Online gambling is the use of the Internet to place bets on sporting events and other games of chance. These activities may be legal or illegal, depending on the state in which the player lives. Several nations in the Caribbean Sea, however, allow such gambling. In the United States, it is illegal to conduct online gambling unless you reside in a state where it is legal.
In the early 1990s, there were only a few online gambling sites. The number of websites grew to around 150 in 1997. In 1998, revenues from online gambling topped $830 million. The next year, more than half of all gambling revenue came from online casinos. By 2008, revenues reached $21 billion. The online gambling market is expected to grow to more than 9.5 billion dollars in 2021.
As a result of the popularity of the online gambling industry, legislation was drafted in the late 1990s to regulate it. In 1999, the Internet Gambling Prohibition Act was introduced in the Senate. The bill would have prohibited most forms of online gambling, with the exception of sports betting, which is legal in most US states. The law has faced constitutional challenges, mainly because of concerns about its enforcement.
A federal criminal case has been filed against the owners of three major online poker companies. The charges involve money laundering and violation of the Unlawful Internet Gambling Enforcement Act. The owner of Seals with Clubs, a bitcoin poker site, was sentenced to two years probation and a $25,000 fine. The government alleges that the owner of the company, K23 Group Financial Services, used the company to facilitate money laundering, which is a criminal offense.
Several bills aimed at regulating online gambling have been introduced in Congress over the past few years. One bill, HR 2046, would require Internet gambling facilities to be licensed by the director of the Financial Crimes Enforcement Network. Another, authored by Rep. Barney Frank, would amend the Unlawful Internet Gambling Enforcement Act, or UIGEA.
The issue of whether online gambling should be legal is one that is still debated. The Senate has not yet passed any legislation on the matter, and many states are taking a different approach. In the meantime, many state officials are worried that the Internet could be used to transport illegal gambling into their jurisdictions.
In response to this concern, the Justice Department announced that all forms of Internet gambling are now subject to the Wire Act. According to the Wire Act, the United States does not recognize cryptocurrencies as currency, and therefore online gambling operators should not be advertising cryptocurrencies. This prompted PayPal to warn its customers that it may face legal prosecution.
In addition to the UIGEA, other federal statutes are implicated by illegal Internet gambling. Section 1956, for example, creates several crimes related to laundering. This includes laundering with intent to promote illicit activity, to disguise, and to evade taxes. It also includes receiving and placing bets.