Using the internet to engage in illegal gambling is a violation of seven federal criminal statutes. The laws in question are the Wire Act, the Federal Information Technology Rules, the Illegal Gambling Business Act, the Racketeer Influenced and Corrupt Organizations Act, the Travel Act, and the Anti-Kickback Statute. The Wire Act prohibits illegal gambling on sporting events and contests. In addition, the federal government has seized money from an online gambling company, Discovery Communications, after it was found that the company had violated the law by accepting ads from an illegal gambling site.
In 1998, the Frost & Sullivan report found that US online gambling revenue had exceeded $830 million. At that time, there were fifteen gambling websites. There were also casinos and sports books offering horse racing betting markets. These facilities were regulated by the Kahnawake Gaming Commission, which issued gaming licences to many of these venues. The Kahnawake Gaming Commission also attempted to maintain fair operations for its licensed online gambling organizations.
While gambling is generally a matter of state law, a federal law was introduced in the late 1990s to regulate Internet gambling. The Internet Gambling Prohibition Act was introduced in the US Senate and would have banned online gambling in the United States. The bill was opposed by states and individual members of Congress. However, it was ultimately declared unconstitutional in the United States Supreme Court. The Justice Department later announced that it would apply the Wire Act to all forms of Internet gambling.
While gambling is not protected by the First Amendment, the fact that it is a commercial activity seems to satisfy some of the Commerce Clause concerns raised by some lawmakers. It has also been argued that the commercial nature of the gambling industry serves as a safeguard against violations of the First Amendment. Nevertheless, state officials have expressed concern that the Internet could be used to bring illegal gambling into their jurisdictions.
In 2007, Congress introduced HR 2046, which would change the federal law that prohibits online gambling. The bill would require internet gambling facilities to be licensed by the director of the Financial Crimes Enforcement Network. The bill also would allow the Justice Department to take legal action against players who use facilities in other states to engage in unlawful activities. The bill is also referred to as the Internet Gambling Regulation, Consumer Protection, and Enforcement Act. The law would also prohibit financial transaction providers from accepting financial instruments from illegal Internet bets. The bill would also require the Federal Communications Commission to cease leasing facilities to gambling companies.
Since the bill was introduced, several similar bills have been introduced in the House. However, the bills have all failed to gain the necessary legislative support. There has also been little success in attacks based on the First Amendment or the Commerce Clause.
The United States Department of Justice has also announced that it will take legal action against the owners of Seals with Clubs, the first online gambling platform that offered betting on bitcoin. The owner was found guilty of running an illegal gambling operation, and he was sentenced to two years probation and a $25,000 fine. In addition, federal prosecutors warned PayPal that it could also face prosecution for its activities.