US Online Gambling Laws

Internet Gambling has long had its legal issues in America but if recent legal developments are any indications, thing may have a way of turning around in the near future thanks in part to the downwards state of the economy.

Gambling itself has been heavily regulated or banned throughout the U.S. over the years. Though internet gambling is only expressly banned in 6 out of 50 American states for many years the federal government seemed to be waging a personal war against the industry. In at the humble start of the internet gambling industry first Republican Senator Jon Kyl (in 1998 and 1999) and later Republican Senator Bob Goodlatte both try to pass their own versions of an Internet Gambling Prohibition Act which would expressly ban the creation or play of any such games and though they both failed to achieve the 2/3 majority needed to pass such a law they did manage to lay the groundwork for further attacks on the practice.

In 2006 the Unlawful Internet Gambling Enforcement Act (UIGEA) was passed and signed by former President George Bush. Attached to the Security and Accountability for Every Port Act it in many eyes spelled doom for U.S. internet gamblers. It basically made it illegal for any financial institution to transfer funds to internet gambling sites forcing many online casinos to show U.S. players the door. (A portion of sites have found ways around the law by working through third parties but all and all it has proven to be nothing but an aggravation for most U.S. players.)

In early 2007 the online gambling industry's most successful wire-transfer service NETeller was forced to pull out of the U.S. when founders were charged with money laundering for continuing to service American players. Early in that year the U.S. Department of Justice subpoenas foreign investment banks HSBC, Credit Suisse, Deutsche Bank and Dresdner Kleinwort for information concerning their online gambling investments as well. There was a glimmer of hope however when in April of that year Democrat Senator Barney Frank made his first attempt to overturn the UIGEA as well as present his new piece of legislation entitled the Internet Gambling Regulation and Enforcement Act but unfortunately for online gamblers he failed to gain enough support to pass either.

In 2008 the U.S. government took a blow when it was forced to pay reparations to Antigua-Barbuda in the amount of $21 million after courts found the U.S. guilty of interfering with their online gambling industry. These activities were ruled to be covered under the The Free Trade and Processing Zone Act of 1994 and the decision was upheld. As it stands to this day Antigua-Barbuda remains one of the online gambling industry's most popular licensing jurisdictions.

In May of this year Democrat Senator Barney Frank once again tried to pass legislation for a revised version of his bill the Internet Gambling Regulation, Consumer Protection, and Enforcement Act with the help of the now democrat majority driven senate. The bill is said to be designed to legalize and regulate online gambling in the U.S. through five year contracts with the U.S. treasury giving contracts only to those “casinos” which the government deems to be of a high moral caliber. Much to the excitement of many in the industry the bill has already gained the much needed 50 co-sponsors. Passage of the bill however has been put off for the time being.

Sen. Barney Frank has also appeared to be making some headway with his attempts to put off industry compliance to the UIGEA. Though this bill only has 32 supporters for the moment if passed it could mean that industry compliance would not be mandatory until December of 2010 which could provide plenty of time to pass further legislative measures against the bill.

The U.S. Supreme Court recently made a ruling in regards to internet gambling that could change the face of the struggle. Though it upheld the UIGEA in the People vs. Interactive Media Entertainment & Gaming Association it did make it known that the UIGEA does not illegalize gambling in anyway, only the transferring of funds from financial institutions. They noted that whether or not a bet would be considered illegal would be up to the law of the state from which the bettor initiates the bet. Since as already stated only 6 states expressly forbid the practice this opens up the rest of the country to regulate and normalize the industry as they see fit putting the control of the issue back on to the state.

Considering the practice was being…only a few short years ago this could spell good news for players. It is important to note that the overwhelming rise in support for the industry may be a major factor in some of the current legislation. This year an online petition of over 375,000 signatures showing support for the industry was presented to President Obama and a reported nearly 200,000 letters and emails were sent to Congress and the House of Representatives during National Poker Week. This is admittedly a giant leap from the advocacy shown last year by similar players.

With a little hope American players may find new legitimacy to their game play as soon as next year. Regular gambling practices appear to be making head way as well with laws in Illinois, Ohio and Colorado providing more options and availability for betting machines in the past year. Most of the states cite the need for more funds as their primary reason and with the national economy in the state that it is it’s easy to see why many American players have placed a measure of confidence on this being the time for major changes.