Forum Archive : Miscellaneous

Is online gambling legal in the U.S.?

From:   Chuck Bower
Address:   bower@astro.indiana.edu
Date:   13 June 2006
Subject:   Stick, update your resume
Forum:   GammOnLine

According to our local morning paper, congress is (again) trying to make
a law to stop "illegal" online gambling, such as poker. (I hope you all
see the irony in making a law to stop something illegal.

Steve Mellen  writes:

Well, it's an election year here in these United States, Chuck. So if
you wonder how come gas is $3/gallon, but Congress is wasting its
legislative calendar debating stuff like a gay marriage amendment, a
flag burning amendment, and an online gambling bill, there's your
answer. Yawn.

This bill comes up every couple years, and I'm not sure if it has any
greater chance of passage this year than in the past. My understanding
is that it would not ban you from gambling online per se, but would seek
to ban the transfer of money to online sites and such. The impression
I've gathered from following the issue casually is that not a lot will
really change, you'll just have to rely on using a foreign conduit for
your money like Paypal, as many already do. (Making the deposit process
harder could result in some fish ponds drying up, though.)

I don't think the result would be federal agents beating down your door
to catch you playing on GamesGrid. However, I would note that many
states already ban online gambling, as a matter of state (not federal)
law. Congress, if they wanted to, could say "any time you violate your
state's laws on online gambling, and the site is out of state or
foreign, we're going to call it a federal crime." That's the serious
answer to Chuck's question, but as I said above, I don't think this is
actually what they are proposing to do.

It's been nearly a century since Prohibition, and our policymakers don't
seem to have learned anything. Any sensible approach would involve
making online gambling fully legal, to allow U.S. companies to get into
the business, and then regulating and taxing the heck out of them.
Instead, some clowns in Costa Rica get to siphon off a certain
percentage of our GDP every year, because we're the type of moral nation
that could never allow something as sinful as gambling.

Raccoon  writes:

Amen. Help support the economies of Costa Rica, Cyprus, Gibraltar, and
the United Kingdom. No gambling! Except in Las Vegas, Atlantic City,
Biloxi and Garden City, the Indian casinos, the riverboats, the poker
cruises, the Friday night home game, the horse track, the jai alai, the
state lottery, the video poker, the dog races, and the church bingo
bazaar. No gambling!

Stanley E. Richards  writes:

I have read the threads in this post and I still do not understand. What
is the current federal law? Is it true that American companies cannot
provide online gambling? Does that mean that Americans are committing a
crime to gamble online? If so, what are the prescribed penalties for
illegal online gambling? Are there any cases of Americans being
prosecuted for online gambling? I have seen online poker advertisement.
Are these advertisements legal because betting is not allowed on these
sites? Or is betting allowed on advertised sites? Are there specific
online gambling bans in some states? Which states?

I understand that Capone went to prison by not reporting his taxes from
illegal activities. Are we reporting taxes on illegal online gambling?
Does reporting our illegal activity save us?

Steve Mellen  writes:

Have you seen the ads on TV for PartyPoker and other online sites? You
may notice they say things like "Check out PartyPoker.net - the world's
largest online poker school!" What they're doing is a clever legal dance
where they advertise not PartyPoker.com, the online gambling site, but
PartyPoker.net, the "online poker school." You might reasonably infer
that they're doing this to get around some law or another.

Here's the short rundown on legality. Many states have laws against
online gambling; whether these laws make it illegal for you to gamble
online, or merely prevent someone from running a gambling operation,
varies from state to state. For example, many states have laws against
running a poker game where the house keeps a cut, but playing poker with
your buddies is perfectly legal; so in those states, you probably
wouldn't be in trouble for gambling online, but the online site might be
if they weren't well beyond the jurisdiction of the authorities.

Federal law applies to everyone, of course, but it is more of a gray
area. The only statute that arguably applies is something called the
Wire Act, which prohibits, to summarize, the use of "wire
communications" (this is a pre-Internet statute) for the purpose of
placing an illegal wager. However, for reasons too complex to get into
here, the courts have interpreted the Wire Act to only apply to sports
betting, and not to other forms of online gambling.

