In many countries around the world, including the United Kingdom and several other nations in and around the Caribbean Sea, online gambling is legal and the governments are regulating it.
In the United States, however, the Federal Appeals Courts has ruled that the Federal Wire Act prohibits the electronic transmission of information for sports betting across state lines. There is no general law prohibiting gambling of any other kind.
There are states which have specific laws against online gambling of any kind. Operating an online gaming operation without proper licensing would also be illegal, and no states are currently granting online gaming licenses.
The government of the island of Antigua and Barbuda, which licenses Internet gambling entities in their country, filed a complaint with the World Trade Organization about the U.S. government's actions to impede online gaming. The Caribbean country won the preliminary ruling but the WTO's appeals body has partially reversed that favorable ruling in April, 2005. The appeals decision effectively allowed state laws prohibiting gambling in Louisiana, Massachusetts, South Dakota and Utah.
However, the appeals panel also ruled that the U.S. may be violating global trade rules because its laws regulating horse-racing bets were not equally applied to foreign and domestic online betting companies. The panel also held that certain online gambling restrictions imposed under US federal laws were inconsistent with the trade body's GATS services agreement.
Deputy Assistant Attorney General John G. Malcolm testified in March 2003, before the Senate Banking Committee, with regard to the special problems presented by online gambling. A major concern of the United States Department of Justice is the thorny subject of online money laundering. The anonymous nature of the Internet and the use of encryption make it very difficult, and even impossible, to trace online money laundering transactions.
In February 2005 the North Dakota House of Representatives passed a bill to legalize and regulate online poker and online poker cardroom operators in that State. Testifying before the State Senate, the CEO of one online cardroom, Paradise Poker, pledged to relocate to the state if the bill became law. However, the measure was defeated by the State Senate in March 2005. Jim Kasper, the Representative who sponsored the bill, is planning a 2006 ballot initiative on the subject.
Google and Yahoo!, the two largest search engines on the internet, announced that they were removing online gambling advertising from their sites in April 2004. The move followed a United States Department of Justice announcement that, in what some say is a contradiction of the Appeals Court ruling, the Wire Act relating to telephone betting applies to all forms of Internet gambling, and that advertising of such gambling "may" be deemed as aiding and abetting.
Critics of the Justice Department's move say that it has no legal basis for pressuring companies to remove advertisements and that the advertisements are protected by the First Amendment.
In April 2005, Yahoo! commenced advertising for "play money" online gaming. |