The Federal Laws, Bills and Acts Governing Online Gambling in the United States

Online gambling remains a gray area when it comes to the federal rules, regulations and laws which govern this segment of responsible wagering entertainment. There are contradictions, arguable points and poorly worded language contained in much of the legislation that only adds to the confusion. This section of our guide is designed to introduce players to the federal laws which govern online gambling in the United States, and to provide up to date and concise information that helps bring some clarity to the issue. Our objective is to empower players to make informed decisions concerning how, where or even if they will participate in responsible, adult gambling entertainment through virtual Internet gambling sites. We hope to clear up some of the misconceptions and inaccurate information that has been circulating out there. Following is a breakdown of the primary federal laws that affect the legality of USA online gambling options, and how they influence the industry and players.

UIGEA (Unlawful Internet Gambling Enforcement Act)

Known as the Unlawful Internet Gambling Enforcement Act, this is probably one gambling law that most players people have heard of. Despite popular belief, this law does not actually prohibit US players from participating in legal online gambling that is based and regulated outside of United States borders. The UIGEA was passed to regulate gambling related transactions and prohibit illegal financial practices such as fraud and money laundering. This being the case, the law actually addresses gambling site operators and payment processors, not players. When the law was first enacted and enforced, it did cause some problems for US gamblers as many respected and trusted brands exited the USA gambling market at that time in response to the law. Since then, gambling site operators have learned to work within the confines of the law, and have invested in multiple high quality payment processors to provide a safer and more secure environment for processing gambling transactions. So despite the shakeup that occurred at the onset of the UIGEA, it has actually resulted in a more refined and efficient virtual banking system for the online gambling industry. Full article on "What The UIGEA Is And How It Affects US Online Gambling."

Federal Wire Act Of 1961

The Federal Wire Act was a law that was passed back in 1961, and was specifically intended to curtail the rampant mafia run illegal gambling rings that were operating by phone at the time, particularly in regards to illegal sports betting. It did indeed do its job. Many opponents to this law claim that it was never intended to apply to Internet gambling, however the federal government does interpret the law as prohibiting online sports betting initiatives from emerging here in the United States. This coupled with the PASPA have effectively kept a lid on any potential expansion in the sports betting arena either online or offline. At this time, the Federal Wire Act is enforced by the DOJ as prohibiting US based legal online sports betting.

Paspa (Professional and Amateur Sports Protection Act)

The Professional and Amateur Sports Protection Act was passed in 1992, and effectively out laws sports betting in the United States. Exceptions include Nevada and Delaware, who both offer some type of legal sports betting options to their residents and visitors. PASPA makes it illegal for US sports betting opportunities to be offered anywhere else in the US outside of a few coastal based operations that travel into International waters, which are technically outside of the US. In light of the DOJ's position that each individual state may determine its own destiny with land based and online gambling businesses, some state governments feel that the PASPA law violates states' rights, though there have not been any successful challenges to the law as of yet.

Black Friday - The Infamous Shutdown Of The Biggest Online Gambling Sites

Black Friday occurred in 2011 when the DOJ seized and shut down three of the most prominent online poker sites on the Internet. These gambling operations were suspected of violating the UIGEA law and were investigated by the federal law agencies. The investigation targeted only the site operators and payment processors because as mentioned above, the UIGEA does not target players in any way. No players were included in the investigation, and though certain assets and hence player accounts were temporarily frozen and made unavailable, all funds were eventually recovered by players. Black Friday did ignite some industry changes, with once again several brands exiting the USA gambling market. However some of the most trusted brands remained, and other new poker sites emerged at this time that we have come to consider industry leaders. Black Friday certainly demonstrated that the US government does take enforcement of the UIGEA seriously, and that violators will be dealt with. Ultimately this message will create a stronger and more secure online gambling industry for US players. Black Friday did not make it illegal for US poker players to participate in the legitimate poker sites that are legally licensed to provide their services to players in the United States.

Sources

UIGEA

Federal Wire Act

Paspa