Is online gambling illegal in the US?
Question by RocketProof: Is online gambling illegal in the US?
Furthermore, is it illegal in the state of Florida?
Answer by Niketan
You shouldnt gamble in the first place…
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Yeah its illegal.No American based ISP address is allowed access to gambling websites and no US based banks are allowed process requests from gambling websites.
The gentleman didn’t ask whether it he should play or not play, but rather is it illegal in the USA.
The answer is YES. I refer to his article:
Misleading news stories abound both online and in print regarding the passage of the Unlawful Internet Gambling Enforcement Act. The completely incorrect interpretation states that the new bill essentially outlaws most forms of Internet gambling. The new bill absolutely does no such thing.
I have been analyzing legal issues for 25 years. I have gone to court thousands of times interpreting statutes and I have taught new lawyers the correct method by which a statute should be analyzed. For over 15 years I was part of a legal hotline where California attorneys would call me with a legal question. As this is my field of expertise, I am flabbergasted at the misinformation being perpetuated regarding the new bill.
The New Bill Does Not Make Online Poker Illegal
The new bill attempts to make it more difficult to get money into a site by forbidding US financial Institutions from funding the type of online gambling that the law has previously made illegal. The new bill does not make online gaming illegal where it was not illegal before. Let me say that again. The new bill does not make online gaming illegal. The bill merely speaks to the mechanism by which an online account is funded. I am going to spend some time in this article explaining the accuracy of my reasoning.
The Bill Constitutes Enforcement Legislation
First and most simplistically, the bill is called the Unlawful Internet Gambling Enforcement Act. The operative word is enforcement. It is a bill whose goal is to enforce laws that already exist.
The bill begins in section 5361 by discussing congressional findings. In that section the bill states that Internet gambling is funded by credit cards, etc. Section 5361(a)(4) states in relevant part:
“New mechanisms for enforcing gambling laws on the Internet are necessary because traditional … mechanisms are often inadequate…”
The Bill Does Not Change Existing Gaming Law
Next, section 5361(b) specifically states that nothing in this new law shall be construed as “altering, limiting, or expanding any Federal or State law… prohibiting, permitting or regulating gambling within the US.” In other words, the language of the statute confirms that this new law does not change existing gaming law. It does not speak to the legality of online gaming. It only applies to the mechanism of funding any Internet gaming that has already been deemed to be illegal.
Even Senator Frist said about the bill, “Although we can’t monitor every online gambler or regulate offshore gambling, we can police the financial institutions that disregard our laws.”
The Definition of Unlawful Internet Gambling
Of extreme importance in a statute is the definitional section that sets forth the parameters of a bill. The term “Unlawful Internet gambling” is given a definition. Section 5362(6) defines unlawful Internet gambling to mean placing or receiving a bet “where such bet or wager is unlawful under any applicable Federal or State law.” This raises the question regarding what type of online gambling is already illegal. That will be discussed below.
First, let’s move on to the meat of the bill. This is the section that states just what is prohibited. Section 5363 begins by saying that “No person engaged in the business of betting or wagering may knowingly accept…” electronic transfers, credit cards, etc. where a person is engaged in “unlawful Internet gambling.” This new law applies, if and only if, the gambling is already illegal under current law.
This brings us directly to the issue of what has been deemed illegal in the last 10 years since the first online casino opened its virtual doors. In a nutshell, sports betting is made illegal by the 1961 Wire Act, but poker is not.
Remember please, that the Attorney General’s office has not brought one lawsuit in 10 years against a poker site, even though it takes the position that online poker is prohibited by the Wire Act.
How the Law Works
In order to explain this discrepancy, I must digress with some rudimentary background about just how the law works. You probably remember from your high school civics class that the legislature makes laws that the judiciary construes. That means that our representatives in Congress draft the laws that judges then interpret.
Legislators are not wordsmiths, which is why there is a whole body of law called statutory construction. The first rule of statutory construction says that if the words of the statute are clear, the court may rely upon the common language. But if the language is not clear, the court must construe the language using a complicated legal process.
If a law is unclear, a depuy attorney general (the prosecutor) will take one position and often a defense attorney will take an opposing position. They go to court and a judge makes a determination. So when the Attorney General makes a public statement about what a law means, he might or might not be correct. It is ultimately the decision of a court.