The Justice Department has taken a tougher line, however, arguing that
online poker and other games are also prohibited by the Wire Act.
They've threatened cable providers with prosecution, for example, for
running ads for gambling websites. I suppose it's the same legal theory
that would get the cable company in trouble if they ran ads for
prostitution or illegal drugs. But in any event, even though the cable
providers could probably go to court and win, it's not worth their
trouble (do YOU want to fight an expensive legal battle against the U.S.
Department of Justice?) and so they went to the gambling websites and
said "sorry, we're not going to run your ads any more, they're getting
us in trouble." The response of the gambling websites was to come up
with the "clever" advertisements I mentioned above.

As to your last question, income from illegal gambling is definitely
taxable. Reporting it saves you from getting in trouble with the IRS,
but doesn't protect you from other sorts of trouble.
Did you find the information in this article useful?          

Do you have any comments you'd like to add?     



Backgammon computers  (Graham Bayne+, Mar 2005) 
Backgammon in famous paintings  (Dan Scoones, Mar 2000) 
Backgammon versus poker  (Peter Hallberg, June 2006) 
Backgammon's popularity  (Anon+, Sept 2003) 
Board orientation  (Daniel Murphy, Mar 1999) 
Calculation versus instinct  (Kit Woolsey, Jan 1998) 
Checker play versus cube play  (Gregg Cattanach, Oct 2004) 
Checker play versus cube play  (David Montgomery, Jan 1998)  [Recommended reading]
Copying positions from books  (Stick+, Nov 2005) 
Famous people who play  (Carem Wiklicm+, Dec 2002) 
Free lesson  (Donald Kahn, Apr 1999) 
General tips  (Hank Youngerman, Aug 1998) 
Giants of Backgammon list  (Raccoon+, Mar 2006)  [GammOnLine forum]
Handicapping  (Kees van den Doel+, Aug 2003) 
Handicapping  (flash, Aug 1998) 
Handicapping--Pass or pick a roll  (Michael J. Zehr, Dec 1997) 
Handicapping--Rerolling 5-4  (Mary Hickey, Feb 2004)  [GammOnLine forum]
How bots rate you  (Phil Simborg, Mar 2010) 
Initiatives by local clubs  (Raccoon, Mar 2006)  [GammOnLine forum]
Is online gambling legal in the U.S.?  (Chuck Bower+, June 2006)  [GammOnLine forum]
Maximizing earnings  (Stanley E. Richards+, Oct 2005)  [GammOnLine forum]
Money management  (Carly Robson+, Jan 2009) 
Money management  (Gnoh Mon+, July 2004) 
Money management  (Adam Stocks, Jan 2003) 
Money management and the Kelly Criterion  (Stuart Thomson+, June 1999)  [Long message]
Notation  (Dean Gay, Feb 2000) 
Notation  (Kit Woolsey, July 1995) 
Position cards  (Francois Hochede, Jan 2004) 
Posted diagrams are scrunched up  (Dale+, Sept 2000) 
Top women players  (Tami+, Nov 2006)  [GammOnLine forum]
Typesetting backgammon  (Jason Lee+, Apr 2006)  [GammOnLine forum]
What is Zbot?  (Douglas Zare+, Dec 2003)  [GammOnLine forum]
What is backgammon?  (David C. Oshel, Aug 1997) 
Why do people play for money?  (Hank Youngerman+, Sept 2005) 
World Champions  (John Bazigos, June 1994) 
rec.games.backgammon mini-FAQ  (Daniel Murphy, Mar 1998)  [Recommended reading]

[GammOnLine forum]  From GammOnLine       [Long message]  Long message       [Recommended reading]  Recommended reading       [Recent addition]  Recent addition

  Book Suggestions
Computer Dice
Cube Handling
Cube Handling in Races
Extreme Gammon
Fun and frustration
GNU Backgammon
Luck versus Skill
Magazines & E-zines
Match Archives
Match Equities
Match Play
Match Play at 2-away/2-away
Opening Rolls
Pip Counting
Play Sites
Probability and Statistics
Source Code
Strategy--Bearing Off
Strategy--Checker play


Return to:  Backgammon Galore : Forum Archive Main Page