laws on sports betting

2007-11-15T16:09:00.000-08:00

Straight Answers On the Legality of Sports BettingWhen considering betting sports on the internet, it’s not uncommon for a person to wonder whether they’re breaking a local or state law. After all, most states, and even the federal government, have legislation about whether and how it’s legal or not to gamble.
Who Regulates Sports Betting?Until recently, the regulation of gambling in the US was left entirely to the discretion of the individual States. But the advent of online gambling created confusion about jurisdiction. After all, who runs the laws in cyberspace? Most current laws meant to apply to gambling in general were created long before the internet existed, and thus the application of those laws to online gambling is open to broad interpretation.
US Regulation of Sports Betting“The most important question being asked about online gambling is: ‘Is it legal to run a sports betting operation offshore and take action from clients in the United States?’ The US government will argue it is not legal.However, no bills have been passed to prevent such activity; and in recent years attempts to pass bills of this nature have failed,” explains Chris Costigan, sports gambling analyst and president of Gambling911laws on sports betting at Enterbet.com, the industry’s premier sportsbook watchdog site. Costigan continues on, “The Federal government has placed much of the responsibility of gambling legislation in the hands of individual states, some of which have considered legalizing online gambling (North Dakota voted on legalizing online poker within the state, but that bill failed to pass). Some states, like Illinois, have added legislation that strictly prohibits the advertising of online casinos. Only three states - California, Louisiana, and Nevada - strictly prohibit its citizens from betting beyond state borders. However, such laws are historically loosely enforced. Most states consider gambling violations misdemeanors with the vast majority focusing specifically on operators as opposed to the actual gamblers themselves.”
To avoid breaking US law, most internet sportsbooks are located offshore in foreign countries and also house their computer servers there.
To be clear, the US government has been attempting to pass legislation to deal specifically with the regulation of online gambling. However, because there are so many grey areas regarding who has authority over activities in cyberspace, these attempts have not been successful in passing and it’s becoming clear that the US will not be able to effectively legislate online gambling. As Costigan and Gambling911laws on sports betting at Enterbet.com point out, “2005 will be the first time in five years we will not see any proposed anti-gambling bills emerge in Washington.”
Legal Issues: The SummaryThe Wire Wager Act
The Wire Wager Act, in its most basic sense, prohibits the use of a wire transmission to foster a gambling pursuit. What does this mean? Your guess is as good as mine, and as good as the people who wrote the legislation. Some lawyers argue that what this act means is that any interstate use of the internet that is related to placing or receiving bets is illegal. However, other lawyers believe that this cannot be applied to internet betting due to both the extensive use of wireless internet services and also, due to some vagary in the language, the act may only apply to sports event betting and not other types of betting. Most importantly, the specific language of the Wire Wager Act says that it applies only to those participating in the business of betting or wagering. That limits its impact to only sportsbooks and casinos and means that it can in no way be used against the actual bettor.
April 2005: Two important rulings are handed down regarding online sports betting. Chris Costigan, sums them up as follows:
“Firstly, the World Trade Organization upheld its decision in favor of Antigua, a tiny island nation that claimed the United States stymied its lucrative online gambling industry. Antigua contended that many online gambling operators left its jurisdiction as a direct result of the United States crackdown on operators and advertising venues. A more critical ruling involved the United Kingdom, which now allows gambling companies to take bets online from the UK. While England's stance on bookmaking is quite opposite of the United States, internet sports betting shops and online casinos were forced to operate offshore on nearby islands such as Gibraltar and the Isle of Man. The United Kingdom decision is viewed as a nod of approval by an industrial nation paving the way for internet gambling to thrive in a fully regulated environment, and the U.S. is most likely to recognize and respect its position.”
So, Can an American Bet Sports Legally?The simple answer is there is an explicit law against online betting in only three states – Nevada, California, and Louisiana. Even so, NO American citizen has ever been arrested for betting on the internet.
