Million First Place jackpot won at the WSOP main event goes to the IRS? And how about those who finished in the top 60? That’s quite a payday for the IRS and they never had to call a hand or face a bluff.
The real losers in all this are the citizens of this country who should have the freedom to gamble on something besides the Stock Market, the state lottery ,the nearest OTB or Racetrack, and whether or not Social Security will pay when they hit retirement age..

Jenneba Jalloh
7:22 pm September 19th, 2011

I recommend an interview with Sean Patrick Griffin who is a Penn State professor and the author of “Gaming the Game,” a book based on his research of the NBA referee scandals. Some key points Griffin mentions are about how the Justice Department handles illegal gambling, and how people can get around gambling laws.

Link: http://youtu.be/-o4FpnsHHO8

Compulsive gambling sucks
4:48 pm October 3rd, 2011

Those who addicted to online gambling should get the counseling they need. Laws will help in preventing someone from becoming a gambling addict. However, people can get around the laws just as well….

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