Big Bucks in Web Gambling
You Can Make Money Gambling on the Internet, but Is It Legal?
By MICHAEL P. REGAN
July 28, 2006 — - Question: Can I get in trouble for gambling on the Internet?
Answer: Despite the recent high-profile indictments of the founder and CEO of Internet gambling company BetOnSports PLC, it does not appear that online gamblers in most U.S. states have any reason to fear prosecution -- at least not by the federal government.
The exception is Washington state, where gamblers could be charged with a felony under recently passed legislation.
The state's gambling commission has promised not to start an active campaign against regular players. However, if a gambling site's records are seized, players whose names appear in the records will likely be sent a warning letter. "If a player's name reappears again, charges may be filed," a newsletter from the commission warns.
But when it comes to federal criminal charges, individual users of gambling sites have not been targeted for several reasons, including questions over whether or not they are even breaking the law, according to Gary Kashar, a partner in the New York office of the law firm White & Case who has clients in the gambling industry.
"The Wire Act -- the primary U.S. law used in the prosecution of Internet gambling -- refers to engaging in the 'business' of betting or wagering itself, and it's not clear that this applies to individual gamblers," he said. "There are also practical and political reasons to go after large companies as opposed to individual citizens."
Instead, the government has tried to put up some roadblocks to stop people from gambling on computers based in the United States.
Financial institutions agreed to stop allowing the use of credit cards for online gambling a few years ago as part of settlements with New York Attorney General Eliot Spitzer. So these days, online gamblers in the U.S. typically use offshore payment systems like Neteller or ******* and gamble with impunity.
Still, the federal judge in the BetOnSports case sent gamblers a clear message regarding how her court feels about users of the sites. A restraining order filed in the case told the company to post this message on all its Web sites accessible in the United States.: "It is a violation of United States law to transmit sports wagers or betting information to this Web site from the United States. If you have a wagering account with the operators of this Web site, please call (toll free number) to arrange a refund."
BetOnSports has since shut down its Web sites, though the message promising the refund has yet to appear.
Experts also point out that you are still on the hook for federal income tax on your winnings. And U.S. gamblers need to be aware that since every Internet gambling site is based in another country, they do not have the same legal rights as they do when dealing with a company incorporated in the United States.
"If you're going to bet, you have to be aware that you may not have all the enforcement remedies that you have when you go to a land-based casino. But that's a reason, obviously, to only gamble with a site that you have trusted and that has a record of making its payments to users," said attorney Ken Dreifach, the former chief of Spitzer's Internet Bureau and now a partner at Sonnenschein Nath & Rosenthal LLP in New York.
Proponents of legalized online gambling also warn that more crackdowns by the federal government could bring more obstacles to U.S. gamblers and push the $12 billion a year industry into shady territory.
"The further the U.S. government pushes this underground, the more chance you have of getting organized crime involved in some of this stuff," said Radley Balko, a policy analyst with the Cato Institute in Washington, D.C.
You Can Make Money Gambling on the Internet, but Is It Legal?
By MICHAEL P. REGAN
July 28, 2006 — - Question: Can I get in trouble for gambling on the Internet?
Answer: Despite the recent high-profile indictments of the founder and CEO of Internet gambling company BetOnSports PLC, it does not appear that online gamblers in most U.S. states have any reason to fear prosecution -- at least not by the federal government.
The exception is Washington state, where gamblers could be charged with a felony under recently passed legislation.
The state's gambling commission has promised not to start an active campaign against regular players. However, if a gambling site's records are seized, players whose names appear in the records will likely be sent a warning letter. "If a player's name reappears again, charges may be filed," a newsletter from the commission warns.
But when it comes to federal criminal charges, individual users of gambling sites have not been targeted for several reasons, including questions over whether or not they are even breaking the law, according to Gary Kashar, a partner in the New York office of the law firm White & Case who has clients in the gambling industry.
"The Wire Act -- the primary U.S. law used in the prosecution of Internet gambling -- refers to engaging in the 'business' of betting or wagering itself, and it's not clear that this applies to individual gamblers," he said. "There are also practical and political reasons to go after large companies as opposed to individual citizens."
Instead, the government has tried to put up some roadblocks to stop people from gambling on computers based in the United States.
Financial institutions agreed to stop allowing the use of credit cards for online gambling a few years ago as part of settlements with New York Attorney General Eliot Spitzer. So these days, online gamblers in the U.S. typically use offshore payment systems like Neteller or ******* and gamble with impunity.
Still, the federal judge in the BetOnSports case sent gamblers a clear message regarding how her court feels about users of the sites. A restraining order filed in the case told the company to post this message on all its Web sites accessible in the United States.: "It is a violation of United States law to transmit sports wagers or betting information to this Web site from the United States. If you have a wagering account with the operators of this Web site, please call (toll free number) to arrange a refund."
BetOnSports has since shut down its Web sites, though the message promising the refund has yet to appear.
Experts also point out that you are still on the hook for federal income tax on your winnings. And U.S. gamblers need to be aware that since every Internet gambling site is based in another country, they do not have the same legal rights as they do when dealing with a company incorporated in the United States.
"If you're going to bet, you have to be aware that you may not have all the enforcement remedies that you have when you go to a land-based casino. But that's a reason, obviously, to only gamble with a site that you have trusted and that has a record of making its payments to users," said attorney Ken Dreifach, the former chief of Spitzer's Internet Bureau and now a partner at Sonnenschein Nath & Rosenthal LLP in New York.
Proponents of legalized online gambling also warn that more crackdowns by the federal government could bring more obstacles to U.S. gamblers and push the $12 billion a year industry into shady territory.
"The further the U.S. government pushes this underground, the more chance you have of getting organized crime involved in some of this stuff," said Radley Balko, a policy analyst with the Cato Institute in Washington, D.C.
