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...gamblingman - legal guide to online gambling
What Gambling Man says about
the legal side of online gaming;
The legalities of gambling online...
In most jurisdictions around the world, the law is still a
long way behind the technology and issues applying to online
gambling. As a result, the question of whether or not it is
legal to gambling online can rarely be answered definitively.
It is probably fair to say also, that government attitudes
to online gambling vary significantly, from whole hearted
support, to strong opposition, to indifference. What is clear
though, is that there is very little by way of legislation
drafted specifically to deal with online gambling, whether
positive or negative, and the application of existing laws
is proving problematic.
The position in the US...
US State Gambling Laws
Up until reasonably recently, regulation of gambling in the
United States was left exclusively to the State Legislatures,
who determined the legality or otherwise of gambling activities
within their jurisdiction. Some states have legalized many
forms of gambling, while others have legislated to make it
illegal to participate in any form of gambling other then
the stats lottery. Nevada is the obvious example of a State
which has embraced gambling as a legal form of commerce, while
Utah is a noted for its strong anti-gambling stance, and laws
deeming all forms of gambling within its jurisdiction illegal.
US State gambling laws were all drafted long before the advent
of the Internet, and they do not have provisions dealing specifically
with online gambling.
US Federal Gambling Laws
Specific online gambling legislation
So far, US Government attempts to pass legislation dealing
specifically with online gambling have been unsuccessful.
Separate Bills sponsored by Sen. Kyle and Rep. Goodlatte,
which both attempted to ban online gambling both failed to
attract the required 2/3 majority Senate vote required to
become law. And while it is likely that there will be more
attempts to pass legislation dealing specifically with online
gambling (to regulate or ban), until such legislation is passed
existing federal legislation serves as the only guide on this
issue.
Existing Federal Laws
Federal laws relating to gambling were passed by Congress
more recently (than State laws) to deal with inconsistencies
in State based gambling laws, especially as they applied to
interstate commerce. Although passed recently, US federal
laws applying gambling activities were all drafted before
the advent of Internet gambling. There are a number of current
federal laws that have indirect application to online gambling.
These are discussed below.
1. The Wire Wager Act
The Wire Wager Act is the statute that may be applied most
directly to restrict the use of the Internet as to gamble.
It prohibits the use of a wire transmission facility to foster
a gambling pursuit. It provides, in part:
"Whoever being engaged in the business
of betting or wagering knowingly uses a wire communication
facility for the transmission in interstate or foreign commerce
of bets or wagers or information assisting in the placing
of bets or wagers on any sporting event or contest, or for
the transmission of a wire communication which entitles the
recipient to receive money or credit as a result of bets or
wagers, or for information assisting in the placing of bets
or wagers, shall be fined under this title or imprisoned not
more than two years, or both."
Exactly how this Act applies to Internet wagering is hotly
debated. One school of thought in legal circles is that the
Wire Act broadly covers any interstate use of the Internet
that is related to placing or receiving bets. A second school
of thought is that the Wire Wager Act cannot be applied to
online gambling generally for two reasons. First, the words
"wire communication facility" only apply to transmissions
that use wires and the proliferation of wireless Internet
access would therefore fall outside the scope of the Act.
Second, reference to "bets or wagers on any sporting
event or contest" implies the Act might only apply to
wagering upon sporting events (not card games or other games
based upon chance).
The above issues aside, it is clear that whether or not the
Wire Wager Act can be applied to Internet gambling, it can
only be applied to those "being engaged in the business
of betting or wagering." It cannot apply against the
online gambler or Internet service providers.
2. The Travel Act, The Interstate Transportation of Wagering
Paraphernalia Act, The Professional and Amateur Sports Protection
Act, The Federal Aiding and Abetting Statute
The above 4 Statutes all contain provisions that could be
construed to apply to internet gambling. However, as for the
Wire Wager Act, the appropriateness of their application is
strongly argued, and even if they could be adjudged to apply
to Internet gambling, their application would be restricted
to operators only, and not players or peripheries (ISP's etc).
Given these Statutes questionable validity with regard to
their application to online gambling, and also the fact that
US prosecutors will always have a difficult time coercing
defendants to appear in the United States to stand trial,
actual prosecutions in the US in this area are extremely rare.
Hopefully legislation on point will soon be enacted to clear
up what is currently a very gray legal area.
