Online Gambling and the Law

Online Gambling and the Law

It’s getting tougher to place a bet in your pajamas in the United States. That’s because lawmakers are cracking down on online casinos, making it more difficult for the average Joe to gamble online.

The House passed HR 4411 in July 2006 and then sent it on to the Senate. The Internet Gambling Prohibition and Enforcement Act seeks to thwart online gambling by restricting credit card companies from processing transactions to gambling businesses.

The Internet gaming sites being referred to operate off-shore and service customers from all over the world. Online gambling is big business, raking in about 12 billion dollars a year, with customers from the United States spending half of that at these sites.

The lawmakers may have forgotten but the credit card companies, most of them anyway, stopped processing transactions for online gambling sites some time ago. Paypal doesn’t even process any gambling transactions even if you have a Paypal debit card with a MasterCard logo on it.

The bill would still have to pass the Senate to become law but since it is only making the status quo official there’s really nothing to get up in arms about. It does state that it will be illegal for anyone engaged in an online gambling business to accept any form of payment whether it is an electronic transfer or a paper check from gamblers in this country.

Online Gambling is legal in the UK. Some online gambling businesses are even listed on the London Stock Exchange. HR 4411 is counting on the cooperation of foreign governments as far as not accepting payments from customers in the United States. There are rumors rumbling that at some point, we may not even be able to access unlawful gambling websites in this country.

The new bill doesn’t affect horse racing and online lotteries. These have and will continue to be legal although don’t get too technical about the legality of online horse wagering. Some say it has been legal since the 1970s because it was legal to place a bet over the telephone. Others say it is illegal due to the Wire Act of 1961. The Internet Gambling Prohibition and Enforcement Act just states that this act does not change the law regarding online horse wagering whether it is legal or not.

Don’t buy bullet-proof drapes just yet. They’re not coming after us. If restricting the methods of payment doesn’t do the trick, prosecuting the gambling businesses that accept US payments might. Call it tax evasion if you will. If you make money from selling goods or services to customers of the United States, you have to pay taxes on that income, even if you obtained it illegally.

It remains to be seen how much cooperation the United States will see from other countries and the bill is still up in the air as it is waiting on the Senate to pass or reject it.

It may take some time but eventually Mr. Gambling Businessman in the UK or elsewhere where online gambling is legal will be able to run his gaming site without having to worry about where the gamer is based as no one in the United States will even be able to access his website.

Still, industry-wide, that 50% of gambling revenue is going to hurt somewhere. It will be interesting to see the outcome of this one and of course, it will be some time before any effects are felt anyway. Far from sharing the revenue from this 12 billion dollar a year industry, the United States, through the Internet Gambling Prohibition and Enforcement Act also purports to designate 10 million dollars a year for 3 years to enforce the ban.

Stay tuned to this controversy and get dressed – your pajama clad crap shooting days may be coming to an end!

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