Busted for Betting Online?

Is gambling on the Internet legal? Some state and federal law enforcement officials declare flatly, "It's all illegal." Yet, with hundreds of websites taking billions of dollars in wagers each year, fewer than 25 people have ever been prosecuted for online gambling. Most were bookies who were also taking sports bets by telephone. A few were unusually foolish. For example, a Pennsylvania operator settled a criminal case by promising the attorney general of Missouri that he would stop taking bets from people in Missouri. He continued to take bets from Missouri, and ended up pleading guilty to a misdemeanor.

So, is Internet gambling legal for those of us who are not taking bets by phone or breaking agreements with prosecutors?

Everyone in the United States and Canada is subject to at least two sets of laws, federal and state/province – and an additional set of laws if they are on tribal land. There are also laws on the city and county level, but these are usually of no consequence, except to big operators who are openly taking bets in that city or county.

Federal governments are not usually concerned with gambling. They do care about organized crime. So, there are federal laws in the United States that make it a crime, under some circumstances, to take a bet if you are in the gaming business.

This means that players are not violating any federal laws by merely placing bets. Sen. Jon Kyl's first draft of his proposed Internet Gambling Prohibition Act would have made betting a federal crime. But, the U.S. Department of Justice, remembering the bad old days when it had to enforce the earlier prohibition on alcohol, stated publicly that it did not want to go after bettors. So, today, no one is even proposing making it a federal crime to merely place a bet.

Internet operators, especially those who do not have licenses from foreign countries, may be violating U.S. federal laws by taking bets online. The major statute, the Wire Act, was passed by Congress 35 years ago to help states enforce their anti-bookmaking laws. The Wire Act applies only to individuals in the business of gambling who use a wire, like a phone line, that crosses a state line. Gambling businesses that conduct 100 percent of their activities inside a single state do not violate the Wire Act. There are other federal anti-gambling laws, but most involve committing felonies under state laws.

The major weakness of the Wire Act, besides the fact that it was written long before the Internet was invented, is that it was designed to go after illegal bookies. Betting on a sports event or horse race is clearly covered. But, a good argument can be made that lotteries and casinos do not fall under the Wire Act, even if they are conducted interstate or internationally.

But there are still laws of the states, provinces, and territories. Federal governments may be interested only in organized crime, but states are often interested in saving your souls. Every state has what is known as "police power." This is the right to protect the health, safety, welfare, and morals of its citizens. Of course, one man's moral outrage is another man's hobby.

Still, every state makes most forms of gambling a crime. Almost half the states specifically make it a crime to place a bet. For example, in California, it is a crime to bet at a banking or percentage game outside of an Indian casino. It is also a crime to make, take, or even record a bet on a sports event or horse race, outside of a licensed track or off-track betting location.

No ethical lawyer would ever tell you to break the law, but I have not found one reported case, in the history of the United States and Canada, of a player being arrested for making a bet on the Internet.

This does not mean it is legal. But, your only real chance of being charged with a crime for betting online would come if you were involved with organized crime or did something real stupid, like going on TV and daring the police to arrest you.

Professor Rose can be reached at his website: www.gamblingandthelaw.com.