Online gambling legalities are not clear cut. Many governments have differing attitudes towards online gambling and betting, and in many respects, the law has not caught up with technology. Legislation regarding the stance on internet gambling is inconsistent between countries, and has proven problematic to online providers.

What is clear though, is that no law exists in any jurisdiction around the world that renders the act of gambling online illegal.  That is, laws target the online gambling operator NOT the player.

A great summary the current legal position with respect to online gambling worldwide is set out at Wikipedia.

The U.S position

In 2006 the Unlawful Internet Gambling Enforcement Act ("UIGEA") was enacted.  The UIGEA makes it illegal for payment facilitators to process transactions between online gambling sites and US residents.  The law has been ruled illegal by the World Trade Organization and moves are afoot in America to have the law repealed. 

State Laws

U.S gambling laws were drafted before the birth of the internet, and do not directly deal with online gambling.

State Legislatures have historically been left to their own devices – they can individually choose to legalize gambling, or to make it illegal. For example, Utah has a strong anti-gambling policy and all forms of gambling are illegal there. Nevada on the other hand is well known for legalized gambling.

Federal Laws

Currently, there is no specific legislation regarding online gambling. A 2/3 majority vote was required to pass a Bill attempting to ban online gambling. The Bill failed to attract the required vote. While further attempts to pass legislation are likely, the current law is the only guide players can use. 

Although there are no direct laws related to online gambling, several Acts (discussed below) apply to online gambling indirectly.

Wire Wager Act

This Act prohibits the use of wire transmission to gamble. Although the Act does not specifically discuss the internet, its reference to wire communications makes it the closest Act to deal with internet and online gambling and betting.

"Whoever being engaged in the business of betting or wagering 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, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both."

It is not yet known if this Act does in fact apply to the internet. The use of the words ‘wire communication’ would exclude any internet use that was wireless, leading to absurdities if one individual were to use an internet connection that required wires, having believed it was a wireless connection.  The Act also appears to only be specific to sports events. This may mean that typical casino games are not covered by the legislation. Hence, they would be legal. However, if the law deems the Act to cover internet gambling for both sports events and typical casino games, the Act will cover any interstate use of the internet for betting for those “engaged in the business of betting or wagering”.  Therefore, the Act clearly does not apply to online gamblers and internet providers.

The Interstate Transportation of Wagering Paraphernalia Act, The Travel Act, The Professional and Amateur Sports Protection Act and The Federal Aiding and Abetting Statute

None of the above Statutes apply directly to internet gambling. If construed so as to apply to internet gambling, it is thought that the application of the Acts would be restricted to operators only.

Prosecutions in the U.S in this particular area are extremely rare. Due to the arguable nature of the application of these Statutes, it is hoped that legislation in this area will be clarified in the near future.

WTO

The World Trade Organisation has found that U.S legislation criminalizing online gambling and betting was in violation to the WTO accords. While there is a pending appeal, it appears that the current status is that the U.S cannot criminalize online gambling and betting without being in contravention of the WTO. There is additional information concerning this ruling found on the legal issues page. It is unknown what the likely outcome of the appeal will be.

The UK position

The Gaming Board of Great Britain issued a report to the Home Secretary recently. This can be viewed by clicking here. The summary outlined below gives readers an insight to the current legal status of online gambling and betting in the UK.

"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 no licence could be obtained by an operator who wished to offer such Internet gaming here 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 authorise such lotteries. However, the Board has been approached by lottery managing companies with proposals to use the Internet to run lotteries in much the same way as someone might use the telephone. 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. "

  While this summary is current, it should be noted that legislative changes are likely to be passed. These legislative changes will deal specifically with online gambling and betting and will be clear on where gamblers, providers and casinos stand in the matter.

It can be assumed that the pending legislation will not completely prohibit online gambling and betting. In 2002, former chief economic adviser to the Treasury, Sir Alan Budd reviewed Britain’s restrictive gambling laws. The British Government’s reply to the review claimed that prohibition of online gambling and betting would not be a realistic objective, despite possibly being desirable. In fact, it is likely that online gaming will be legalized. We look forward to seeing the new legislation.

Australia

Unlike many of its counterparts, Australia has already enacted legislation specific to online gambling.

In Mid-2000, the Interactive Gambling Bill was passed. It is summarized briefly below and can be viewed here. The legislation is aimed at the operators of online casinos and sportsbooks, not players.

This law makes it:

• legal for licensed Australian online race betting, lottery sites and sports books to offer their product to Australian and International customers.

• illegal for any online gambling service to advertise – on any medium (including Australian web sites)  – within Australia.

• illegal for an Australian based online casino to offer its product to Australian residents and residents of countries who also follow the Australian Governments legislation.

• illegal for online gambling service providers based outside Australia to offer its product to Australian residents. This includes online lotteries, race betting, casinos and sportsbooks.

The Australian Government must now attempt to enforce the legislation. This may prove to be a difficult feat.