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Legal Betting Options Online – Is Online Gambling Legal In The U.S.?

April 17, 2014
Law Book

We created this site as an online gambling resource for US citizens. And the most frequently asked question by online casino, poker and sportsbook aficionados in the United States is this. “Is online gambling legal in the USA?” Most American citizens are shocked to find out that there is not a single federal law against gambling online. Don’t believe me? On November 14, 2007, the US House Judiciary Committee held a hearing concerning all types of wagering online. U.S. Attorney Catherine Hanaway, representing the Department of Justice at that hearing, opened up by flatly stating that “all online gambling is illegal.” When forced to admit the federal code regarding online gambling only bans accepting bets and wagers over the Internet, she was then pointedly asked by Representative Robert C Scott (Virginia Democrat), “But…there’s no prohibition against gambling on the Internet?” Hanaway then famously replied, “That’s correct.”

This came 3 1/2 years before the April 15, 2011 filing of United States versus Scheinberg. That federal DOJ prosecution said that the three largest online poker companies catering to US players, PokerStars, Full Tilt Poker and Cereus (Absolute Poker/Ultimatebet) were engaged in money laundering and bank fraud through their Internet poker operations. This caused the majority of legitimate Internet operations supporting US players to shut their doors for fear of similar allegations and prosecution. However, very quietly on December 23 of that same year, that same DOJ released a legal opinion on the meaning of the Interstate Wire Act of 1961. Also known as the Federal Wire Act, it prohibits using wire communications (to include but certainly not limited to the Internet) to aid in the placing of bets or wagers for real money.

It is a practiced tradition in the United States for legislators to announce passage of bills on a Friday just before the close of government business if they do not want to attract attention. Couple this with the fact that the date of this particular announcement was just two days before Christmas, an annual celebration practiced by much of the US. The feds wanted this opinion known, but did not want to attract a lot of attention. Christmas came, and the New Year, and many USA residents had no idea that a gambling friendly attitude had just been admitted by their federal government. What did the new opinion state about online gambling? It said quite pointedly that it agreed with several rulings by the federal court system which stated that the 1961 Wire Act only applies to sports betting. The Department of Justice decided that individual states should concern themselves with their own online gambling destiny, as long as that was relegated to virtual casinos, poker rooms and bingo.

It did not take a long for Nevada, New Jersey and Delaware to legalize certain forms of Internet wagering for real money. And as we write this piece, there are a minimum of 10 states with live legislative packages which push to legalize cyber gambling for their state residents and visitors. Clearly states offering legally regulated online gambling is gaining momentum across the country. Probably the easiest way for confused US citizens to understand what is and is not legal regarding online gambling is to take a look at what representative Bob Goodlatte (Virginia Republican) was recorded as saying back in that 2007 Judiciary hearing. He was a primary and very vocal supporter of banning all forms of Internet gambling, but even he admitted that online gambling is not legal in the US. He stated under questioning, “The only thing that Congress has done is to pass legislation related to the transfer of funds.”

And to this day, some banking institutions operating in the United States will still not honor Internet gambling deposits, even in those states which have legally certified and regulated online wagering businesses with the blessing of the federal government. And while just a handful of states do have active laws against online gambling, there have been even fewer cases of player prosecution. To this date, no American citizen has been indicted or prosecuted, much less arrested, for gambling online. And while the move is inevitably towards US companies delivering the online gambling experience, thankfully there are legitimate international options. Many operators, after Black Friday of 2011, moved their companies offshore. They obtained recognized legal licensing as Internet gambling operators. This provides support for US players until those United States residents’ individual states, or federal government, offer Internet gambling options of their own.