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Is Online Gambling Legal?

9 October 2012 by Devon Chappell

is online gambling legalWell, if you were to ask that question five or more years ago, the more common answer would either be “no”, or, “maybe, maybe not”.

The fact is, online gambling, like the internet, hasn’t been around very long. Fifteen years (about how long the internet has been mainstream) simply is not your typical time period for establishing an entire industry. But thanks to a huge demand, responsive supply and fast-growing technological advancements, online gambling has indeed become a formidable and thriving industry.

The United Kingdom officially began regulating online gambling in 2005 (under the UK Gambling Act, 2005). And by “regulating”, it’s meant that the market has been opened to gambling operators outside of the UK – not just for government-controlled monopolies – which has been the case in other parts of the world. Several high-GDP European countries, such as Italy, France and Spain have followed Great Britain’s lead and have regulated online gambling to various extents (although none quite as liberally as Great Britain).

These days, the question of whether online gambling is legal or not is most relevant for United States citizens. Existing in a grey area for years, it was shortly before the UK began to legalize online gambling that a highly criticized and faulted anti-online gambling bill – the Unlawful Internet Gambling Enforcement Act (UIGEA) – was slyly attached to a must-pass port security bill and made law.

While it took nearly two years to make the UIGEA enforceable (contingent upon federal banking institutions becoming compliant under what has been deemed confusing and unrealistic terms), the ruling legal authorities in the United States – the Federal Bureau of Investigation and Department of Justice – have since turned to the UIGEA to instigate a campaign of cracking down on large gaming operators and payment processors doing business with U.S. citizens. Neteller, BetOnSports, Poker Stars and Full Tilt are, to date, the most well known victims of the UIGEA.

In fact, the FBI has an article published on its website clearly stating that it is illegal for U.S. citizens to gamble at an online casino. However, this article was published in 2007 (has not since been updated). Besides the fact that no U.S. citizen has been arrested for betting at an online casino to date, the truth of the matter is that online gambling has gone full circle, back into a regulatory grey area.

Early in 2012, the DOJ announced a change in its interpretation of the outdated Wire Act, stating that the UIGEA only applied to sports betting. While that’s not the best news for sports bettors, the good news is that online gambling in the United States is well on its way to becoming legalized and regulated. Delaware became the first state to officially legalize online casino gambling in 2012, Nevada became the first to legalize online poker, and several other State’s – including California, Florida and New Jersey – have introduced legislation and are currently considering regulatory options.

While the gaming industry at large would prefer a federal plan to make online gambling legal in the United States (let’s just say there would be more uniformity in compliance between States), at this stage in the game, operators will take what they can get. As it was in the beginning days of the internet, U.S. citizens continue to be the driving force behind the multi-billion-dollar online gambling industry of post 2012.

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