USA Domestic Gambling Laws

Four key legal documents oversee the United States’ treatment and tolerance of casino gambling. These domestic gambling legislations regulate various components of American gambling opportunities, each from different regulatory aspects such as finances, internet access, and anti-money laundering. We discuss briefly each of the laws weight and expand further within individual USA gambling law pages.

US federal law inforgraph

The Federal Wire Act of 1961

This Act became law in 1961 under the Kennedy administration to combat illegal number fixing, racketeering, and money laundering operations run by the mafia. The Federal Wire Act prevented sports betting information and wagers from being transmitted across state borders and between US territories. The Act prevented this action from occurring through telecommunication, i.e. telephone calls and telegraph messages.

The creation of this legislation predated the use of the internet for mass commercialization and consumerism. Individual authors and legislators clearly understood the Federal Wire Act only applied to topics discussed within its construction. By all technicality, the Wire Act prevents interstate wagering and mainly assists states in enforcing their own laws concerning gambling activities.

This law has been reinterpreted multiple times since the 2000’s. Under various administrations, the U.S. federal Department of Justice had expanded or narrowed the application of the Federal Wire Act. Typically, this interpretation has revolved around the concerns of online gambling.

The Unlawful Internet Gambling Enforcement Act

Enacted in 2006, the UIGEA was not a stand-alone bill rather it was inserted last-minute in a must-pass bill known as the SAFE Port Act. Since 1998, Congress has attempted to pass an anti-online gambling bill and the UIGEA gave them a moment of success as their insertion has passed under the radar and the last reading of the SAFE Port bill was waived. However, the UIGEA had been transformed via multiple readings, additions, and edits that it no longer served the same purpose it originally intended.

Once passed, anti-online gaming legislators realized the UIGEA was simply a banking regulation bill. The Unlawful Internet Gambling Enforcement Act (UIGEA) prevented financial institutions from knowingly processing online gambling transactions. While this Act did not forbid online gambling access from either operator or player, the Act did provide to be inconvenient for online gambling payment processors which in turn hurt the bottom line of most American-serving online gambling entities.

The Department of Justice Opinion Memorandum of 2011

Two high-level US government agencies, Department of Justice (DOJ) along with the Office of Legal Counsel (OLC), have revisited the Federal Wire Act and offered their formal interpretation of the law which was created in the 60’s. Under the Bush administration, the feds attempted to apply the Wire Act to offshore gambling but were unsuccessful due to the wording and scope of the law. Numerous legal experts disagreed which the Act application toward anything beyond sports gambling.

The DOJ and OLC revisited the Wire Act and gave a formal DOJ Opinion Memorandum in 2011 which clarified the law’s reach to only include domestic online sportsbooks, providing the authority to regulate online casinos and poker sites to the individual states who desired to do so.

States rejoiced upon notification of this Memo and began constructing laws to allow state-regulated online gambling offers, of course exempting regulations for online sports betting. However, in 2018 a law which prevented domestic sports gambling venues was rescinded which led to the questioning of the Wire Act’s application over state-regulated online sportsbooks. This stirred a quick response which detailed the Wire Act’s application to only prohibit interstate sports wagering online and via mobile. This means that domestic online casinos, poker sites and sportsbooks can now be legally regulated by individual states. Licensed US friendly online casinos operating offshore remained unaffected by memorandum.

The Restoration of Americas Wire Act

Introduced in 2014, the Restoration of Americas Wire Act (RAWA) bill is an anti-online gambling legislation at its core. The bill would federally prohibit any and all online gambling from casino gambling, poker gambling, to sports gambling from either overseas or domestically. Sheldon Adelson, the Sands brick and mortar casino-chain owner, is one of the largest donors for this bill and has monetarily contributed to Republican party members who push RAWA’s agenda.

Little movement has pushed RAWA to fruition as numerous states would suffer enacting RAWA after legalizing and implementing online gambling offers. RAWA, on the other hand, contains specific carve-out for certain gambling games. This would allow these game types to be exempt from federal prohibition.

How Do These Laws Affect Online Gambling?

None of these country-specific gambling laws prohibit offshore online gambling at licensed and regulated betting site and only regulate domestic online gambling practices. The Federal Wire Act was arguably a key document which caused debate well after its creation. The UIGEA produced friction and inconvenienced online gambling businesses by hurting their profits through payment processing issues, and the DOJ 2011 opened offshore and domestic online casino and poker gambling to Americans once again, offshore sportsbooks were also permitted.

RAWA, not yet a law, intends to prohibit all forms of online gambling whether licensed and regulated by a U.S. state or overseas. While these legislative pieces have some effect or at least potential effect in the case of RAWA, there is no federal law which prevents Americans from enjoying offshore online gambling or state-regulated online gambling offers. Rather each state has the ability to choose to permit or prohibit gambling within their borders, to which many have shown interest in regulation.