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7 Things to Know About Online Gambling Laws

— May 14, 2020

Keeping up with breaking news surrounding recent changes in online gambling regulations through reliable sources is also a good place to get started.

Online gambling is on the rise. Due to an unclear regulatory environment, many gamblers are turning to the internet to play their favorite casino games. The laws in the US around gambling, and online gambling, in particular, are quite complex and probably more difficult to understand than they should be.

This is due to America’s long and complicated history of gambling laws and regulations, as well as the effect of technology on the regulatory environment. Many gambling laws have historically focused on gambling that takes place on US soil, targeting American casinos. However, the adoption of the Internet and digital technologies have made the status of these regulations less clear and more difficult to enforce. 

Because online gambling happens virtually rather than at a specific location, many older regulations have not kept pace with these rapid technological changes. The end result is that for all intents and purposes, Americans can feel safe gambling online, but should make sure that the physical headquarters or location of whatever site they are gambling on is not based in the US.

In this way, gamblers can ensure that they are not interfering with Federal regulations that have a specific focus on gambling on US soil. However, things yet again become unclear when considering local or state regulations which sometimes prohibit gambling in specific areas without using the same language that focuses on the physical location where gambling is taking place.

In order to fully understand the rather complex regulatory system surrounding online gambling around the world, let’s take a look at the seven most important things to know about online gambling laws.

  1. US Federal Regulations Around Gambling Are Ambiguous 

One of the most operative pieces of federal legislation that regulates online gambling activity in the US is the Unlawful Internet Gambling Act of 2006. It was, in fact, passed as an add-on to another piece of legislation called the Safe Port Act which was necessary for a variety of other reasons not directly related to online gambling. Nonetheless, a group of socially conservative Republicans at the time did add this piece of legislation onto the Safe Port Act, which passed the House and Senate to become law.

The Unlawful Internet Gambling Act does prohibit people and businesses from knowingly accepting funds associated with illegal Internet gambling. This pronouncement, however, isn’t as disruptive as it may seem to the online gambling industry.

While it does prevent institutions from accepting payments, it does not prohibit gamblers from sending payments. That means gamblers aren’t technically violating the letter of this law by gambling and sending payments to an online casino based outside of the US. 

But, why, you may ask, are online casinos not being prosecuted for accepting those payments? Most online casinos that accept American players have found a clever loophole. They have payments from gamblers pass through a separate payment processor company that is based outside of the US and therefore outside of American jurisdiction.

Casino slot machines
Casino slot machines; image courtesy of stokpic via Pixabay,

What this all means is that as long as Americans choose an online casino based outside the US, which uses a payment processor that is also out of the country, and has proper licenses, they should be safe from federal prosecution.

  1. US State Regulations Vary Across the Country

States also have their own specific regulations surrounding online gambling across the US. This is where things get tricky. Since each state has its own regulations, gamblers are responsible for researching the specific regulations of their state. The legal status of online gambling in different states ranges from not illegal, to conditionally legal, to almost or patently illegal. 

Despite the differences in regulations across states, it is important to note that violations of these state laws around online gambling are very rarely enforced or prosecuted. It’s therefore quite common for online gamblers to technically infringe upon state law but face no consequences. In fact, one of the only times an online gambler faced prosecution for violating state law was in the case of Jefferey Trauman, who faced a $500 fine on $10,000 worth of winnings in 2008.

Nonetheless, online gamblers should look up the regulations of their state before placing any wagers or playing any casino games just to be safe. Moreover, state laws do change from time to time, so it’s wise for any gambler to check up on any changes to state regulations just to make sure they don’t run into any trouble.

  1. International Regulations Vary By Country

There are not currently any mutually agreed upon international law governing online gambling throughout the world. As a result, the legality of online gambling varies by country. Gamblers outside of the US must research the specific regulations pertaining to their country before gambling online.

In broad strokes, some provinces in Canada and most countries in the European Union do permit online gambling. However, there are many exceptions to this general rule and regulations across Asia vary greatly. Online law-related publications can be a great resource in informing how you learn about the regulations of your region.

  1. Some Gamblers Have Turned to Cryptocurrency in the Face of Regulations

Due to the complicated nature of online gambling regulations in the US and internationally, many online gamblers have turned to cryptocurrencies like Bitcoin in order to preserve their anonymity while gambling online. 

Bitcoin uses authentication keys and digital wallets that allow gamblers to process payments to online casinos that aren’t tied to their personal identities. Some gamblers also use this to prevent banks or payment processors from denying payments made to online casinos or flagging them as suspicious.

It’s no surprise that a growing number of online casinos are accepting Bitcoin as a form of payment. As a tool, it can be a helpful way for online gamblers to play it safe and avoid risking prosecution. However, using cryptocurrency is still not a substitute for researching and knowing the regulations of your country or state.

  1. Regulations Differentiate Between Different Forms of Gambling

When researching online gambling regulations, it’s important to note that many regulations differentiate between different forms of gambling. Laws can, therefore, vary depending on different forms of gambling such as Poker, Casino games like Roulette or Blackjack, sports betting, lotteries, horse racing, and advance-deposit wagering. 

Online gamblers should research how any given regulation applies to their specific form of gambling or casino game of choice. According to Online Casino Gems, understanding the different parts of the gambling process will not only help to wrap your head around different regulations but also serve to make you a more informed and responsible gambler.

  1. Regulations Draw Distinctions Between Different Parts of the Gambling Process

Many gambling regulations also differentiate between different parts of the gambling process, which means that laws could vary depending on which specific actions a gambler takes. Those distinctions could be between placing a bet or wager, processing a payment, processing a payment as an intermediary, and cashing out. 

Online gamblers should also research how each specific regulation relates to each part of the gambling process. Some regulations might allow for some things while disallowing others.

State and federal regulations can also emphasize different parts of the gambling process. It’s not the only way that federal and state regulations can clash. According to the New York Times, states are pushing to keep federal regulations from infringing upon sports gambling in particular.

  1. Online Casinos with Proper Licenses and Registrations are Safer Bets

If all this research seems like a lot of work, that’s because it is. A good place to start, if you are looking to gamble online, is to make sure you register with an online casino that holds all the proper licenses and permits.

These licenses can vary by country but depending on where you live, it can be very helpful to make sure that your online casino of choice holds the relevant license and has gone through the legal hurdles to operate that casino legally. 

It’s a great place to start your research into the relevant regulations and can act as a bit of a shortcut to making sure you avoid violating any regulations or facing prosecution. Keeping up with breaking news surrounding recent changes in online gambling regulations through reliable sources like The Washington Post can also be a good place to get started. Good luck, and gamble responsibly.

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