Online Gambling and the Wire Act

Online Gambling is the process of wagering something of value on a contest of chance. It can include sports betting, virtual poker, and putting your luck to the test with online lotteries.

The Department of Justice’s announcement that the Wire Act applies to all forms of Internet gambling raises questions about the jurisdiction and power of the federal government in the area of internet gambling. Moreover, the presence of an interstate element complicates state enforcement policy and frustrates the laudable effort of states to enforce laws in this area.

A good example of this is the recent criminal case against the founders of three largest online poker companies. As with other federal law, the court ruled that the UIGEA and related statutes apply to the conduct of Internet poker operators.

One of the most notable aspects of this case was the fact that the alleged crimes involved the use of a nefarious technology known as a “cryptocurrency” to conduct illegal online gambling. Unlike credit cards, cryptocurrencies are not recognized as currency by the Federal Reserve or by the IRS.

There have also been attempts to regulate and tax the internet gambling industry. France recently proposed new laws to impose a tax on internet gambling. While the legislative proposal failed to enact, it has raised questions about the power of the federal government to regulate such matters.

Some argue that the law is a moot point. While some jurisdictions have legalized internet gambling, others have prohibited it.