Online gambling describes a broad category of games, usually games of chance, where users make bets with the hopes of a higher payout than they put in. The most common forms of online gambling include:
- Online lotteries
- Online casinos
- Online sports betting
- "Fantasy sports"
In the U.S., the legality of online gambling is dictated by both the federal and state laws that regulate gambling. Although federal law is rather straightforward, state law tends to ultimately control the matter. State gambling laws vary from complete abolition to almost a complete tolerance of gambling.
- State Gambling Laws – The legality of a particular site will likely be largely dictated by the forms of gambling that are allowed in a specific state. In states where all forms of gambling are illegal, an internet gambling site headquartered in that state is also illegal. On the other hand, in a state that has legalized certain forms of gambling, an internet site that provides only acceptable forms of gambling are legal.
- Federal Gambling Laws – Federal legislation serves as the only applicable guide on this issue. For internet gambling sites the most widely used federal gambling regulations are the Unlawful Internet Gambling Enforcement Act of 2006 and The Wire Wager Act.
- The Unlawful Internet Gambling Enforcement Act of 2006 – This act prohibits gambling companies from knowingly accepting bets or wagers that would be unlawful under any federal or state law over the Internet. This act has a specific carve out for "fantasy sports," provided the fantasy sport betting focuses on skill, rather than chance, and the pay-out is not based on single, real-world performances.
- The Wire Wager Act – The Wire Wager Act prohibits the use of a wire transmission facility to foster gambling. In order to prove a prima facie case, the government must show all of the following:
- The person was engaged in the business of betting or wagering
- The person transmitted any of the following in interstate or foreign commerce
- Bets or wagers
- Information assisting in the placement of bets or wagers
- Communications that entitled the recipient to receive money or credit as a result of a wager or bet
The Wire Wager Act is typically applied to those engaged in the business of betting and wagering, not the gamblers themselves. Because a key distinction at the federal level seeks to separate those that merely bet from those that benefit from the betting, the application of federal law mostly focuses on those affiliated with the business of facilitating these various games.
Violations of internet gambling regulations can have serious civil and criminal consequences. An experienced business lawyer can help you understand how existing gambling laws impact your business. Similarly, if you are or fear being prosecuted by the government, you should strongly consider contacting a criminal defense lawyer.