Whether in the form of internet sports betting or casino gambling, illegal gambling on the web has become a topic of interest to law enforcement and regulatory officials alike. In fact, state officials have expressed apprehension about the internet as a conduit for illegal gambling to enter their jurisdictions. On the flip side, the federal government has been less than receptive to enforcing its gambling laws.
The best way to combat this is to develop a solid state enforcement policy. Unfortunately, such a policy can be a challenge, especially in light of the fact that the internet provides an unrestricted venue for unlawful gambling. The law is rife with exceptions, and the state is in the unique position of having to determine whether to impose civil or criminal penalties against those engaged in illegal gambling on the internet.
One of the most notable federal statutes to come out of this particular era is the Wire Act. This statute, which has long been on most people’s mind, has a number of interesting provisions. One is the so-called “Rackteer-Influenced and Corrupt Organizations (RICO)” provisions, which prohibits a number of illegal gambling business activities, such as offering and soliciting bets and wagers, and accepting financial instruments from such bettors. The other is the “State-Sanctioned Offenses” (SSO) provision, which authorizes federal law enforcement officials to use their powers and resources to seize assets of entities engaged in a variety of illicit activities, including illegal Internet gambling.
The most interesting aspect of this law is the fact that it has the potential to disrupt online gambling in ways that are not only a threat to consumers, but also to the legal and financial industries. One example is the case of PayPal, which was recently advised by federal prosecutors that it could be prosecuted for violating the UIGEA. The company was also warned that it might be ineligible for payment of taxes owed by its gambling customers. This is an unfortunate situation, especially considering the fact that PayPal is one of the largest payment processors in the world. The company also received a visit from the U.S. marshals, who seized approximately $3.2 million from the company.
Other statutes to keep an eye out for are the Gambling Devices Transportation Act (GDTA), the Johnson Act, and the Travel Act. These statutes have a number of notable features, but not everyone is aware of their significance. The GTA, for example, allows federal marshals to seize property used in a number of illegal gambling activities, including online gambling. It also allows the federal government to pursue the prosecution of gambling kingpins.
The law has also been criticized on constitutional grounds. In particular, the question of whether or not the Commerce Clause can be used to trump state vs. federal gambling laws has been posed in several court cases. Some of the questions that have been raised include whether the government can use the Commerce Clause to impose civil or criminal penalties against those who engage in illegal Internet gambling.