WTO Ruling
Just to confuse things further, while US law makers look to
various avenues to outlaw online gambling, the small Caribbean
nation of Antigua Barbuda has recently won a World Trade Organization
ruling, finding that U.S. legislation criminalizing online
betting violates WTO commercial services accords.
The effect that the ruling will have on any future attempts
by Congress to outlaw online gambling is unclear.
Other Countries...
The UK
The following summary of the current legal situation with
respect to Internet gambling in the UK is extracted from a
report to the Home Secretary issued by The Gaming Board of
Great Britain. For the full paper, click
here.
"British gambling legislation - apart from that setting
up the National Lottery - is all over a quarter of a century
old and was enacted at a time when the power of the Internet
could not have been imagined. Unsurprisingly therefore, that
legislation impinges on Internet gambling in ways which were
unintended and are erratic. In broad terms, the position,
as the Board understands it, is as follows.
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Betting Bookmakers have for many years been able to
accept telephone bets from clients with credit accounts.
There is therefore nothing to prevent them accepting
such bets by e-mail. Likewise, football pools have always
been able to accept entries by post and can therefore
also use e-mail. The reason why bookmakers have been
choosing offshore locations for their telephone and
Internet betting operations is because taxes are lower
and not because such operations would be illegal here.
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As for casinos, bingo and gaming machines, such gaming
can only take place on licensed and registered premises
and, in particular, the persons taking part in the gaming
must be on the premises at the time when the gaming
takes place. Hence no licence could be obtained by an
operator who wished to offer such Internet gaming here
and to set up such a site would be illegal. The Board
has stated that it would seek to take action against
anyone who did so.
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The position with lotteries is more complicated. Tickets
for lotteries can be sold almost anywhere other than
in the street. They can be sold for instance at people's
homes including over the telephone. But they cannot
be sold by means of a machine. The Board's view is that
a lottery run entirely by computer via the Internet
amounts to selling tickets by means of a machine and
it has refused to authorise such lotteries. However,
the Board has been approached by lottery managing companies
with proposals to use the Internet to run lotteries
in much the same way as someone might use the telephone.
With these, the Internet is simply used as a means of
communication by which one person offers another a lottery
ticket and that second person agrees to buy. Two such
proposals have been approved.
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There is nothing in the legislation which makes it
illegal, or seeks to prevent, British residents gambling
on the Internet from their own homes. The position in
respect of public places such as Internet cafes is less
clear and more difficult.
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Overseas gambling operations are subject
to restrictions on the extent to which they can advertise
here. In the case of casino and similar gaming, this does
not amount to a total ban but prevents advertisements
which, to paraphrase, invite the public to subscribe money
or to apply for information about facilities for subscribing
money. Some Internet casino operators have begun to advertise
within these constraints. Added complications arise because
the whole question of what constitutes an advertisement
on the Internet, and then what can or cannot be done if
it is, remains far from clear. "
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Although the above summary represents the
law as it currently stands in the UK, it should be noted that
moves are afoot to introduce legislation dealing specifically
with online gambling.
In March 2002, a British Government reply to an independent
review of Britain's restrictive gambling laws by Sir Alan
Budd, a former chief economic adviser to the Treasury, said
that the prohibition of online gambling to British consumers
would be an entirely unrealistic objective, even if it were
thought to be desirable.
"Instead, we will as the review body has proposed, move
towards legalising the provision of the full range of online
gambling services by operators located in the UK, including
gaming," it said.
We eagerly await the release of this new legislation.
Australia
Australia is one of the few countries in the world to have
already enacted legislation aimed specifically at online gambling.
On 28 June 2000 the Interactive Gambling Bill became law.
The legislation:
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Makes it illegal for any interactive gambling service
provider based outside Australia (including online casinos,
sportsbooks, race betting sites, lotteries etc) to offer
its product to Australian residents;
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Makes it illegal for any Australian based online casino
to offer its product to:
a) Australian residents, and
b) residents of any country around the world that chooses
to opt in on the Australian Government's ban;
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Makes it legal for Australian licensed online sports
books, race betting and lottery sites to offer their
product to Australian and international customers;
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Makes the advertising of any interactive
gambling service on any medium within Australia (including
'Australian' web sites) illegal;
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The legislation is clearly aimed at the casino/sportsbook
operators and not players. The Australian Government is now
faced with the very onerous task of trying to enforce this
legislation
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