- Online Gambling -

Growth Requires Regulations
Internet gambling operated by offshore, unregulated companies has seen explosive growth since the introduction of the World Wide Web in 1995, a fact that has led Congress to take up the issue and consider legislation to ban such gambling in order to protect the right of each state to regulate gambling within its borders.

 

According to information from the report of the National Gambling Impact Study Commission (NGISC):

  • In May 1998, there were approximately 90 on-line casinos, 39 lotteries, 8 bingo games and 53 sports books. A year later, there were more than 250 on-line casinos, 64 lotteries, 20 bingo games and 139 sports books.
  • A gaming industry analysis by Christiansen/Cummings Associates estimated Internet gambling revenues at $651 million for 1998, more than double the estimated $300 million from the previous year.
  • Some studies estimate that revenues for Internet gambling doubled within one year.

 

The Issue
The U.S. commercial casino industry is one of the most heavily regulated industries in the nation. Not only must U.S. commercial casinos comply with state restrictions, licensing requirements and regulations, they also are subject to numerous federal laws. For example, U.S. commercial casinos are subject to federal corporate taxation, publicly traded companies comply with Securities and Exchange Commission rules, casinos file information reports on larger winnings with the IRS and withhold federal taxes on certain winnings, and casinos adhere to anti-money laundering statutes and regulations administered by the U.S. Treasury Department.

In contrast, those offshore operators engaged in

the business of taking Internet wagers from the United States are not subject to these important federal and state legal requirements.

Legislation is moving forward in Congress that would prohibit gambling businesses—wherever they are located (in the United States or not)—from using the Internet or any other interactive computer service to take bets or wagers from individuals in the United States. This legislation would update the Wire Communications Act of 1961, which already prohibits the use of the telephone or other wired devices to circumvent state prohibitions or regulations affecting gaming.

 

American Gaming Association (AGA)
The American Gaming Association (AGA) opposes all forms of unregulated and illegal gambling and supports appropriately drafted legislation to update the Wire Communications Act to account for the advent of the Internet.

The AGA's position is based on two primary facts:

1)
The commercial casino industry believes that tight regulation and strict law enforcement are necessary to ensure that only those who meet high ethical standards operate casinos.

Internet gambling, as it exists today, allows an unlicensed, untaxed, unsupervised operator to engage in wagering that is otherwise subject to strict federal and state regulatory controls—controls that are vital to

ensuring that all casino operators exhibit the honesty, integrity and fairness that are vital to protect consumers from unscrupulous operators who could unfairly tarnish the image of gaming generally.

The AGA supports a ban on Internet gambling, particularly in the absence of placing the same legal and tax regimes on Internet gambling as apply to non-Internet casinos.

2)
Federal law has always "back stopped" the right of each state to determine its own policies on gambling.

The 10th Amendment of the U.S. Constitution states that any right not explicitly granted to the federal government lies with the states or the people. As a result, each state has the right to determine whether or not it will allow any form of gambling and, if so, how it would be regulated and taxed. The federal government recognized these states' rights when it passed the Wire Communications Act in 1961. Unregulated Internet gambling presently allows offshore and out-of-state operators of Web sites that accept bets and wagers to bypass state policies, including restrictions on the availability of gaming within each state.

Federal Internet gambling legislation should follow the model of the Wire Act and permit states to make decisions about the use of technology within their borders by licensed gaming companies. For example, casino

companies should be allowed to market and advertise over the Internet, just as other legal businesses are permitted to do.

It is important to note that, despite the claims of some, the commercial casino industry does not oppose Internet gambling because of fear of competition. To begin with, were Internet gambling to be made legal, commercial casino companies would be in a good position to gain the major share of the market because of their well-established brand names. Second, there is no comparison between the social- and group-oriented entertainment experience of visiting a casino resort and the solitary experience of placing a bet on a computer. Finally, the casino entertainment experience is about more than wagering: Individuals also visit casinos for the restaurants, shows, retail outlets, recreation and other non-gaming amenities that Internet gambling does not offer. The bottom line is that all those who engage in the wagering business should be required to follow the same legal requirements.

 

At The End

Though there are particular states that have passed legislation to prohibit online gambling, it is almost impossible for them enforce it. As far as we know, there has been no one in the United States or Canada, who has gotten into legal trouble for wagering online.

Having said that, it is fact that most physical locations for the web servers that house online casinos, reside in countries such as the Caribbean Islands or Antigua. In these 

countries and in a number of others, gambling is legal.

One thing to keep in mind if you are gambling online is to make sure you claim any wins (and losses) to your government body that oversees personal taxes. You need to keep records outlining the money you have spent gambling online so you can offset your losses against your winnings. Why pay more taxes than you have to?