Online Casinos & The Law

It goes without saying that different jurisdictions have different laws to govern online gambling, and as a player you need to be aware of your local laws before you deposit. A common mistake is to think that because you can find a way to deposit, you’ll be okay, but the laws also govern the casinos so getting paid might be trickier than you think if you live in a country where gambling online is illegal.

Below, I’ll look at the law in the USA nd Europe in a bit more detail, but always be sure your country of residence is comfortable with the thought of allowing you freedom to spend your own money before you play an online casino or poker room.

The US

The law regards online gambling has always been fuzzy in the US since the inception of the web. Until relatively recently, many casinos were generally happy to take US players, but in October 2006, the US slid in the “UIGEA” legislation that forbade banks and financial institutions from allowing their customers to place bets online. The 1961 Wire Act outlawed sports betting by telephone, and it was widely believed that this extended to the Internet when that duly arrived in the late 80s. But it’s a grey area as clearly (sic) the law was passed well before the concept of online gambling was present.

The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), referenced above, gave the banks and eWallet providers until mid-2007 to put controls in place that prevented US citizens from gambling online. It was in fact a watered down version of HR4777, a full-on Bill championed by Senators Goodlatte and Lyl and aimed at outlawing Internet gambling altogether - which remains on the table incidentally, but doesn’t seem to be moving as I write. The UIGEA was the final act of Senator Frist, who faced with the situation where he wasn’t going to get it through on it’s own before he retired, tacked it onto the “must pass” Port Securities bill. Unfortunately, that’s how politics in the US works, and the Bill flew through unopposed and as expected.

It failed to clear up the grey areas, and observers argue that in fact it has made the area even greyer by including carve-outs for horse betting and state lotteries. While the Bill was presented on “American values” and moral arguments, clearly this was smoke and mirrors, but the fact remains that it still passed. So much for freedom of choice. Consequently the online gambling industry has widely accepted that the US needs some care, so residents in a selection of 11 US States are now not able to gamble their own money online. The US states where online gambling (well most of it!) is illegal are Illinois, Indiana, Louisiana, Michigan, Nevada, Oregon, South Dakota, Washington and Wisconsin. Additionally, New Jersey & New York are considered so “grey” as to be widely included in that list. If you live in these States, you are breaking the law by gambling online.

Residents of the other US States are kind of in limbo. You will find most online casinos and poker rooms accept you, but because of the UIGEA, you may find your Government take a different view and consequently, if you can deposit money, you may find it difficult to withdraw any winnings.

As a footnote, the tiny nation of Antigua, which draws much of it’s income from online gaming operators, has challenged the US under WTO fair-trade regulations. What’s more, the WTO ruled in Antigua’s favour. What remains to be seen is how this will impact on the US policy. There are moves afoot in the US to try and repress the legislation, with Senator Barney Frank drafting legislation to ease the pain of the UIGEA. In the meantime, there is every chance that the US could withdraw online gaming from it’s WTO charter to avoid the issues raised by Antigua’s WTO ruling.

Europe

The law varies from the strict to the lenient in Europe. Residents of the UK for example are free to gamble online and there are new laws in place to regulate the industry and provide some level of future protection for the player. Additionally, the UK does not tax players on their winnings. This contrasts directly with The Netherlands and France, where the former is clear on it’s policy of no online gambling, while the latter has more grey laws, but argues again that it is illegal for French citizens to gamble online. To muddy the waters in Holland, the Government is in the process of allowing the partly-State owned “Holland Casino” to open it’s online doors to Dutch residents, creating something of a monopoly that will no doubt be challenged under WTO rules in the future.

Until fairly recently, the situation in Italy was also one of “oppression” with online gambling illegal across the nation. Once again, this was challenged, this time by Malta who house a number of online gaming operators and derive a healthy income therefrom. The challenge was upheld in an International court and in this instance, it seems to have prompted a rethink by the Italian authorities. One would suspect that regulation, and the obvious tax benefits to the Government, in this case might at some point prevail.

Conclusions

The bottom line is, if you are unsure of the legalities, always check before you play. The industry is still relatively young and the landscape will change a lot over the coming years. I wouldn’t rule out the US yet either. It’s a common perception, based on the obvious carve-outs in previous legislation, that the US are clearing the way for their own companies, the Vegas casinos etc, to enter the online gambling market with the minimum of competition. It seems a question of “when” rather than “if” and once this occurs, some sort of regulation will be essential. A change in government would also likely have an impact with the Democrats more prone to freedom of choice than the increasingly moral-minority driven Republicans. Time will tell.

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