The Constitutional Issues Related to Online Gambling


Gambling is a game of chance involving wagering something of value for a chance to win another thing of value. It can include sports betting, lotteries, and casinos. These activities may involve risk or reward, and are conducted in person or online.

In the United States, legalized gambling can be found in several states. However, illegal gambling is illegal under the Wire Act, the Travel Act, and the Illegal Gambling Business Act. Using the Internet to engage in illegal gambling is also illegal under these statutes. Some states are concerned that the internet could be used to illegally bring illegal gambling into their jurisdictions.

The federal government has taken many actions to curb illegal gambling. For example, it has charged two companies with running an Internet poker operation that violated the Money Laundering Laws. One company, PayPal, was warned that it could be indicted for participating in the illegal gambling business. Another company, Discovery Communications, was charged with money laundering for accepting advertisements for an online gaming company called Tropical Paradise.

While the Commerce Clause and the First Amendment have been attacked for their lack of constitutional protection, these attacks have failed to produce results. For example, the Commerce Clause has been cited in the United States v. Nicolaou case. That case involved five employees, including the bartenders and managers of a video poker machine establishment. They had gross revenues of $2,000.

Under the Federal Wire Act, the act of transmitting information from one state to another through the Internet constitutes gambling activity in that state. The Wire Act also prohibits the placing of bets on sporting events. An exception to the Wire Act is the private social bet, which is an organized gambling activity that does not involve a commercial interest.

Other notable cases include the first online sportsbook, FanDuel. Another, DraftKings, was among the early companies that offered sports betting to the general public. Online sportsbooks are only available in limited proximity to connected physical sportsbooks. There are 14 sportsbooks in the Old Dominion.

Section 1956 of the Unlawful Internet Gambling Enforcement Act (UIGEA) raises constitutional issues when it comes to regulating Internet gambling. In order to comply with the law, the owner or operator of an illegal gambling business must operate a gambling business for at least two days and have gross revenue of at least two thousand dollars during the same period. If a violation is committed, the owner or operator of the business can be fined, imprisoned, or both.

The UIGEA also contains factors that can help to narrow down low-level gambling cases to the most likely ones. These factors include whether the activity involves the transmission of money or financial instruments, whether the transaction is conducted using an internet service provider, and the nature of the activity.

A related report, CRS Report RS22749, is available in an abridged form. The report contains citations to several statutes, including the Unlawful Internet Gambling Enforcement Act, the Travel Act, and the Wire Act.