iGamblingul and the legal process in the USA: towards federal legalization?

Monday, 1 May 2017

-Oana Mihalache

The gambling landscape in the United States is pretty mottled, and the legalization process is far from being accorded to the gaming habits or the actual state of the industry, and this deficiency is rather visible in the case of online gambling. Nevertheless, the legislation in the field also has a complexity which is dictated by the fact that the laws have been made a few centuries ago, thus undergoing a lengthy process. The disadvantage of this development of the legal process is the irregularity: while some states legalized online gambling, others did not pass at all legislation in this field, and in those cases we can say that we’re dealing with a lack of adaptation to the current state of the industry or, firmly said, with a legislative void.

If states like Nevada, Delaware, of New Jersey were among the precursor regarding the legalization of online gambling, others followed suit, like Minnesota, Maine, New York, Pennsylvania, Rhode Island. In the case of the three model-states, online gambling was legalized in 2010 in New Jersey, shortly after in Nevada, and in 2012 in Delaware. The attempt to rank the USA states according to this criterion is a hazardous one, given the fact that in some states the regulations for online gambling, for a legal point of view, are ambiguous – such as Alabama, Alaska, Arizona, South Carolina.

In the United States, the legislative system allow the adoption of laws at the local, state and federal level – in some states, for example, regulations in the field date for over two centuries. This also applied for traditional gambling, only that in this case the legislative framework is more liberal – there are 44 lotteries in the USA, casinos operating in more than 25 states, gaming rooms in almost all big cities and new forms of betting are allowed.

If we shift our attention towards online gambling, we will see tougher restrictions. This type of gambling is regulated at the federal level by three sets of laws, known as The Interstate Wire Act (adopted in 1961), The Professional and Amateur Sports Protection Act (1992) and The Unlawful Internet Gambling Enforcement Act (2006). All three were initiated as attempts to prohibit online gambling. At the state level, some states were clearly in favor of outlawing this form of gambling completely – Indiana (considered one of the most restrictive states in the field of gambling), Illinois, Louisiana, Maryland, Montana, Oregon, South Dakota, Washington, Wisconsin.

There is no need to seek for the opinions of experts in the field in order to claim that the standardization of the legislative framework, by making online gambling legal in each and every state, would be impossible. Nevertheless, many states are doing noticeable process in this regard. In Pennsylvania, many anticipate that online gambling will be legal by the end of the year – in the search for more incomes to the state budget, the most optimistic scenarios show how if legalization became a fact, the online gambling industry could bring half a billion dollars per year in the first five years. Another state that is recording visible progress in the direction of legalization is New York, aiming to legalize online poker – and the only way to do this is to classify it as a skill game. A bill has been introduced already and among the stipulations there is one asking 15% tax for operators and an initial payment of $10 million when applying for a license. California is another state that has been making steps to make this type of gambling legal, even though other representatives from the industry are clearly against. The bill in this case contains a point asking operators to pay $12 million for a license which is available for 7 years. Other states that are making steps ahead in this regard are Massachutes, New Hampshire, Michigan, West Virginia – where the first bill dedicated to online gambling was initiated this year. In some states pressure could grow from the bottom, as the growth of the traditional gambling sector could lead to a liberalization of the governors’ agenda, like in the case of the governor of Ohio, John Kasich.

Among the states that already adopted a piece of legislation dedicated to online gambling we can mention Colorado, Hawaii, Iowa, Louisiana, Mississippi.

If we consider the relation between federal authorities and the laws in the field, we can mention the attitude and public positions of FBI. In 2007, a press release on the site of the Federal Bureau was announcing in a restrictive manner – Don’t roll the dice and mentioned that the only types of online games that are allowed are fantasy, free online games and some sites that are not considered part of the online gambling industry. In 2013, after an investigation conducted by the FBI, the former CEO of the poker company Full Tilt – Raymond Bitar, was found guilty and charged by the Court of Manhattan for money laundering activities. Before having his license revoked, in 2011, Full Tilt was controlling together with PokerStars 70% of the online poker market in the USA and they had total incomes of over $1 billion per year each. Following the legal charge, the Full Tilt Company had to forfeit $731 million, with more than $100 million as compensation for clients turned into victims.

Like we already mentions, the year 2017 could bring new states in front of the pretenders to the status of liberal states regarding online gambling, but the perspectives for a legalization process at the federal level are extremely low, even in the most optimistic scenarios. Until this happens, it’s safe for operators to limit their endeavors to the borders of the states in which online gambling is allowed. And we say this because even though is seems to be pretty caught in the scandal regarding the allegedly Russian involvement in the elections that brought Trump to power, for sure the FBI institution will bring any new Full Tilt case in front of the Courts.

Author: Editor

Share This Post On

Submit a Comment

Your email address will not be published. Required fields are marked *