Various state and federal officials have expressed concern about the potential for illegal gambling to creep into their jurisdictions. This concern has been further complicated by the fact that some of the activities involved are interstate and foreign. This has led to a variety of different approaches, all of which have their own merits. It is unclear, however, which one is right for any given situation.
The best way to approach this problem is to look at the legal and regulatory framework of the various jurisdictions. State officials have largely resorted to state-level laws to combat illegal gambling, and federal law has only reinforced those laws where it can. In addition to the aforementioned state-level laws, there are several federal criminal statutes that are relevant to the topic, including the Wire Act, the Travel Act, and the Illegal Gambling Business Act.
The Illegal Gambling Business Act, also known as the IGBA, is a federal law that aims to stop Internet-based companies from engaging in illegal gambling, including the provision of online betting services, or “betting services,” as well as the facilitation of wagering. The act, which is enforced by the Attorney General, prohibits accepting financial instruments in connection with any type of Internet bet.
The IGBA was a significant achievement in itself, and it has prompted other states to take a more proactive stance. The Federal Communications Commission, for instance, has jurisdiction over common carriers and common carrier facilities, and the agency has the authority to regulate, or even scuttle, such facilities. As such, the FCC has the authority to stop or restrict the leasing of such facilities. In addition, the FCC has the authority to make rules regarding data security, which may be relevant to an Internet-based gambling business. In addition, the Federal Communications Commission has the authority to levy a fine if an Internet service provider fails to comply with its rules.
The aforementioned UIGEA, however, is a comparatively minor issue compared to the other federal criminal statutes that may be relevant to the Internet gambling business. The FCC’s jurisdiction over common carriers may make it difficult to enforce certain state laws, especially when those laws involve telecommunications services. This may be one of the reasons for state officials’ concern, but the fact remains that federal law does its part to protect the American consumer. A federal agency has already issued warnings to PayPal that it could face prosecution for facilitating illegal Internet gambling. Although a few other companies are also facing similar regulatory scrutiny, PayPal remains the poster child for this problem.
The most obvious way to combat illegal gambling is to enact legislation, such as the IGBA, that makes it easier for the government to identify and prosecute these types of operators. Several states have already enacted legislation on this subject, and some, such as the state of New York, are also looking into the issue. In the meantime, the federal government has put in place a variety of initiatives to counter illegal gambling, including the aforementioned FCC directives. The FCC has the authority to levy a financial penalty, as well as the authority to suspend or revoke a license to operate a common carrier facility.