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Legal Regulations That Revolutionized Online Gambling in Western Nations

— October 27, 2021

The current legal framework in Canada and the USA is somewhat grey regarding online betting but is gradually opening up.

The law covering online gambling has had to evolve over the years in the Western world, and may currently be on a converging path. As the USA and Canada seek to make their stringent legal situation more open, the liberal UK may be about to tighten things up, which may make an international harmonization of laws regarding online gambling a credible possibility.

State by State Regulation in the USA

Because of the constitutional arrangement of the United States and the relatively high degree of autonomy that individual states have compared to many other nations, the matter of online gambling is determined legally by the state rather than the national government. This means that the legal situation can change drastically from one state to another, with some parts of the nation being cautious, some fully embracing online gambling, and others remaining very wary of it (which has, until very recently, been the traditional US approach to betting in most forms).

Utah and Hawaii are the only two states that are dead set against almost all gambling, although poker is permitted as an element of skill is involved. While relatively few states have completely endorsed betting through legislation (Nevada, New Jersey, and Pennsylvania among them), most are looking to liberalize their laws in order to facilitate betting online, driven by a combination of the desire for revenue and the essential fact that people who want to bet online can and will. And, that being so, it’s better for such wagering to be properly regulated and for associated revenues to be sent to the state in question rather than overseas nations (or the black market). The same applies to both sports and casino betting, with increasing numbers of states accepting online sports wagers.

Previously, sports betting in the USA had been almost completely illegal thanks to the Professional and Amateur Sports Protection Act of 1992. This was overturned on May 14, 2018, when a Supreme Court ruling found the Act to be unconstitutional. Despite this, sports and casino betting are not free across the board and vary significantly in legal terms state by state. An interesting exemption for casino betting in the country was the Indian Gaming Regulatory Act of 1988 which provided scope for Native American Trust Land to be used for that purpose.

The Situation in Canada and Australia

Canada has taken a similar approach to the United States, with provinces/territories determining the detail of gambling laws, including online betting. Sports betting previously was strictly limited to parlay betting (also known as accumulators or multiples, bets with multiple legs all of which must be satisfied to pay out for the bettor). However, Canada recently changed that state of affairs with the C-218 Bill. This gambling bill enabled single-game sports betting, which makes gambling both more straightforward and easier for players to win because just a single event needs to go the predicted way, rather than multiple. Online betting is not illegal in Canada but it is illegal to bet at a Canadian online casino not owned by a provincial/territorial authority. However, there is widespread betting by Canadians at offshore casinos and this grey area may be remedied by legislation in the future.

A key piece of legislation in Australia was the Interactive Gambling Act 2001 (IGA), with taxes varying significantly according to which part of the country the betting occurs. Individuals are not taxed, however, as the money is deemed to be dependent on luck rather than skill (an exception being made for professional gamblers who face rates of up to 30% in income tax). In 2016 an amendment to the IGA was passed that made online poker illegal.

Betting Online as a Grey Area – UIGEA

The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) was one of the most important, yet unhelpful, pieces of legislation regarding betting in the USA. This made online gambling grey in many regards, as it did not prohibit online betting but did make illegal financial transactions involving online gambling service providers. Circumvention of the act has seen it receive plenty of criticism.

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Despite UIGEA, individual states have generally trended towards opening up avenues of online gambling. State penalties for breaking the law have also varied massively, with some exacting small fines (Vermont has a maximum penalty of $200) and others treating it far more seriously (Oregon deems it a Class A misdemeanor with a penalty of 1 year in prison).

A Harmonious Future?

In the United Kingdom, traditionally a more pro-betting nation than many others, a review is assessing the Gambling Act 2005 (the key piece of legislation in the country for betting) to see whether it needs tightening up. This followed a decision to ban the use of credit cards in the UK for betting purposes.

The grey situation in Canada and varying laws in the USA are far from unique. Online gambling laws are ambiguous in many nations, and harmonizing international law in this area would be one way to bring clarity while also fighting against the black market. Bringing the world together on gambling regulation would also help in combating cross-border crimes such as money laundering and fraud. The review could see the UK traveling in the opposite direction to the US and Canada and may see a greater degree of overlap in legal frameworks than has been the case in the past. In turn, this may pave the way towards a possible harmonization of gambling laws on the international stage.

The current legal framework in Canada and the USA is somewhat grey regarding online betting but is gradually opening up. Whether holdouts such as Utah and Hawaii retain their opposition to legal online betting remains to be seen, but internationally there does appear to be a convergence of legislation in the world of online betting.

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