by I. Nelson Rose filed under Poker News [Originally appeared in the May 15, 2006 issue of Poker Player]
I. Nelson Rose
The question I get far more than any other is, "Is gambling on the Internet legal?" My favorite emails are from gamblers who have won big and now want to know if they will get arrested. I have a standard answer: There is no federal law against being merely a player. About half the states do have ancient laws on the books that sometimes make it a crime to make a bet. But you have a better chance of winning the World Poker Tour than of being arrested.
For gaming operators, the major federal statute is the Wire Act: anyone in the business of gambling cannot use a wire to send bets or information useful in the placing of bets across state boundaries.
The Department of Justice believes the Wire Act covers all forms of Internet gambling. But courts have ruled the prohibition is limited to bets on racing and sports events. Online casinos, lotteries and poker do not fall under this law.
This does not mean that overseas sports books are going to be prosecuted. Besides the practical problems of going after operators in foreign countries, there are legal barriers. Only a few recent extradition treaties, like the one the U.S. entered into with Hong Kong in 2000, include gambling. And the U.S. has Mutual Lateral Assistance Treaties or MLATs with other countries, which requires that before the U.S. can take criminal action against a foreign citizen who is physically in his own country, there must first be top government to government discussions.
Licensed bookies still have to be careful. I worked with a British bookmaker who had $734,578.82 in a bank account in New Jersey. Although I raised the MLAT issue, the court decided this was a civil forfeiture.
Few other federal crimes might apply. RICO, short for Racketeer Influenced and Corrupt Organizations, does includes gambling, but it is expressly limited to state felonies. Most state gambling crimes are misdemeanors.
The Travel Act makes it illegal to use "any facility" in interstate commerce to conduct an unlawful business, including violating the gambling laws of a state. The Internet may not be a "facility."
The Organized Crime Control Act of 1970 created a new federal crime, "illegal gambling business." Because Congress cannot outlaw purely in-state activities, it declared that large (5 people, $2,000 a day for 30 days) operations have an impact on interstate commerce.
These federal crimes are unique because they do not say the state illegal gambling has to be felonies.
Still, there are problems. Exactly what state crimes are being committed? State anti-gambling laws cannot reach into other states or nations unless they expressly say they are intended to cover activities outside the states' borders.
All the sovereignty issues kick in. Nevada does have a statute that clearly makes it a crime in Nevada for someone in a foreign country to take a bet online from someone in Nevada. But can Nevada do that, when the operator is a citizen of a foreign nation, licensed by his own country? What if it is the foreign country itself, accepting bets on its state lottery? And exactly how is the state of Nevada going to go about arresting someone in a foreign country, with gambling not covered by an extradition treaty?
Somehow I cannot see the governor sending the Nevada National Guard to make an arrest in England. Even if that were legal.
As the English would say, it's just not done.
I. Nelson Rose
The question I get far more than any other is, "Is gambling on the Internet legal?" My favorite emails are from gamblers who have won big and now want to know if they will get arrested. I have a standard answer: There is no federal law against being merely a player. About half the states do have ancient laws on the books that sometimes make it a crime to make a bet. But you have a better chance of winning the World Poker Tour than of being arrested.
For gaming operators, the major federal statute is the Wire Act: anyone in the business of gambling cannot use a wire to send bets or information useful in the placing of bets across state boundaries.
The Department of Justice believes the Wire Act covers all forms of Internet gambling. But courts have ruled the prohibition is limited to bets on racing and sports events. Online casinos, lotteries and poker do not fall under this law.
This does not mean that overseas sports books are going to be prosecuted. Besides the practical problems of going after operators in foreign countries, there are legal barriers. Only a few recent extradition treaties, like the one the U.S. entered into with Hong Kong in 2000, include gambling. And the U.S. has Mutual Lateral Assistance Treaties or MLATs with other countries, which requires that before the U.S. can take criminal action against a foreign citizen who is physically in his own country, there must first be top government to government discussions.
Licensed bookies still have to be careful. I worked with a British bookmaker who had $734,578.82 in a bank account in New Jersey. Although I raised the MLAT issue, the court decided this was a civil forfeiture.
Few other federal crimes might apply. RICO, short for Racketeer Influenced and Corrupt Organizations, does includes gambling, but it is expressly limited to state felonies. Most state gambling crimes are misdemeanors.
The Travel Act makes it illegal to use "any facility" in interstate commerce to conduct an unlawful business, including violating the gambling laws of a state. The Internet may not be a "facility."
The Organized Crime Control Act of 1970 created a new federal crime, "illegal gambling business." Because Congress cannot outlaw purely in-state activities, it declared that large (5 people, $2,000 a day for 30 days) operations have an impact on interstate commerce.
These federal crimes are unique because they do not say the state illegal gambling has to be felonies.
Still, there are problems. Exactly what state crimes are being committed? State anti-gambling laws cannot reach into other states or nations unless they expressly say they are intended to cover activities outside the states' borders.
All the sovereignty issues kick in. Nevada does have a statute that clearly makes it a crime in Nevada for someone in a foreign country to take a bet online from someone in Nevada. But can Nevada do that, when the operator is a citizen of a foreign nation, licensed by his own country? What if it is the foreign country itself, accepting bets on its state lottery? And exactly how is the state of Nevada going to go about arresting someone in a foreign country, with gambling not covered by an extradition treaty?
Somehow I cannot see the governor sending the Nevada National Guard to make an arrest in England. Even if that were legal.
As the English would say, it's just not done.