Online Casino Legislation

Online Casinos Global Legislation

EU Internet-gambling laws are a mess of judicial wrangling. On one hand, member states are legally bound to accept goods and services from other member states. Yet, on the other, the European Court of Justice has declared that the issue of gambling is exclusively a matter of member-state competence, meaning that an EU country has full jurisdiction over whether online gambling is legal within its specific territory. And yet, on a third hand (say what?), the Court of Justice has also ruled that bettors have the right to consumer protections, thus recognizing the legitimacy of online gambling as a business--and, hence, trade--venture. Consequently, sharp legal divergences can be seen from country to country in the European Union.

It should be noted, of course, that the overwhelming majority of EU member states tolerate online gambling. In fact, its common practice among EU member states that such businesses are regulated and taxed, instead of being prohibited. Online casinos are enjoying a sustained interest across Europe. Norway, Sweden, Denmark, Germany, Austria, France and Ireland are all examples of countries that have seen the highest growth in terms of online casino-club creation. At the same time, though, enhanced Internet access in Eastern European countries has naturally led to a growth in online gambling there as well.

Of course, most states in Europe have managed to exert a level of control over online gambling thanks to licensing. Indeed, legislation is often present, obliging casinos to obtain specific licenses and endorse specific rules about online-gambling practices. In the Netherlands for instance, online casinos are perfectly legal. And yet, at the same time, the Dutch Gaming Act does not allow Dutch nationals to take part in online casino games operated by a company which does not have a Dutch license. Meanwhile, U.K. legislation not only tolerates the activity altogether, but supports foreign operators' coming into the U.K. and running their activities from there. (The advantage of such an attitude toward online gambling is that the state is able to regulate the activity effectively, thus enabling British public authorities to tackle issues of fraud and money laundering).

As in the U.S. where states have their own laws, countries in the EU enjoy a noticeable amount of legal "liberty" when it comes to regulations affecting their citizens. The general framework is that European states allow their nationals to play at online casinos as long as such practices are legal. Because there is no specific legislation concerning online gambling, and given the lack of interest from the political class, there is no common legal framework across EU countries.

Ultimately, this has led to squabbles over what the court rulings mean and which laws hold water on a European-wide level. Bwin, an Austrian company that's been locked out of the German market by a state-mandated monopoly for government-run games, has filed several suits against all 16 German states. These suits' outcomes have been mixed, with the judge sometimes ruling in Bwin's favour and, other times, not. Meanwhile, the powers that be have been stringent on gambling restrictions for new member states. This is the case with Bulgaria, which joined the EU in September 2008 and, since that time, has been harranged by Brussels officials seeking to limit the state's liberal gaming laws. To sum all this up, online casinos are for the most part legal in Europe. There has however been several worrying developments in a number of EU member states that have churned out anti-online gambling legislation. But, as we said before, the EU has taken a pretty clear stance on this and the legality of any proposals to ban or restrict online gambling in individual member states is sure to be challenged at the international level.

PLEASE NOTE! All of the information given on these pages has been taken from various sources and up to date accuracy is not guaranteed. For more current and formal information considering the legality of online gambling, consult the specific laws of the area in which you reside or jurisdiction in which you are playing.

Online Casinos & U.S. & Australia Legalisation

In a nutshell, U.S. legislation about online gambling has been and continues to be very unclear. We always said, the main point to remember is that no federal law exists preventing U.S. citizens from engaging in online gambling or any related activity. And, even after the UIGEA, this essentially remains the case. Online gambling "expert" Professor I. Nelson Rose, explicitly states that online gambling should be regarded as perfectly legal as "no United States federal statute or regulation explicitly prohibits online gambling, either domestically or abroad." Reinforcing the argument, estimates show that 70 percent of all online wagers are U.S.-based and that Americans account for over 80 percent of online poker players and participate in more than 55 percent of online gambling activities. It would seem quite extreme to claim that all of those people are not respecting the law!

Different State laws on online gambling can affect citizens who attempt to play, and there have been attempts - most notably the Internet Gambling Enforcement Act of 2006 (H.R. 4411) - to prohibit the activity altogether at the federal level. In the past, online gambling wasn't an issue in the culture of U.S. legislation: it all depended, and still does in some ways, on the state in which you reside. Nevada, Louisiana, Michigan and Illinois currently outlaw online gambling, and many other state legislatures are about to introduce similar legislation. California, Massachusetts, South Dakota, and Utah outlaw certain forms of online gambling while allowing others.

Moreover, many states outlaw online gambling in order to protect the brick-and-mortar casinos in their states. The logic for this is that, because online sites do not have to be in the U.S., there's no way for the state (and federal) governments to tax them. This was certainly the case recently, when The Commonwealth of Kentucky seized 141 gambling-site URLs demanding that their owners block Kentucky residents from using them. Both the UIGEA and the Kentucky suit make much of the supposed social ramifications of gambling and highlight its detrimental effects. But at the heart of the matter, is the desire to keep the money that's in the U.S. in the U.S. and, therefore, be able to draw on a lucrative and taxable industry. In the Kentucky's case, even Gov. Steve Beshear admitted this was so--not to mention that Beshear supports legalizing land-based casinos in the state and would necessarily want to protect them and Kentucky's horseracing industry from online competition.

