Online gambling is an activity that is both legal and illegal in different states and countries. While it may seem easy to evade laws regulating online gambling, federal agencies are empowered to take action to combat illegal gaming. This could include monetary fines or even seizing assets. In many cases, the federal government has seized assets from the operators of illegal gambling sites.
The UIGEA (Unlawful Internet Gambling Enforcement Act) is a federal statute designed to help curb the illegal gambling industry. Section 1956 of the act defines several distinct crimes related to illegal gambling. These include laundering, evading taxes, and concealing assets. Those crimes are also the most important.
AML (Anti-Money Laundering) laws are another way to keep your online gambling operations from becoming a financial crime. For example, banks and casinos are required to file currency transaction reports for transactions over $10,000. They are also required to perform in-depth external audits.
Other regulations may come into play as well. For instance, the Kahnawake Gaming Commission, which regulates gaming activities from the Mohawk Territory, issues gaming licenses to many online gambling organisations. It also requires them to maintain a large cash transaction report.
Similarly, the Travel Act applies to players who engage in interstate gambling. However, the true legality of the alleged state-to-state gaming law has been questioned.
Several federal and state criminal statutes are implicated by illegal Internet gambling. Some of these include the Wire Act and the Travel Act. Also, the First Amendment has been called into question.
One of the first online gambling sites to operate in the United States was the Seals with Clubs bitcoin poker site. The owner was fined $25,000 for launching an illegal gambling site and two years of probation. Another notable occurrence involved a Costa Rican casino operation known as Tropical Paradise.
Nevertheless, the most important distinction is that there are more than a dozen jurisdictions in the United States that have some form of legalized gambling. The most prominent is the state of New Jersey. Delaware permits casinos and poker, but no sports betting. In 2022, Kentucky and Connecticut will follow suit, while the state of New York will allow legal online gambling.
Although it is not clear how much UIGEA will actually change the landscape of the gambling industry, it is likely that online casinos and other gaming businesses will have to up their compliance game. If they are not already, they should conduct regular external audits and use KYC (Know Your Customer) practices to ensure that they aren’t facilitating money laundering or account takeover schemes.
Despite its flaws, the UIGEA is a good first step toward ensuring that online gambling is regulated in a fair and unbiased manner. With the number of sites increasing at an exponential rate, it is important to be mindful of all legal obligations as well as the risks of misuse and fraud. As more states legalize online gambling, the regulatory expectations will become complicated.