Using the internet to illegally place bets or receive bets is illegal. There are seven federal criminal statutes that relate to this topic. Each criminal statute creates a distinct crime.
Section 1956 of the Unlawful Internet Gambling Enforcement Act (UIGEA) creates a new crime. This crime requires that the operator of an illegal gambling business possess gross revenue of at least two thousand dollars in a single day. The owner of an illegal gambling business can be imprisoned for up to five years. It also prohibits the use of financial instruments for illegal Internet bets.
Section 1956 also creates laundering, which is the process of concealing or evading taxes or other forms of taxation, or law enforcement stings. It creates laundering for several purposes: disguise, law enforcement stings, and international purposes.
Section 1956 is also an important part of the Racketeer Influenced and Corrupt Organizations (RICO) provision, which makes it unlawful for an illegal gambling business to engage in any activity that may be used to promote or facilitate any illicit activity. It is also an important part of the Lopez Amendment, which regulates commercial activity in gambling.
Section 1956 has raised constitutional issues regarding the enforcement of the federal gambling laws. While the Commerce Clause seems to satisfy the doubts that have arisen, questions have been raised about whether the First Amendment protects a gambling business’s right to free speech.
As a result of the federal laws, state officials are worried that the Internet will bring illegal gambling into their jurisdictions. Some states, such as Indiana, may legalize online casinos in the future.