When the Attorney General’s office takes the position that the Wire Act prohibits online poker, the court ultimately decided whether that opinion is accurate. Senator Frist incorrectly believes that all online gaming is illegal. He said: “or me as majority leader, the bottom line is simple: Internet gambling is illegal.”
However, in order for Internet poker to be illegal, there must be a specific statute that forbids such activity. For years I have posed the question: What statute prohibits online poker? And if it is illegal, why has there not been one lawsuit filed by the government against an owner of an online poker site?
Online Poker Is Not Illegal
Even though the Attorney General’s office has publicly taken the position that the 1961 Wire Act forbids online poker, in 10 years they have not put their money where their mouth is. Why? The judiciary (that is, the interpreting body) has already held that the 1961 Wire Act doesn’t speak to poker. It only applies to sports betting.
The case in point to which I refer is “In Re Mastercard International,” decided by District Court Judge Stanwood R. Duvall, Jr. in 2001. Among other issues, Judge Duval was faced with the question of whether the Wire Act applied to online gambling. The posture of the case was interesting because many deadbeat gamblers attempted to avoid online gambling debts they had incurred by alleging that the money they owed their credit card companies amounted to illegal gambling debts in violation of the Wire Act. As a matter of fact, there were so many similar suits filed by so many gamblers who did not want to pay their losses that the lower court consolidated 33 such similar charges.
Judge Duvall ruled that the Wire Act only prohibited wagering on sports events and he dismissed all 33 cases, noting that “Comparing the face of the Wire Act and the history surrounding its enactment with the recently proposed legislation, it becomes more certain that the Wire Act’s prohibition of gambling activities is restricted to the types of events enumerated in the statute, sporting events or contests.” In other words, online poker was not within the reach of the Wire Act’s prohibition. The District Court of Appeal agreed with Duvall’s ruling that the 1961 Wire Act does not apply to online poker.
I must mention one caveat. District courts are permitted to disagree with one another until the Supreme Court steps in. However, in this case Judge Duvall’s reasoning is so sound that it is close to irrefutable. There is a well established body of law regarding statutory construction and Judge Duvall followed the procedure to a tee.
Even Representative Goodlatte, who authored one of the online gaming bills in the House, acknowledges the limitations of the Wire Act. “We need to modernize the Wire Act, which is 45 years old, and does not apply to all forms of gambling,” says Goodlatte, adding, “It clearly applies to sports betting.”
Hysteria Is Completely Unfounded
Since this new law does not change what is legal or illegal, the current hysteria is completely unfounded. This legislation attempts to make it more difficult to get money into a site. Besides a few wrinkles that will be the topic of another article, that’s about it.
The statute is primarily no big deal since poker players stopped using credit cards a few years ago and found other ways to get their money into their favorite gaming sites.
I am not saying there won’t be lawsuits construing the meaning of the statute, but ultimately, the statute will only be deemed to affect the method by which online sites are funded.
Correct Analysis
There are a few very insightful people out there correctly analyzing this new legislation. For example, the president of the American Gaming Association, Frank Fahrenkopf is one such person. “This bill did not make anything legal or illegal,” says Fahrenkopf. “What it did was affect the mechanism by which Internet gambling takes place…and there is some question as to whether or not that will be effective.”
Bloomberg correctly reports that “Congress passed legislation that curbs financial payments from banks to offshore Internet casinos that are illegal under US law.”
Consumer Affairs seems to have gotten it right as they report that “The legislation does not criminalize the placing of bets by consumers. Rather than outlawing online gambling, the bill prohibits banks and credit card companies from making payments to online gaming websites… However, it’s unclear just what is covered by the bill. Internet sports betting is plainly outlawed but what about online poker and other popular games?”
I urge our readers to use care in accepting the opinions that one site gets from another site where no legal opinion is being presented. Please, read the statute yourselves. Read the words carefully and think about my analysis. The statute can be found by clicking here. The Unlawful Internet Gambling Enforcement section starts on page 213.
Jurisdiction
Another area I have written about extensively is the area of jurisdiction. Libraries of books have been written on the varied and complex meaning of jurisdiction. One of the simplest meanings of “jurisdiction” is legal power.
