Column: Online gamblers can face the law
By Michael P. Regan, AP Business Writer | July 25,
2006
Q. Can I get in trouble for gambling on the Internet?
A. 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 likely will
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 U.S.
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 Firepay 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 U.S.: "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 of 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.