Does the Federal Government Have the Power to Regulate Online Gambling?
Several federal criminal statutes have been implicated by illegal Internet gambling. One of these is the Wire Act, which prohibits the illegal gambling of sporting events. Another is the Illegal Gambling Business Act, which imposes penalties for the illegal operation of any gambling business. And then there is the Racketeer Influenced and Corrupt Organizations (RICO) provision, which prohibits the unlawful gambling of any business.
There is also a provision in the Travel Act, which prohibits the illegal gambling of any business on interstate commerce. However, this statute has been attacked by the First Amendment on several grounds, including that it violates the rights of citizens to privacy, free speech and due process. Some states have expressed concerns that Internet gambling could bring illegal gambling into their jurisdictions. Other states, such as California, have passed legislation to enact laws against illegal Internet gambling. Other states, such as Missouri, have passed indictments against Internet gamblers.
These cases have raised questions about the extent of the federal government’s authority to enforce federal laws. In some cases, the commercial nature of a gambling business has appeared to satisfy the concerns about the Commerce Clause. Nevertheless, due process arguments do not necessarily survive in cases where financial transactions in the United States are involved. Other challenges have focused on the First Amendment, and while they have not been successful, they have been raised. The question of whether a federal government has a legal right to regulate online gambling is a complicated one.
In the United States, gambling includes the sale of chances or odds, the maintenance of slot machines or dice tables, the conduct of pool-selling, and the conduct of lotteries and other games of chance. Several other laws have been implicated, including the Gambling Devices Transportation Act (also known as the Johnson Act), which prohibits the transportation of gambling devices from one state to another. Other laws, such as the Illegal Gambling Business Act, prohibit the unlawful Internet gambling of sports. Other laws, such as the Wire Act, are specifically targeted at illegal Internet gambling.
The Federal Communications Commission has the power to discontinue the furnishing of facilities for illegal Internet gambling. The FCC is also able to stop the leasing of such facilities. In some cases, the FCC has imposed restrictions on the Internet operators themselves, such as in the case of Sporting News, which agreed to pay a $4.2 million fine and launch a public service campaign. In other cases, the FCC has taken action against Internet service providers, such as American Banker, which reported illegal Internet gambling transactions.
The United States Court of Appeals for the Seventh Circuit has considered a case involving an Internet-based sports bookmaking operation, Tedder, which charged money laundering under 18 U.S.C. 1955. The case involves an offshore Internet-based sports bookmaking operation that had gross revenues of about $2,000. Another case was the United States v. O’Brien, which involved the sale of gambling equipment to be used to bet on football games. In addition, the Tenth Circuit has ruled that bartenders and managers of establishments that had video poker machines are ineligible to be indicted under the Wire Act. The Fifth Circuit has also considered the case of the United States v. Grey, which involved the sale of video poker machines to bartenders and managers of establishments with video poker machines.