The history of online gambling in the United States is a convoluted one. Until 2006, players from all across the US could access international casinos to play for real money. The primary law that addressed online gambling, The Wire Act of 1961, explicitly outlawed placing or receiving sports bets using a telephone line or other electronic transmission across state lines.
Despite a US Federal court decision affirming that the law did not refer to other forms of online gambling, as a policy , the Justice Department interpreted the Wire Act to include other forms of online gambling as well.
In 2006, the Unlawful Internet Gambling Enforcement Act (UIGEA) was passed, which made it illegal for financial institutions to engage in transactions involving illegal online gambling, and the Justice Department went after perceived offenders with a vengeance. This eventually led to a condition where many international online casinos would not accept US players for fear of prosecution.
In late 2011, however, the Justice Department reversed itself on its interpretation of the Wire Act, and this new interpretation became consistent with Federal Court interpretation that the Wire Act only applies to sports betting across state lines. Since the UIGEA referred specifically to “illegal” online gambling, the legal situation for online casinos was thrown into a state that could only be characterized as murky.
More importantly, the new Justice Department interpretation signaled a sea change in the US regarding online gambling. This new attitude raises a new question: could legal US online casinos be on the horizon?
The New Frontier
Good news! Not only are legal US online casinos on the horizon, but in some states they are already here. In the past year, legal online casinos have opened for business in New Jersey and, to a lesser extent, Nevada, which now regulates online poker but not other casino games. As recently as November, online casinos have opened for business in New Jersey.
Both of these states have begun issuing licenses to independent online casinos to offer play for real money. In addition to these recent developments, other states have made online casinos legal as well, but not as independent operators. Instead, states like Delaware, Georgia, Illinois, and Kentucky have allowed online casinos to take real money wagers as part of each state’s lottery system.
In all the above cases, access to the online casinos is limited to residents in each state. No state has yet allowed online casinos to operate across state lines, but the legislation on the books in both Nevada and New Jersey leave open the possibility of regulating interstate access to their online casinos in the future. They’re waiting for huge states like California to open up their markets for online gambling because of the potential for huge profits marks Internet gambling as a new frontier.
All of this raises the question of whether it’s currently illegal to gamble online for US players.
Is It Legal to Play Online Games for Real Money?
If you don’t live in one of the aforementioned states, this is an important consideration. The answer to that is complicated. For those states that have taken the plunge and started to regulate online gambling, it’s perfectly legal. For the rest of us in the US, it’s in a grey area.
The UIGEA makes it illegal to collect or distribute money for illegal online gambling, and the use of the word “illegal” has given lawyer’s leeway in arguing that a player is not breaking the law when there is no explicit law making online gaming illegal, which is the case in most states. Some states, such as Oklahoma, have laws on the books that make it illegal to gamble online, but these states are few.
So far, no individual player in the US has been prosecuted for gambling online at casino games. Instead, the government has gone after the casinos themselves or the financial institutions that process transactions involving money gained or lost through gambling. In the past, international casinos have not allowed US players to register with them in order to avoid possible prosecution, but since the Justice Department has changed its opinion regarding the Wire Act, some have opened up to allow US players. However in that case, claiming your winnings is usually a time consuming and convoluted process.
Although no individual has been prosecuted for playing casino games online for real cash, the same cannot be said for betting on sporting events. This is overtly illegal, and both the federal government and state governments prosecute this rigorously.
Perhaps the best way to understand the current state of online gambling in the US is to think of ending up on the wrong side of the law as a gamble itself. As a player, it’s unlikely that you would face prosecution for gambling online in electronic casinos. The real risk is in getting your money from winnings, if you should be so lucky.
There have been cases where the federal government has shut down an online casino and frozen the accounts of players registered there. Even in some of these cases, the government has sought to work out some way to release those funds to the players, but these have been pending for years.
The bottom line is that unless you live in a state that has legalized and regulated online gambling, you are taking a risk of not being able to claim the money you win.
Hope for Gamblers on the Horizon
The good news is that the tide is changing. As new states regulate online gambling, other states are paying attention to see how this works out, both for the players and for the economy and industry as a whole. In addition, the online casino industry has some allies in powerful positions in Congress.
So long as his party maintains a majority in the Senate, Harry Reid, one of these allies, has the post of Senate Majority Leader, one of the two posts that can determine the legislative agenda in Congress. Another supporter is Representative Peter King of New York, but the gambling world did lose a key ally when Representative Barney Frank retired at the end of last year.
Regardless, the country is undergoing a sea-change from the darker days in the past decade, when the US government was doing all it could to keep online gambling a kind of black market enterprise. The day is coming soon when players across the US can play online without fear of losing their winnings in safe and regulated online casinos.