The Betting Code

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Internet Gambling – Federal Regulation


Internet Gambling – Federal Regulation

internet gambling

The World Wide Web in 1990 was growing rapidly and with this online gambling found a way to go around government control and prohibition. All that a site operator needed to do was to establish a business in an offshore jurisdiction and start taking bets. This then saw the Department of Justice and Congress explore the applicable current law and the appeal of new regulation for online gambling.

The Wire Act gained focus during the investigation if offshore Internet gambling that took bets from Americans violated federal law. Under the Wire Act the operator was at risk of a fine and being imprisoned if they knowingly used a wire communication facility to send information related to wagering on any sport event or contest. However, the act is legal in both the source and destination locations of the transmission. It would then seem that the Wire Acts definition for wire communication facility would them embrace the nation’s telecommunications infrastructure in its entirety and would then apply to online gambling.

Under the Wire Act all internet gambling by bettors in the US is illegal according to the Department of Justice.

The Unlawful Internet Gambling Enforcement Act was passed by congress in 2006. The act made it illegal for wagering businesses to knowingly accept payment that was in connection with unlawful internet gambling. The Federal Reserve System was also authorized to create regulations that prohibit the financial transaction providers from accepting such payments.

The combination of this act and the Wire Act has led to many gambling businesses online to withdraw from the US market.

In 2007 multiple bills were introduced by House Representatives to soften internet gambling law.

Then Internet Gambling Regulation and Enforcement Act and the Internet Gambling Regulation and Tax Enforcement Act would license, regulate and tax Internet gambling businesses rather than prohibit them from taking bets from the US. The Skill Game Protection Act clarifies the Wire Act to exempt certain games.


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