The United States isn’t the only country that regulates gambling at the state level, nor even the largest, as this is the case in India for instance who have three times the population, but it certainly is the country with the largest gambling market, and state regulated gambling certainly complicates things a great deal when looking at this from the federal level.
In most countries, this is all decided federally, and all the federal government has to do is pass legislation regulating it or prohibiting it and that’s that. While interpreting and applying the law is sometimes not a simple matter, there is still a single legislative body that is deciding all this, which does indeed make this a fairly simple matter to put into place.
So we end up with countries who have taken up the task of regulating online gambling, they pass laws, they set out conditions, and while a certain percentage of the market activity still exists outside this framework, they do capture a fair bit of it, regulate it, license it, tax it, and so on, all fairly well.
Regulating online poker in particular does provide some additional challenges though, as this is a game that benefits from larger player pools, as compared to casino gambling or sports betting, which is just the player versus the house so to speak.
Even in a country as large as France, restricting players from only playing against other players from France has proven to be a big stumbling block, and a lot of players have chosen unregulated sites over the regulated ones in their thirst for bigger player pools, even though the French sites have some fairly big ones to offer.
So you work all this out, and in the case of several smaller countries, the goal has been to allow them to play against players from other countries while still keeping their play tracked, regulated, and taxed by their own government, and this has been pulled off pretty successfully in several locations already.
This is a problem that regulated online poker in the United States has encountered as well, as much larger player pools are accessible at some offshore sites, and with a lot of online poker players, player pool size is king.
In the US though, we are essentially dealing with 50 different legal jurisdictions, 50 different countries in a sense, all with their own criminal laws and appetites for gambling regulation, which vary substantially.
Nevada for instance has always been at the forefront of gambling permissiveness, while just across the border in Utah, they are as anti gambling as they come and don’t have any form of legal gambling.
The Federal Government’s Will to Intervene
States do retain this power though, and this can all go off without a hitch without any federal intervention, but in the case of online gambling, this now presents at least the opportunity for interstate gambling, which they do have a say in, and the only say actually.
If you had a gambling enterprise in two or more states, well the states themselves couldn’t regulate this, because there would be more than one actor involved. So while compacts could be entered into, they would have to be at the approval of the federal government who retain the legal power to regulate this commerce.
The federal government has taken a broader view of all of this though, broader than supported by either the law or the Constitution, and have felt that anything going on via the internet, all online gambling, is within their purview.
So several laws have been alleged to apply to online gambling in the United States generally, the Wire Act in particular, although this was never meant to apply to anything but sports betting, and the UIGEA, which only applied to illegal gambling.
The UIGEA at best could only be rightly held to apply to interstate sports wagering and online gambling illegal at the state level, and even at the state level, operators are often outside the state and their jurisdiction so the laws wouldn’t even apply to them, and with no federal law applying, this means no law applying essentially.
There are three components to the UIGEA actually, the first being that the gambling in question be illegal, the second that it involves financial transactions related to the illegal gambling, and the third and overlooked one is that the laws making it illegal must apply to the accused.
So someone in Nevada who offered online poker to someone in Washington State where it is illegal, and then someone processing financial transactions in Nevada, would not be rightly subject to the UIGEA because Washington law does not apply to residents of Nevada, who are only subject to Nevada law and federal law, not the laws of another state.
So we’re talking a very narrow focus here indeed, but going by the way the federal government puffed out its chest, you would think that the UIGEA made all online gambling illegal that involved Americans. They even believe that operators in foreign countries are subject to all this, which is simply ridiculous actually from a legal perspective, but don’t tell them that.
So the will to intervene is there, and much smoke has been created surrounding these issues, and this has also caused a number of bills in Congress to be proposed to deal with what are essentially threats with no real legal foundation.
The Online Gambling Enabling Bills Don’t Do Much Anyhow
People put a lot of false faith in these bills, and in particular the ones proposed by Representatives Barney Frank and Joe Barton, who each proposed two bills, and proponents of online gambling saw these two as knights in shining armor, coming to their rescue, or at least trying to.
Players in particular have always been quite confused about the legalities of online gambling in the U.S. anyway, they now believed that the UIGEA somehow made it illegal, or the Wire Act already did, and these bills were going to legalize and regulate online gambling or online poker at the federal level, and easy fix if passed.
None of the bills did pass as it turned out, and it was too much to hope for that one would, at this point in time actually with so many legislators holding negative views towards gambling and especially online gambling and not wanting to appear to be permissive to their so called conservative constituents.
Did this matter though? Well the federal government doesn’t even have a role in online gambling outside of the realm of sports betting, it is completely silent for all practical purposes in the world of online poker and online casinos, there are no current laws that restrict this at the federal level, and they are virtually powerless to stop online sports betting even though they do have a law they could use if they could that is.
They did bust some people in past years but operators have simply gotten wise to the deal and no longer visit the United States if there is an indictment to be served to them. Most of these arrests involved American residents and they know enough to move away first now.
The federal government couldn’t really regulate the online gambling industry even if it wanted to, on its own that is as some of these bills suggested. it does not have the constitutional power to regulate anything other than interstate online gambling where the gambling is between Americans and American sites, and even then only with the permission of the states who would have to opt in to this.
The truth is, there is no reason to be concerned about federal legislation not being passed to help the online gambling industry, as they do not really need such help, nor do players who continue to play to their heart’s content regardless.