Online Gambling – The First Amendment and the Commerce Clause

Online Gambling

During the late 1990s, online gambling became popular. In 1998, more than eight hundred gambling websites existed. According to a Frost & Sullivan report, revenues from online gambling had reached $830 million.

In 1999, US senators introduced the Internet Gambling Prohibition Act. The Act would have prohibited online gambling for U.S. citizens. However, Congress rejected the bill.

While the bill was defeated, it is important to remember that online gambling is legal in certain states. States can regulate gambling, and even ban it. Some of the most common forms of gambling are casinos, online poker, horse racing betting, and pool-selling.

Several federal criminal statutes are implicated by illegal Internet gambling. These statutes include the Wire Act, the Illegal Gambling Business Act, the Travel Act, and the Racketeer Influenced and Corrupt Organizations (RICO) Act.

The federal law prohibits any person from accepting or receiving any financial instrument for any illegal Internet bet. The Department of Justice also announced that the Wire Act will apply to all forms of Internet gambling. It also prohibits unlawful gambling on sporting events, contests, and interstate commerce.

The First Amendment is often cited to challenge the government’s ability to enforce federal gambling laws. Some state officials have expressed concerns that the Internet could be used to bring illegal gambling into their jurisdictions. However, attacks based on the First Amendment have had little success.

There have also been attacks based on the Commerce Clause. In United States v. K23 Group Financial Services, the government charged an Internet poker company with violating the Unlawful Internet Gambling Enforcement Act (UIGEA). The court found that a business operating online had gross revenues of $2,000. The company was charged with money laundering and violating the 18 U.S.C. 1955 statute.

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