Illegal gambling on the internet is a felony under seven federal criminal statutes. These include the Wire Act, which prohibits illegal wagering on sporting events, and the Illegal Gambling Business Act, which prohibits the unlawful establishment or conduct of an Internet casino. The federal government is also attempting to penalize financial transactions related to illegal online gambling.
Online gambling primarily involves sports betting, but it also includes casinos and other forms of gaming. Generally, these activities involve a computer with access to the Internet, and some type of software for placing bets and for entering contests. For example, online poker is played on a virtual table that uses a random number generator to determine the winner of each hand.
There are many different kinds of online gambling, from casinos to sports betting to virtual poker. Some gambling sites specialize in one or two categories, while others offer a full suite of games. Most online casino games are available either through a web browser or by downloading a software client. In addition, most sites have two types of game options: “instant” games and real-money casino games.
One of the simplest types of gambling is sports betting, which allows a bettor to place bets on events without the need to download software. Typically, an online site will list all of the sports that are covered in its game selection. If a player wants to place a bet on a specific team, he or she simply clicks on a sport, which will bring up upcoming events pertaining to that sport. Once a bet is placed, the amount is automatically deducted from the account.
The first commercial venue to operate online for the general public was the Liechtenstein International Lottery. This was followed by an agreement with Sporting News to launch a $3 million public service campaign.
Various state officials have expressed concern that the Internet can be used to facilitate illegal gambling within their jurisdictions. In some cases, these issues have resulted in constitutional challenges. In these situations, the question of whether legislative power under the Commerce Clause can be used to ban Internet gambling is under discussion. However, it is difficult to conclude that the commercial nature of gambling is a valid reason for a federal prohibition.
Other challenges have been mounted on First Amendment grounds. For example, many have argued that the ability to bet on a game of chance does not qualify as a lawful exercise of free speech. While attacks based on the Commerce Clause have received little traction, those based on the Due Process Clause have been less successful. Ultimately, however, these arguments are often moot, since the commercial nature of Internet gambling is enough to satisfy the constitutional concerns.
Nevertheless, online gambling is a growing industry, and there are a few legal issues that have come up. For example, in December of 2002, the Government Accountability Office issued Internet Gambling: Overview of Issues. Its report found that while state law is the primary governing authority for online gambling, federal law does reinforce state law in certain cases.