Internet Gambling: Why The U.S Is Not An Option

Why online gambling regulation is bound to fail in America

By re-defining global capitalism, Internet technology has shaped the prices of goods and services and exponentially reduced the cost of doing business for any would-be entrepreneur.

Strictly speaking it opened the door for small-scale venture capitalists that have access to opportunities they won’t necessarily have in the physical world. Suddenly the impossible is now possible. One can now justifiably talk about a ”New World”, a ”Land of Plenty” literally flowing with milk and honey. The Internet is now open to Joe Public, a domain once exclusively reserved to millionaires and major corporations. Now, anyone with a dream can now operate a business within the vastness of its space.

More than half of the Internet’s users reside in America, the shining beacon of global capitalism. Aside from Vegas, Atlantic City and certain autonomous Indian reservations, the business of internet gambling is still pretty much prohibited in the world’s greatest economy. In this article I’m going to discuss why regulation might be a hit and a miss in the U.S.

Draconian Laws

Although the Internet is a worldwide phenomena, the U.S government is now trying to claim jurisdiction over it by stifling the business-related activities of its citizens. At this stage it’s illegal to base or run an online gambling business in or from the United States. This is not good for domestic entrepreneurs who plan on starting their own online casino. As a U.S citizen you could renounce your citizenship and set up shop in another country that’s less hospitable.

The other alternative, yet very risky, you could flaunt federal law and play a dangerous game of chance. Chances are pretty good you’ll receive a hefty fine or end up in prison. Or, you could take advantage of the ‘grey area’ that is the current state of interactive legality between the cyber world and U.S Federal Law by starting your own virtual Las Vegas. The aim of this article is to highlight the current manifesto and the stance of the government towards it.

Online gambling is now a hot topic and heavily debated in Congress. There are five U.S federal laws or proposed laws (bills) that regulate it. I’m only going to discuss three of them. Before I mention these laws I’d just like to point out that an active poster at Twoplustwo had the following to say about the current state of affairs at the New Jersey regulated online casinos:

”As a current online player in NJ I can tell you the sites suck! The customer service is 10x worse then illegal sites if that is even possible. Don’t know how many people still try and play on Bovada but I can’t blame them. The promotions are an absolute joke, the sites offer less and less and expect to get a higher volume of players.”

It’s pretty evident from the above quote that ”illegal operators” targeting U.S citizens are offering a much better service than the regulated New Jersey casinos.

Draconian U.S internet gambling laws


1. Law

18 U.S.C 1080, 1084, also know as the Federal Interstate Wire Act of 1961. It’s sole purpose calls for government regulation of the Internet. Any person who places a bet over the internet using a wire connection knowingly, interstate of foreign commerce or wagers or information assisting in the placing of bets or wagers which entitles the recipient to receive money or credit as a result of bets or wagers will be fined, imprisoned or both.

The use of wire communication facilities (telegraph and telephone lines) in placing bets or transmitting data to or from a U.S state, commonwealth or a foreign country is prohibited by this 40 odd year old-law. This statute gives the federal government jurisdiction over matters that relate to interstate wire communications. Most people disagree with this law since they feel that the internet is a worldwide instrument that does not fall under the jurisdiction of U.S federal law. Also, the 1961 law is outdated and no longer applies to a time when a gambler phones his book in another state to place a bet.

2. Bill

S692 IS (S 477. RS is an earlier version of S.692 IS) collectively known as the Internet Gambling Prohibition Act of 1999. The congressional sponsors of this bill are Senator Kyl from Arizona and John Goodlatte (R-VA). It states that it is against the law for any person or persons to place a bet, finance, manage, supervise, sporting event or a game of chance.

The sole intention of the bill is to put a blanket prohibition on all aspects of gambling over the internet. The bill authorizes both the federal and state authorities to pursue and prosecute any offender. In 1999 it helped ensure the bill’s Senate passage. Internet Service Providers (ISP) were exempted from liability under the proposed law for hosting offenders and bear no responsibility for screening or monitoring violators, as long as the ISP’s discontinued service to offenders when notified by authorities. One cannot help but notice that the S.692 Bill received a lot of support from land-based casinos, state-run lotteries and riverboat operations. They already enjoy a monopoly and seek to discourage any new entrants into the field of internet gambling.

3. Bill S.474 RS (Unamended version of S.692 IS). This is the Internet Gambling prohibition Act of 1997. Congressional sponsors of the Bill are Senator Kyl from Arizona and John Goodlatte (R-VA).

”It shall be unlawful for a person engaged in the business of betting or wagering to engage in that business through the Internet or through any other interactive service in any State. The terms ‘bets or wagers’ means the stake or risking of something of value upon the outcome of a contest.”

”The term Internet means the International computer network of both Federal and non-Federal inter-operable packet switched data Networks. Interactive computer service means any information service that provides or enables computer access by multiple users to the Internet.”

”The term ‘State’ means a State within the United states, the District of Columbia, Puerto Rico, or a commonwealth, territory, or possession of the United states.”

The Bill calls to action the Federal Interstate Wire Act of 1960 by trying to make amends to specify the legal applicability to the Internet. It prohibits both individual customers and online casino businesses based in the U.S or receiving a bet via the Internet.  

The proposed bills are backed by politicians and corporations that fear, if legalized, internet gambling will have a severe impact on the businesses. One must keep in mind that U.S law is only applicable to the U.S. Those who see the handwriting on the wall still see it as a place where they can achieve their entrepreneurial dreams.


Sadly, America is not known as a nation that protects the privacy of its citizens. In its lawsuit-happy society, any litigant can pretty much find out about anybody. The U.S has the current technology, infrastructure and political stability-all the ingredients necessary to create a sustainable and highly profitable market for cyber gambling.

As it is many law makers would rather prosecute businesses who engage in illegal betting instead of embracing them. The wealthy corporate interests dominate America’s legalized gambling market since they support the political aspirations of a few. A colorful yet contradictory individual that comes to mind is none other than Sheldon Adelson. In return he’s managed to retain his lucrative casino empire at the behest of the American citizen.



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