For example, a New York court doesn’t generally have jurisdiction (legal power) over a problem in Texas. A federal court doesn’t have jurisdiction over a violation of most state laws. A municipal judge doesn’t have jurisdiction over a felony trial.
Our government doesn’t have jurisdiction to make rules for a company that resides offshore. Our rules do not apply in other countries, as they have their own sets of rules.
This bill prohibits a gaming company from accepting payment that violates US gaming law. Besides the fact that no law makes online poker illegal, all the gaming sites are offshore and not subject to US laws.
A law that tries to control an offshore company is considered a law with no teeth, because it cannot be enforced. In the US, when a law is broken, a person is arrested. The government subpoenas records and a case moves forward. What it means not to have jurisdiction is that US laws do not apply offshore, nor can the US arrest a person in another country nor does our government have subpoena power to command an offshore company to turn over records. NETeller, an online money transfer service, is also an offshore company, not subject to US laws.
The Future
First of all, nothing is going to happen for 270 days. The Secretary and the Board of Governors of the Federal Reserve System have 270 days (after the bill is signed by the president) to come up with enforcement policies and procedures. Those procedures are directed to the behavior of banks and credit card companies. The procedures will be a nightmare.
Representatives of the financial services industry worry about a heavy regulatory burden being placed on banks. “The bill sets up banks to police a social issue,” said Laura Fisher, spokeswoman for the American Bankers Association. “It’s not something we want to encourage.”
The bill passed by Congress could allow regulators to exempt checks and money transfers because they are more difficult to track. “Analyzing 40 billion checks a year would be a largely manual process,” Fisher said.
If checks are not exempt, this would break our banks as it would be too costly to enforce. If checks are exempt, players could simply send a check to an online site. If checks are not within the purview of the law, what about e-checks?
The rules won’t even be figured out for nine months during which time, all the clever sites will have legally circumvented this new law by other legal procedures to fund the sites.
Some Online Sites Are Overreacting
I am surprised to see some online sites overreacting and posturing as if they will pull out of the market. Any company that just pulls out of the market deserves to lose a lot of money because it is receiving bad legal advice.
Offshore companies are not bound by US antigaming laws. But the most persuasive reason why offshore companies shouldn’t pull out is because the laws of online gaming have not changed. A few years ago when the government was beginning to subpoena news networks, offshore sites didn’t pull out because the movement by the government couldn’t affect them. Similarly, a law that directs itself to the mechanism used to enforce current laws, does not change the legal landscape.
Secondly can you engage in online poker in Florida?
The direct answer to the title question is: I don’t know. I’m not an attorney, a Justice Department official, nor a Supreme Court Justice. Nothing here should be seen as legal advice. What is here is a collection of court rulings and the best information on this subject that I have been able to find. Use it as you will. (Scroll down for information on the Unlawful Internet Gambling Enforcement Act of 2006.)
Many recent events have brought attention to the legal standing of online wagering in general. The first thing to understand is the skill game of poker is not the same as sports betting nor even “random chance” casino games like craps and roulette. It may be treated the same eventually, but it may not. Legal precedent for a lot of this simply does not exist. As of this writing, no person has been charged, let alone brought to trial, let alone convicted, let alone sentenced for playing online poker. But this does not guarantee one or more of these things will not happen in the future.
Online Poker Law According to Professor I. Nelson Rose, one of the world’s leading gambling law authorities: “no United States federal statute or regulation explicitly prohibits Internet gambling, either domestically or abroad.” Still, the US government has taken the position that certain things are illegal, and more importantly, certain things are worthy of prosecution. The Wire Act is the statute most often cited as making on-line gambling a federal offense. The operative subsection reads: “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.”
Rose goes on: “The first element of the Wire Act, says that the statute applies only to an individual involved in the ‘business of betting or wagering’ (not to a common player).”
The question of whether Internet sportsbetting is covered by the Wire Act seems to have been answered by the US Supreme Court’s refusal to review the conviction of Jay Cohen. Whether online casinos and online poker cardrooms are covered under the aimed-at-sportsbetting Wire Act is a different question. In February 2001, Judge Stanwood Duval of the US District Court in New Orleans ruled that it did not: “‘in plain language’ [the Wire Act] does not prohibit Internet gambling ‘on a game of chance.’” (Text of Judge Duval’s ruling, plus a news story, and Nelson Rose’s view.)