In most jurisdictions around the world, the law is still a long way behind the technology and issues applying to online gambling. As a result, the question of whether or not it is legal to gamble online can rarely be answered definitively. It is probably fair to say also, that government attitudes to online gambling vary significantly, from whole hearted support, to strong opposition, to indifference. What is clear though is that there is very little by way of state or federal legislation drafted specifically to deal with online gambling, whether positive or negative, and the application of existing laws is proving problematic.
US State Gambling Laws and Betting Legislation
Up until reasonably recently, regulation and sports gambling laws in the United States was left exclusively to the State Legislatures, who determined the legality or otherwise of gambling activities within their jurisdiction. Some states have legalized many forms of gambling, while others have legislated to make it illegal to participate in any form of gambling other then the stats lottery. Nevada is the obvious example of a State which has embraced gambling as a legal form of commerce, while Utah is a noted for its strong anti-gambling stance, and laws deeming all forms of gambling within its jurisdiction illegal. US State gambling laws were all drafted long before the advent of the Internet, and they do not have provisions dealing specifically with online gambling.
US Federal Gambling Laws and Sports Betting Laws
So far, US Government attempts to pass legislation dealing specifically with online gambling have been unsuccessful. Separate Bills sponsored by Sen. Kyle and Rep. Goodlatte, which both attempted to ban online gambling both failed to attract the required 2/3 majority Senate vote required to become law. And while it is likely that there will be more attempts to pass legislation dealing specifically with online gambling (to regulate or ban), until such legislation is passed existing federal legislation serves as the only guide on this issue.
Federal laws relating to gambling were passed by Congress more recently (than State laws) to deal with inconsistencies in State based gambling laws, especially as they applied to interstate commerce. Although passed recently, US federal laws applying gambling activities were all drafted before the advent of Internet gambling. There are a number of current federal laws that have indirect application to online gambling. These are discussed below.
1. The Wire Wager Act
The Wire Wager Act is the statute that may be applied most directly to restrict the use of sports betting via the Internet. It prohibits the use of a wire transmission facility to foster a gambling pursuit. It provides, in part: "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." Exactly how this Act applies to Internet wagering is hotly debated. One school of thought in legal circles is that the Wire Act broadly covers any interstate use of the Internet that is related to placing or receiving bets. A second school of thought is that the Wire Wager Act cannot be applied to online gambling generally for two reasons. First, the words "wire communication facility" only apply to transmissions that use wires and the proliferation of wireless Internet access would therefore fall outside the scope of the Act. Second, reference to "bets or wagers on any sporting event or contest" implies the Act might only apply to wagering upon sporting events (not card games or other games based upon chance). The above issues aside, it is clear that whether or not the Wire Wager Act can be applied to Internet gambling, it can only be applied to those "being engaged in the business of betting or wagering." It cannot apply against the online gambler or Internet service providers.
2. The Travel Act, The Interstate Transportation of Wagering Paraphernalia Act, The Professional and Amateur Sports Protection Act, The Federal Aiding and Abetting Statute
The above 4 Statutes all contain provisions that could be construed to apply to internet gambling. However, as for the Wire Wager Act, the appropriateness of their application is strongly argued, and even if they could be adjudged to apply to Internet gambling, their application would be restricted to operators only, and not players or peripheries (ISP's etc).
Given these Statutes questionable validity with regard to their application to online gambling, and also the fact that US prosecutors will always have a difficult time coercing defendants to appear in the United States to stand trial, actual prosecutions in the US in this area are extremely rare.
So, is Online Sports Betting legal?
As you may have determined above, sports gambling laws are very gray at this point in time. The simple answer is there is an explicit law against online betting in only three states – Nevada, California, and Louisiana. Even so, NO American citizen has ever been arrested for betting on the internet. It’s probably a pretty safe bet that you won’t be the first, but recommend that all members check with their local and state laws before wagering online.

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