Despite the fact that the Internet has helped in opening up a new world of opportunity, there are several questions pertaining to the legality of online gambling in the United States. These questions include whether it is legal to conduct gambling activities on the Internet, where to conduct business, and what to do if a government agency decides to prosecute your business for illegal gambling.
The first question is whether the Commerce Clause provides Congress with the authority to regulate gambling on the Internet. While the Commercial Activity Clause does provide a legislative basis for federal regulation of gambling, it is difficult to determine what power the Commerce Clause really has. The answer depends on which statutes are involved in the case and how they affect interstate commerce. Generally, state laws govern gambling, but there are some exceptions.
During the mid-1990s, the General Accounting Office became the Government Accountability Office (GAO). The GAO released a report titled Internet Gambling: Overview of Issues, which provided an overview of various gambling issues. These include issues related to remote gaming and the Unlawful Internet Gambling Enforcement Act. It also discussed the Travel Act, which prohibits illegal gambling on interstate commerce.
A number of states have expressed concerns that the Internet could be used to bring illegal gambling into their jurisdictions. In fact, state officials have urged federal law to enforce the federal criminal statutes that apply to illegal Internet gambling. In some cases, the federal law reinforced the state law, but in others, the state law was weakened.
In addition, a number of legal cases have challenged the constitutionality of the enforcement of federal gambling statutes. One of these was the case of K23 Group Financial Services, a gambling company that was charged with violating the Unlawful Internet Gambling Enforcement Act (UIGEA). This case is considered to be a criminal prosecution, and the company has agreed to pay a $4.2 million fine and launch a public-service campaign to educate the public about the dangers of online gambling.
Another case is United States v. Nicolaou, a case that was tried in the Fourth Circuit. In this case, the prosecution argued that five individuals made more than two thousand dollars in gross revenues at a gambling facility in a thirty-day period. The court found that the prosecution could prove the illegality of the gambling activities. However, the Court rejected the Due Process Clause of the Fifth Amendment, which states that no person shall be deprived of life, liberty, or property without due process of law. This argument has largely been thwarted, despite the fact that the Commerce Clause provides for free speech.
Other issues raised by these cases are the scope of the Commerce Clause, the extent of the First Amendment’s protection for crime facilitating speech, and the potential for governmental interference with interstate or foreign elements. The commercial nature of the gambling business appears to satisfy the objections, and in many cases, the First Amendment and the Commerce Clause are not at odds.