On November 21, 2002, the US Fifth Circuit Federal Appeals Court upheld Duval’s ruling, stating: “The district court concluded that the Wire Act concerns gambling on sporting events or contests… We agree with the district court’s statutory interpretation, its reading of the relevant case law, its summary of the relevant legislative history, and its conclusion.” (Text of Appeals Court ruling)
The Appeals Court further states: “Because we find neither the Wire Act nor the mail and wire fraud statutes may serve as predicates here, we need not consider the other federal statutes identified by the Plaintiffs… As the district court correctly explained, these sections may not serve as predicates here because the Defendants did not violate any applicable federal or state law.”
The Appeals Court specifically cites Duval’s statement: “[A] plain reading of the statutory language [of the Wire Act] clearly requires that the object of the gambling be a sporting event or contest.” This is very explicit language. You would have to jump through a lot of mental hoops to consider the playing of online poker to be “a sporting event”.
So, while the US Justice Department recently stated that the Wire Act covers casino games in addition to sports wagering, the Federal Appeals Court has directly ruled that that interpretation is not correct. This is not a small disagreement. It is a direct contradiction that could well spur the creation of new, 21st Century Federal legislation that actually deals with these issues. The UIGEA aims to inhibit the ability of citizens to gamble online. It however does not criminalize actual gambling online. But other bills may be introduced in the future with that goal.
Gambling regulation traditionally has been the responsibility of individual states. For instance, New York State Attorney General (now Governor) Eliot Spitzer reached a settlement with Citibank and PayPal regarding their involvement with online gaming. Some individual states have laws prohibiting any form of gambling, a different issue from whether it is legal on a Federal level.
A key distinction exists on a Federal level between bettors and those operators whose business is to benefit from the actual making of wagers: “engaged in the business of betting or wagering… 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…” As long as players stay in the “players” category and not in the in-the-business-of-wagering owners/bookies/runners/agents categories, a significant difference in status exists.
There are many ways to read the Wire Act, but only under the broadest interpretation could playing online poker be deemed illegal in terms of the Wire Act. In my opinion (which isn’t worth a hill of beans… only the US Supreme Court’s view will matter unless new legislation passes) playing online poker is not illegal for US citizens, in regards to Federal Law — unless it is a crime in an individual state, in which case the Federal Organized Crime Control Act of 1970 may apply. The Act makes it a federal crime for five or more persons to engage in a gambling business illegal under state law. Gambling online is definitely illegal in some states, but the Crime Control Act of 1970 does not apply to players. In addition, since the Crime Control Act does not refer to foreign commerce, it is hard to see how a case could be made that it applies to Internet gaming across multiple international borders.
In November 2004, the Caribbean island nation of Antigua and Barbuda won a World Trade Organization ruling that United States legislation criminalizing online betting violates global laws. In April 2005, the WTO Appellate Body affirmed the principal conclusions involved. (The resources link below will take you to a page with links to the WTO ruling, news stories about it, and further resources on online poker / online gambling and US law.)
Finally, in September 2006, the Congress passed legislation that makes it a crime for a bank or financial institution to transfer money to an online gambling site. The bill that was passed did not include language about the Wire Act that was in previous versions. The bill does not appear to address playing online in any way.
So, as long as online poker players do not participate in owning a share of the house rake; as long as players only wager against each other; as long as players participate in the skill game of poker and do not bet sports; as long as players obey state laws… draw your own conclusions.
Yes it is illigal but there are so many people do it they wont go after an individual.
Gambling online is not illegal. The part that is illegal is for banks to transfer funds direct to a gambling site. The new law only makes it more difficult to put funds in your account, but not illegal to play.
One can use either use epassport or a prepaid Visa to deposit funds.
Online poker is legal in the US, except where individual states have enacted laws otherwise (Washington has online poker playing as a felony, some others have it as a misdemeanor). In any case, the amount of evidence that a prosecutor would need to convict you (your name on the account, visual evidence that it was you playing the account in the state where it is illegal, etc) make it impossible to enforce those laws. So play away. Just don’t play on Absolute Poker.