Gambling Online

Legal Issues

Is online gambling legal?
This is a good question that is difficult to answer. The law is still a long way behind the technology and issues applying to online gambling, in most places around the world. The consequence of this mismatch is that the question of whether or not online gambling is legal can hardly ever be answered definitively.

Another factor that makes the answer to this question so delusive is that government attitudes towards it are spread across the wide range between wholehearted support to strong opposition and sometimes even plain indifference.

What is apparent though, is that there is very little drafted specifically to deal with online gambling, whether positive or negative, and the application of the laws that do exist is known to be problematic.

Australia | US State Gambling Laws | US Federal Gambling Laws | The UK



 Australia
Australia is one of the few countries in the world to have already enacted legislation designed specifically for online gambling.

On 28 June 2000 the Interactive Gambling Bill became law.

The legislation:
It is illegal for any interactive gambling service provider based outside Australia (including online casinos, sports books, race betting sites, lotteries etc) to offer its product to Australian residents.

" it is illegal for any Australian based online casino to offer its product to:

1. Australian residents.
2. Residents of any country around the world that chooses to opt in on the Australian Government's restriction. "it is illegal to advertise any interactive gambling service on any medium within Australia (including 'Australian' web sites).

"it is legal for Australian licensed online sports books, race betting and lottery sites to offer their product to Australian and international customers;

It is clear that the legislation is aimed at the casino/sports book operators and not players. The Australian Government is now faced with the very arduous undertaking of trying to put into effect this legislation.

 US State Gambling Laws

Until not long ago gambling laws were left to the decision of each state and their legislatures, allowing them to decide what to legalize according to their attitude towards gambling. This led to the reality of gambling being completely band in some states, such as Utah where any form of gambling is illegal, and on the other hand having gambling as a legal form of business in other places such as Nevada.

 Existing Federal Laws

Quite a recent step was to pass laws concerning gambling in order to deal with inconsistencies in State based gambling laws, especially as they applied to interstate commerce. However, these federal laws were passed before Internet gambling expanded into a business requiring separate legislation.

Some of the federal laws concerning gambling can be implied also to web based gambling. The main one is the wire wager act. Looking at the following quote it is easy to understand why whether this law applies to Internet gambling or not is so strongly debated.

"...Whoever knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest…will be fined or imprisoned for no more than two years…"

Two schools of thought exist when it comes to whether this law can be regarded as relevant to Internet gambling or not. The two main arguments as to why this law can not be applied to Internet gambling are as follows:

1. Since the law uses the term "wire communication facility" and Internet is a wireless form of communication the rule cannot be applied to web based gambling.

2. Second is that the law speaks specifically of "sporting event" and so all other games of chance such as cards aren't part of this law.

The debate on this subject is passionate but no conclusion has yet to be presented and since no other laws on this matter exist that can shed light on the subject the argument will probably stay unresolved.

 Specific online gambling laws

Although US Government tried to pass laws dealing exclusively with online gambling, they have been unsuccessful. Separate Bills sponsored by Sen. Kyle and Rep. Goodlatte, which both attempted to forbid online gambling failed to attract the required 2/3 majority Senate vote required to become law.

Also today the only laws we have to refer to when dealing with Internet gambling are the existing federal laws of gambling. These laws being not only extremely debatable in this matter can also clearly not affect the online gambler or Internet service providers.

Even if the wire act can be applied, bringing a person to trial would be almost an impossible mission because of the nature of web based gambling. Online gambling therefor stays in the gray area of the law until new legislation will be passed.

 The UK
The following review of the current legal situation with relevance to Internet gambling in the UK is extracted from a report to the Home Secretary issued by The Gaming Board of Great Britain. For the full paper, click here.

"British gambling legislation - apart from that setting up the National Lottery - is all over a quarter of a century old and was enacted at a time when the power of the Internet could not have been imagined. Unsurprisingly therefore, that legislation impinges on Internet gambling in ways which were unintended and are erratic. In broad terms, the position, as the Board understands it, is as follows.

Betting Bookmakers have for many years been able to accept telephone bets from clients with credit accounts. There is therefore nothing to prevent them accepting such bets by e-mail. Likewise, football pools have always been able to accept entries by post and can therefore also use e-mail. The reason why bookmakers have been choosing offshore locations for their telephone and Internet betting operations is because taxes are lower and not because such operations would be illegal here.

As for casinos, bingo and gaming machines, such gaming can only take place on licensed and registered premises and, in particular, the persons taking part in the gaming must be on the premises at the time when the gaming takes place. Hence an operator who wished to offer such Internet gaming here could obtain no license and to set up such a site would be illegal. The Board has stated that it would seek to take action against anyone who did so.

The position with lotteries is more complicated. Tickets for lotteries can be sold almost anywhere other than in the street. They can be sold for instance at people's homes including over the telephone. But they cannot be sold by means of a machine. The Board's view is that a lottery run entirely by computer via the Internet amounts to selling tickets by means of a machine and it has refused to authorize such lotteries. However, lottery-managing companies with proposals to use the Internet to run lotteries in much the same way as someone might use the telephone have approached the Board. With these, the Internet is simply used as a means of communication by which one person offers another a lottery ticket and that second person agrees to buy. Two such proposals have been approved.

There is nothing in the legislation, which makes it illegal, or seeks to prevent, British residents gambling on the Internet from their own homes. The position in respect of public places such as Internet cafes is less clear and more difficult.

Overseas gambling operations are subject to restrictions on the extent to which they can advertise here. In the case of casino and similar gaming, this does not amount to a total ban but prevents advertisements which, to paraphrase, invite the public to subscribe money or to apply for information about facilities for subscribing money. Some Internet casino operators have begun to advertise within these constraints. Added complications arise because the whole question of what constitutes an advertisement on the Internet, and then what can or cannot be done if it is, remains far from clear."

Although the above summary represents the law as it currently stands in the UK, it should be noted that moves are taking place to initiate legislation dealing specifically with online gambling.

In March 2002, a British Government reply to an independent review of Britain's restrictive gambling laws by Sir Alan Budd, a former chief economic adviser to the Treasury, said that the prohibition of online gambling to British consumers would be an entirely unrealistic objective, even if it were thought to be desirable.

"Instead, we will as the review person has proposed, move towards legalizing the provision of the full range of online gambling services by operators located in the UK, including gaming," it said.

We enthusiastically anticipate the release of this new legislation, and send warm regards to that member of the British Government.