USA Online Gambling Laws

USA online gambling laws are often quite nebulous. For many, it’s difficult to discern the legality of many aspects of online gambling in the United States. Is it legal to gamble online as a resident of the US? Is it legal to provide an online gambling service that is based in the US? Is it legal to collect winnings earned at an online gambling site while living in the US? ¬†These questions and more plague the minds of online gamblers all the time. In order to examine current USA online gambling laws, it is useful to take a brief look at the history of online gambling legislation in the US.

The Federal Wire Act

In 1961, the Federal Wire Act (aka the Interstate Wire Act) was passed as federal law in the United States. Obviously, online gambling did not exist at this time. The law was instead passed to regulate and restrict the use of any telecommunication device, such as a telephone, to participate in gambling and wagering.

The language in the bill is quite nebulous, and many have argued about whether the act pertains to sports betting, casino-style gambling, poker or all of the above. In addition, it is unclear whether the bill is intended to penalize the gamblers themselves, or rather the companies and institutions providing the gambling services.

In 2002, the US Fifth Circuit Court of Appeals determined that the Federal Wire Act pertains exclusively to sports betting, and that other types of online gambling such as casino gaming and online poker are spared from the law. The Supreme Court, however, has not issued a final ruling on the matter. For the time being, the simple answer to the question of USA online gambling laws is this: online gambling, with the exclusion of sports betting, is legal in the United States of America.

USA Online Gambling Laws: Individual States

Although online gambling is legal in the US from a federal standpoint, there are certain states within the US that have specific laws forbidding certain types, or all types, of online gambling. Before you begin an online casino account, it’s wise to check with your state’s current online gambling laws. Because these laws are subject to change at any time, it’s advisable to seek the most current information possible. Additionally, the penalties for violating state gambling laws can vary wildly.

Operating an Online Gambling Company in the US

If you’ve browsed around several online casinos and paid attention to their country of residence, you may have noticed that not a single online casino operates from within the United States. Although this may seem surprising, the reason for this is quite simple. In order to operate an online gambling web site, you must first obtain the proper licensing.

Currently, there isn’t a single granting licenses for online gambling. Because of this, it is technically impossible from a legal standpoint to own and operate an online casino within the US. As per usual, USA online gambling laws are rather gray in this regard, and there isn’t a specific law forbidding the practice of operating an online casino in the United States.

The Current State of USA Online Gambling Laws

In recent years, there have been several attempts made to create meaningful, specific USA online gambling laws with clear language. The reasoning behind this is simple. Currently, online gambling laws in the US are so nebulous and poorly implemented that there is very little enforcement when it comes to the laws themselves.

For example, at a brick-and-mortar casino, it is virtually impossible for an underage individual to enter and play for real money. This limits the liability of the casinos and protects them from cheating scams like Blackjack card counting or collusion schemes at table games. ¬†However, and despite the fact that online casinos do not technically allow underage individuals to play, there is nothing stopping a minor from signing up for an online casino and wagering real cash. In addition, it’s currently all to easy for compulsive gamblers, hackers, and identity thieves to participate in real money play at online gambling establishments.

Representative Barney Frank, a democrat from Massachusetts, introduced a bill known as the Internet Gambling Regulation, Consumer Protection, and Regulation Act. The bill aimed to regulate online gambling and prevent underage gambling, fraud, identity theft, and money laundering. Although supporters of the bill and neutral witnesses determined that the bill could be effective, it fizzled out until reintroduction in May of 2009.

According to the bill, each state within the US would be able to create their own online gambling laws. The bill is actually intended to protect the rights of online gamblers, as well as their right to continue to gamble online into the future. As it stands, the Federal Wire Act is subject to interpretation and could firmly include types of online gambling other than sports betting at any point in the future.

The most significant problem with current USA online gambling laws is their ambiguity. Many individuals believe that these laws will become clearer, for better or worse, within the next few years. The widespread ubiquity of the Internet has increased the visibility of online gambling, and there is a clear need for more specific regulation. This holds especially true when you consider that online gambling is a multi-billion dollar industry.