Online gambling has been growing in popularity over the past two years. This includes sports betting and casinos. Although not all of the United States allows online gambling, some states have legalized the practice.
There are federal laws on the books, however, that are used to criminalize the practice. Specifically, there is the Wire Act, the Illegal Gambling Business Act, and the Unlawful Internet Gambling Enforcement Act. In addition, there are seven federal statutes that are implicated in the activity. These include the Travel Act, the Bank Secrecy Act, the Anti-Money Laundering statutes, and the Racketeer Influenced and Corrupt Organizations (RICO) statutes.
While these statutes all have their own set of requirements, they are all aimed at preventing illegal gambling from occurring. A recent study by the University of Bristol revealed that regular gamblers are six times more likely to gamble online than offline. Also, the amount of money that is spent on online gambling is also rising, indicating a need for better regulation.
For instance, the Travel Act prohibits illegal gambling on interstate commerce. It also applies to internet casinos and players who use interstate facilities for unlawful activities. As a result, some states have taken a cautious approach toward the trend. Other states, such as New York, have begun legalizing online gambling. However, there are also some states, such as Kentucky and Illinois, that still haven’t approved the practice. The federal government has the power to take action in these cases, including seizing assets and imposing monetary fines.
On the other hand, the First Amendment has also been a subject of contention. According to the Marquette Sports Law Journal, “the UIGEA is not the only law that should be the focus of attention.” The First Amendment’s guarantee of free speech may not be available when dealing with financial transactions in the United States. Some courts have found the Commerce Clause does not provide a constitutional defense against state-level gambling prohibitions. Moreover, some have questioned whether the statute is even legally permissible because it fails to define what constitutes an acceptable form of gambling.
Another area of controversy is the use of the Internet as a money-laundering tool. The FBI has stated that a substantial number of transactions for illegal Internet gambling are made with money derived from criminal activities. Therefore, the question arises as to what laws are best enforced against such illegal activity.
In fact, the most logical step that an online casino can take is to implement a robust anti-money laundering (AML) and Know Your Customer (KYC) program. Both of these systems will help to ensure that customers do not fall prey to fraudsters, and that businesses do not go out of business because of a breach of security.
Fortunately, there are a variety of AML and KYC frameworks that online casinos can choose from. Using a framework can help companies to identify users, check to make sure they are legally eligible to participate in gambling, and cut off access to users when the spending reaches a certain threshold.