Using the Internet to conduct gambling is illegal under federal law. Seven federal criminal statutes have been implicated in the case of illegal Internet gambling, including the Wire Act, the Illegal Gambling Business Act, and the Racketeer Influenced and Corrupt Organizations (RICO) statutes. These laws impose fines and imprisonment for the owners of illegal gambling businesses.
The United States Court of Appeals for the Fifth, Sixth, and Seventh Circuits have held that it is illegal to conduct illegal Internet gambling. However, there are a number of issues that have been raised as to whether or not the federal government has the power to enforce these laws. Some of these issues are based on the Commerce Clause and the Due Process Clause. Both of these attacks have had limited success.
While the Commerce Clause provides that the government has the power to regulate commerce among the states, there have been questions raised about whether the government has the power to regulate Internet gambling. In addition, the First Amendment guarantees free speech, which may make it difficult to prosecute the conduct of gambling businesses under the Commerce Clause. In addition, state officials have expressed concerns that illegal Internet gambling could potentially bring illegal gambling into their jurisdictions.
The Travel Act is another federal statute implicated in the case of illegal Internet gambling. The Travel Act, like the Wire Act, also imposes a criminal offense for facilitating or promoting the conduct of unlawful gambling. The jurisdiction of the Travel Act can be established by reference to an interstate or foreign nexus to the payment of gambling debts, the distribution of gambling proceeds, or the promotion of unlawful gambling. The jurisdiction can also be established by reference to the telecommunications component of the Internet.
The Racketeer Influenced and Corruption (RICO) statutes impose a number of strict penalties for the owners of illegal gambling businesses. They can be fined or imprisoned for up to five years. It is also illegal to accept financial instruments from an illegal Internet bet. The Racketeer Influenced Corruption Acts also prevents the owners of illegal gambling businesses from engaging in a variety of activities, including evading taxes, laundering proceeds, and engaging in a scheme to promote illicit activity.
The Federal Communications Commission may also have jurisdiction over a gambling business. The Commission has the power to discontinue the leasing of facilities and the furnishing of equipment. It also has the power to levy and collect a fee for providing facilities. The Commission has also the power to discontinue the provision of telecommunications services. The owner of an illegal gambling business must have at least $2,000 in gross gambling revenue per day. This is a fairly high threshold. In addition, a gambling business must have a substantially continuous operation for at least thirty days.
The Wire Act is another federal statute that prohibits the illegal gambling of sports contests. It also prohibits the use of the Internet to conduct illegal gambling on sporting events.