Online Casino Regulations in the US

Online gambling in the US has been marred by a lot of problems over the years. Many of the top gambling sites around the world used to have a large share of their customers from the US, but after some of the legislative reforms in the past few years, these companies have been forced to stop catering to US players.

Even though some companies are still available to US players, most US casino sites have suffered quite a lot in terms of revenue. However, a lot of effort is being put in right now to repeal these changes. Here is a look at the various regulations that exist in the US regarding online casinos.

The Wire Act and the UIGEA

The Federal Wire Act or the Interstate Wire Act went into effect in 1961. This law bans certain betting activities in the United States. The law states that anyone, who knowingly takes part in any form of betting using wired communication for sporting events, can be fined and/or sentenced to two years in prison.

Many authorities, including the Department of Justice have interpreted the law as saying that all forms of online gambling is illegal, while others have argued that the law is only applicable to bets made on sports and not on games like poker. The US Fifth Circuit Court of Appeals has ruled that the Wire Act is applicable only for sports bets and for no other online gambling games.

The Unlawful Internet Gambling Enforcement Act (UIGEA) was passed in 2006 as a part of the SAFE Port Act. UIGEA states that gambling companies cannot indulge in financial transactions related to any bet or wager that is done through the internet. The act does not term online gambling as illegal. It says that financial transactions related to online gambling are illegal.

Impact on Online Gambling

After the UIGEA was passed the response from various companies was immediate. Many of the companies decided to pull out of the market altogether. Party Gaming, which had the biggest Poker room at that time also decided to do the same. Its stock price in London fell by 60% following this announcement. In 2008, Party Gaming was also indicted under the Federal Wire Act and it had to pay a fine of $300 million. The charges were applied against their poker room even though the Wire Act does not cover Poker.

On April 15 2011, which is often referred to as the Black Friday for internet gambling, three online poker companies including FullTilt and PokerStars were indicted for going against the UIGEA. The companies had used illegal methods to allow players to do the transactions. For instance they disguised the payments made for placing the bets in the form of payments made for merchandise like golf balls. They were also charged of investing money in a particular bank so that it would process the transactions. The .com domain was also seized from the indicted sites. This was a controversial move as domain names are international and should not be seized in such a manner.

Current Status

You should understand a few things about the current legal status of online gambling in the US before playing from the country. The first and the most important point is that there is no law which states that online gambling in itself is illegal. Very few states have laws against online gambling and prosecution of a player is even rarer. But it is illegal for a company to take sports bets over the internet. Also it is illegal for banks to handle transaction for online gambling. However, it is not illegal for you to attempt making one.

Over the years, attempts have been made through bills to legalize online gambling. The basis for these bills is that games like Poker are based on skill and not on chance and so should not be a part of gambling laws. In fact, in 2010, the New Jersey state senate became the first body to pass a bill which stated that certain forms of gambling would be legalized. The Poker Players Alliance has also collected over $3 million to help the cause. Not only this, Caesars entertainment, which owns many casinos throughout the US has also been lobbying for legalizing online gambling in the country.

The status of online gambling is not very clear in the US right now. However considering the poor economic conditions and the huge market present, legalizing online gambling would also mean that the government ends up earning a lot of revenue. So, it is possible that online gambling may be given a legal status sooner rather than later.