Using the internet to engage in illegal gambling is a no-no under federal law. The Wire Act, the Illegal Gambling Business Act, and the Racketeer Influenced and Corrupt Organizations (RICO) provisions all prohibit such activities. However, these laws have been interpreted to have limited effect on the state level. That said, a number of state officials have expressed concern that the internet could become a nexus for illegal gambling. The federal government, by way of the Federal Communications Commission (FCC), has the authority to regulate telecommunications providers and common carriers. In addition, the Federal Trade Commission (FTC) has jurisdiction over the marketing and advertising of regulated products and services.
In addition to federal law, the state level has enacted its own laws pertaining to gambling. For example, in New York, an act of transmitting information from New York to a remote gambling site is considered gambling activity. There are also state laws that prohibit certain forms of sexual conduct at home. In some cases, state laws are just as good as federal law. Consequently, the state level has a harder time enforcing these laws. In the wake of the dotcom boom and subsequent bust, state officials have been pushing for more regulatory oversight of online gambling operators. While this may be a good idea, the federal government has been a little less than enthusiastic.
It’s worth noting that the federal government has not yet cracked the case regarding online gambling. However, the FCC may have a role to play, and a number of state officials have expressed a desire to enact more stringent laws. There is also the matter of the fact that the Internet is a global medium, and thus may have a wide reach. A recent study by the Government Accountability Office (GAO) has sparked some interest in the subject, particularly as it relates to the telecommunications industry. The GAO has commissioned a study on the topic, which has been published as Internet Gambling: Overview of Issues. In its ad-hoc review of the internet, the GAO found that the average Internet user visits about 50 websites a day. The GAO also noted that about 5% of the population is likely to be engaged in illegal gambling online. The GAO also found that the internet may represent a significant revenue source for the gambling industry, a finding that has been reinforced by a recent study that shows Internet gambling revenues are growing rapidly. The study also showed that online gambling is likely to be a boon to the gambling industry’s bottom line, as many companies are currently struggling to survive the recession.
The aforementioned CRS report RS21984 also highlights some of the more interesting aspects of the Internet gambling industry. The report includes a list of the most significant statutes and rules governing internet gambling, a bibliography, and a glossary of terms. The report is a good starting point for those interested in exploring the subject. Moreover, a number of state attorneys general have also weighed in on the topic, including California Attorney General Kamala Harris, who wrote an article in the Los Angeles Times titled “Illegal Gambling: An Unconventional Threat to States’ Constitutional Rights”. Nevertheless, as of yet, there have been no definitive solutions found to the problem.