Regulation of online gambling

Abstract

Gambling in the United States is primarily regulated by the states, with federal laws supporting that regulatory scheme. Criminal proscriptions often apply to unapproved gambling operations, but they are subject to jurisdictional constraints. Cross-border communications technologies challenge the efficacy of those constraints, and the Internet presents a formidable new adversary for regulators. Federal laws including the Wire Act, the Professional and Amateur Sports Protection Act, and the Unlawful Internet Gambling Enforcement Act leverage federal power to constrain Internet gambling operations while preserving a zone of authority for the states. However, the resulting patchwork of laws and regulations presents legal uncertainties for patrons and considerable room for legal maneuvering by gaming operators, as evidenced by recent enforcement efforts. Federal policy changes announced in 2011 regarding enforcement of the Wire Act have arguably expanded the zone of state authority, thereby creating new opportunities for Internet gambling firms. Three states – Nevada, Delaware, and New Jersey – have chosen to regulate certain forms of Internet gambling for their residents. Other states have responded by proscribing Internet gambling, favoring their own state-licensed venues or continuing restrictions on most forms of gambling. The emergence of fantasy sports leagues has added new complexities to this evolving legal framework, raising new questions about the boundaries of gambling regulation and drawing new attention from state regulators concerned about consumer protection and emergent problem behaviors. These challenges for government regulators extend across international borders. The chapter concludes with a brief look at global regulatory issues, including WTO and EU frameworks involving free trade among member states. Consumer demand for gambling and government interest in associated tax revenues ensures that efforts to regulate will persist. However, such efforts must address similar challenges across the globe, including concerns about consumer protection, money laundering, and the means to address emergent problem-gambling behaviors.