Despite the fact that state laws are a significant part of the online gambling landscape, federal criminal statutes also play a major role in the enforcement of illegal Internet gambling. The Wire Act, the Travel Act, and the Illegal Gambling Business Act (IGBA) all have a distinctly criminal role to play in the case of illegal Internet gambling.
In addition to the federal criminal statutes, state officials have also expressed concerns that the internet can be used to bring illegal gambling into their jurisdictions. This has led to federal law reinforcing state law in many cases. For example, Illinois residents cannot wager on in-state college sports or non-sports events. The state also requires that sportsbooks be registered in person. However, the state’s registration requirement will sunset in 2022.
The federal law’s proscriptions on gambling businesses also include Racketeer Influenced and Corrupt Organizations (RICO) provisions. These prohibitions can thwart state enforcement policies. The IGBA provides that owners of illegal gambling businesses can be imprisoned for up to five years for operating an illegal gambling business. However, in some cases, due process objections can be raised. In these situations, the Commerce Clause and the First Amendment can be used to stymie federal prosecutions. However, these objections have not yielded much success.
Another way to combat federal prosecutions is to argue that the federal government has no authority under the Commerce Clause to impose restrictions on financial transactions within the United States. In some cases, the commercial nature of the gambling business may be sufficient to satisfy Commerce Clause concerns. However, in other cases, the interstate or foreign elements of the business can frustrate state enforcement policies.
Section 1956 of the Unlawful Internet Gambling Enforcement Act (UIGEA) provides that unlawful Internet gambling is illegal. This includes establishing, maintaining, and operating a gambling business. Specifically, this statute prohibits the “transmitting, receiving, or placing of bets,” as well as the “transmitting, receiving, or facilitating the transmission of wagers.” The statute also includes provisions for age verification and data security. In addition, the owner of an illegal gambling business must have gross revenue of at least $2,000 on a single day. The owner must also operate the gambling business for at least two consecutive days.
In the case of a law enforcement sting, Section 1956 also creates laundering for purposes of concealing, concealing to disguise, and laundering with the intent to promote an illicit activity. The statute also creates laundering for international purposes. In addition, it creates laundering to evade taxes.
In the case of the federal government, it has been argued that it may not use Section 1956 to prosecute illegal Internet gambling. It has also been argued that the prohibitions of Section 1956 violate the First Amendment. However, the arguments based on the Commerce Clause and the First Amendment have not yielded much success. For example, in the case of United States v. Mick, bartenders and managers of establishments with video poker machines were included in the prosecution’s case.