Despite the many benefits of online gambling, there are also some significant concerns. One of the biggest issues is that the laws surrounding gambling on the Internet have not been clearly established. The legality of online gambling has been contested on both constitutional and criminal grounds.
The Federal Wire Act, which prohibits illegal betting on sporting events, is one of the most common criminal statutes associated with illegal Internet gambling. However, there are other federal criminal statutes involved as well. These include the Unlawful Internet Gambling Enforcement Act (UIGEA) and the Racketeer Influenced and Corrupt Organizations (RICO) provisions. The UIGEA, for instance, makes it unlawful to transfer money to a gambling site.
The law also bars the use of financial instruments to place bets in violation of the law. The Racketeer Influenced and Corruption Act (RICO) prohibits the illegal conduct of gambling businesses. The RICO provisions may be particularly effective in thwarting illegal activity by players who use interstate facilities for unlawful purposes. The First Amendment’s guarantee of free speech also is a factor in the case. Several other federal criminal statutes are implicated by illegal Internet gambling, including the Wire Act and the Illegal Gambling Business Act.
The United States Department of Justice has attempted to estimate the size of the online gambling industry. According to the National Gambling Impact Study Commission, the industry generated around $2 billion in 2000. The agency estimates that the industry could grow to between $5 and $10 billion over the next ten years. Some experts have estimated that there are approximately six hundred to seven hundred sites currently operating. A number of publicly traded Internet gambling companies have stopped accepting American customers. This is due to the concerns about the size of the online gambling industry and the resulting conflicts with the government.
Another reason to avoid using the United States as a destination for online gambling is that there are many issues with the due process rights of consumers. For example, some banks may refuse to process Internet gambling transactions in certain countries. And some Internet casinos operate as fronts for fraudulent activities. In addition, some bank accounts may be blocked or restricted. If a bank blocks an account, the consumer will have to find an alternative way to fund the account.
Another possible issue involves the Commerce Clause. There are questions as to whether the Commerce Clause is applicable to gambling. Some state officials have expressed concerns that Internet-based gambling can bring illegal gambling into their jurisdictions. Others have questioned whether the commercial nature of the gambling business would satisfy the Commerce Clause.
There are also legal issues involving the Travel Act, which prohibits the offering of gambling games on interstate commerce. Some states have argued that enforcing the law in this manner is difficult, if not impossible, because the law does not clearly define what constitutes an “interstate transaction” for the purposes of the statute. Other opponents argue that attacks on the Commerce Clause have proven to be ineffective.