Among the many issues raised by the federal government’s enforcement of illegal Internet gambling laws are those involving the Commerce Clause and the First Amendment. While the Commerce Clause seems to provide the legal framework for enforcing online gambling law, it has been criticized for being limited in scope and for being too narrow. There are also questions concerning the scope of the First Amendment’s free speech protection. Moreover, when financial transactions in the United States are involved, due process arguments may be hard to sustain.
In terms of the Commerce Clause, the UIGEA’s jurisdiction can be determined by reference to the telecommunications component of the Internet and by establishing a nexus between an interstate or foreign destination for the distribution of gambling proceeds and the payment of gambling debts. It is also possible to determine jurisdiction under the Travel Act, which prohibits the promotion or facilitation of unlawful gambling and money laundering. The latter can be determined by referencing the shipment of gambling goods or services in interstate commerce or the receipt of gambling debts.
There are other federal criminal statutes that are implicated in the legality of Internet gambling. The Wire Act, for instance, prohibits illegal gambling on sporting events. Additionally, Section 1956 creates a few distinct crimes, such as laundering for law enforcement stings and laundering for international purposes. In addition, Section 1957 bans the expenditure of more than $10,000 in an illegal gambling business at one time.
In some cases, state officials have expressed concerns that the Internet can be used to bring in illegal gambling into their jurisdictions. However, the Federal Communications Commission, which has jurisdiction over common carriers, has said that it would not prevent the leasing of Internet facilities to legitimate Internet businesses. In order to maintain its authority over these communications facilities, the FCC must demonstrate that the activity complies with the law.
Several court cases have been decided on the basis of the UIGEA, including United States v. Mick, United States v. Nicolaou, United States v. Grey, and United States v. O’Brien. These cases centered on the UIGEA’s requirements for a gambling business, including its required duration and the amount of revenue a business must generate in a single day. In the case of the United States v. Nicolaou, the gross revenues generated were two thousand dollars. In addition, the business must be in operation for at least thirty days.
Although the UIGEA does not specifically target online casinos, it does require that the business have a substantial Internet presence and generate a substantial amount of revenue in a single day. Furthermore, the UIGEA’s jurisdiction over Internet gambling businesses includes those that operate under state law and those that are based outside of the United States.
The CRS Report RS21984 is available in abridged form, and it includes citations to state gambling law. In addition, the text of various cited statutes is provided. It also discusses the effects of the Travel Act on the Internet and remote gaming, and the Congressional findings regarding the impact of interstate commerce.