During 2000, the online gambling industry had almost reached $2 billion. It was primarily comprised of casino games and sports betting, and had about 25% of its revenue coming from virtual poker. It also included lottery tickets and pari-mutuel race betting.
The growth of online gambling has been phenomenal. However, there have been questions raised about the legality of Internet gaming. In particular, many countries have yet to accept it as an entertainment medium. Several of these countries have expressed a concern that the Internet may be used to bring illegal gambling into their jurisdictions.
Currently, federal criminal statutes implicate illegal gambling on the Internet. These statutes include: 31 U.S.C. 5362(10) (A) – “Unlawful Internet gambling” means any act involving the use of the Internet or a computer network to place bets, receive bets, or transmit bets in any manner. It includes, among other things, location verification, age verification, and appropriate data security standards.
Section 1956 creates several distinct crimes: laundering to disguise and promote illicit activity, and laundering to evade taxes. It also creates a criminal offense known as a law enforcement sting.
The Unlawful Internet Gambling Enforcement Act (UIGEA) prohibits the transfer of money to internet gambling sites. It is unclear how this will affect the industry. Some banks may refuse to process transactions from certain countries.
The United States Department of Justice has attempted to estimate the size of the online gambling industry. It is estimated that the industry will grow to around $20 billion by the end of 2010.
In December 2002, the General Accounting Office released Internet Gambling: An Overview of Issues. It found that the Lopez Amendment, which regulates commercial activity, could weed out low level gambling cases.