State actions like Kentucky's are primarily based on the UIGEA's open-ended definition of what constitutes illegal online gambling. It must be said, however, that significant loopholes can be identified within the law, which in reality, do not prevent local operators from taking bets online whilst complying with the laws of the state. As U.S. nationals generally take part in online casinos that are legal, it seems highly improbable that state governments or the federal government would ever be able to acquire a comprehensive legal framework allowing the prohibition of online gambling, as well as the prosecutions of the operators themselves.

As for the legal basis for UIGEA, it has often been said that the Federal Wire Act of 1961 (18 U.S.C. § 1084) constitutes a federal statute, which can be interpreted so that it outlaws online gambling as well as telephone and telegraph bets. This piece of legislation explicitly prohibits citizens from different states from betting against each other using phone lines. However, the act only prohibits "sports betting," and does not cover other forms of gambling. Again, one should stress that it was originally aimed at combating organized crime, and is therefore not particularly up to date. Even though efforts were made to extend the provisions of the act, one of its consequences was, in fact, restricting the use of credit cards for U.S. citizens wishing to make gambling transactions outside their home state. Adding to the difficulty, online payments are current practice nowadays, but this example illustrates just how difficult it is for the federal government to regulate online gambling.

Following the high-profile arrests of several online gambling executives travelling in the U.S., in September 2006 (right before the mid-term U.S. elections), the UIGEA bill was floored by Republican congressmen who cited moral reasoning for its necessity. It was successfully passed in the Senate after being attached to completely unrelated legislation (the Safe Port Act) in a devious, last-ditch effort to get the bill through before Congress's recess. On October 14 of that year, President Bush signed the legislation into law. Now, as a result of the act (which makes exceptions for gambling on horse racing, state-run lotteries, and fantasy sports), it is illegal for American financial institutions to process transactions originating from or directed toward any online gambling operator.

Most headlines have described the law as "outlawing internet gambling," and indeed in many circles, it has been received as such. Yet, while the law at the federal level has now become stricter, it still hasn't gone so far as to explicitly outlaw online wagering in each and every aspect. Big, publicly-traded operators like Partygaming and 888.com took major hits following the legislation and have closed their doors (or, sites) to U.S. players. Several other companies have had to shut down operations as a result of the hit on their revenues, and despite the efforts of powerful groups like the Poker Players' Alliance, many Americans undoubtedly have turned away from the activity.

However, aside from the serious financial implications for companies heavily invested in the U.S. market, the effect of the new law is still hard to determine. Several major online casinos and online operators have continued to accept American players and international financial intermediaries have continued to process their transactions. Furthermore, larger financial institutions have complained to regulatory officials about the difficulty - and even impossibility - in enforcing the new laws.

So, for the moment, it appears that the legislation's reach is limited and the ability of U.S. citizens to place bets at online casinos and online poker rooms has only been changed and not completely taken away. Again, in keeping with its tradition, the issue falls into another gray area despite the national reach of the Internet Gambling Enforcement Act. The biggest thorn in the UIGEA's side in the years since it was passed, however, has been precisely the reason it was passed in the first place: It was rushed. With the Republicans slowly but surely losing their hold on Washington, the Democrats have become champions of a new libertarian ethos, and have incessantly attacked the bill using its own vagueness against it.

Rep. Barney Frank (D-Mass.) has led the charge proposing two Payment System Protection Acts, one in 2007 and one in 2008. Both bills sought to amend the UIGEA and relieve the logistical strain it placed on U.S. financial institutions by forcing the Treasury Department to name what it considers "illegal Internet gambling." No doubt, 2007 wasn't the right time for the bill, and it was shot down in a congressional committee meeting before it ever saw the light of day. But this year, with the U.S. financial sector in ruin, Frank's rallying cry that it would free up troubled banks so they could deal with more important matters seemed to hit a chord. In September the bill was passed by the House Financial Services Committee (which Frank chairs) and is waiting in the House docket for the opening of the 2009 Congressional session.

Others have also jumped on the bandwagon, including Sen. Robert Menendez (D-N.J.) who has proposed a bill that would delineate online poker as a legal "game of skill." This has been the PPA's line of argument throughout the past two years as they joined the Interactive Media Entertainment and Gaming Association in challenging the UIGEA state-by-state. If such a bill were passed in the U.S. it would ensure that online poker sites receive a by from the Department of Justice's wrath because they would be providing access to games that required skill, not luck, to play.

So why all the change of heart in the good 'ole US-of-A? Well, for one thing gambling is one of the few industries to boom during financial uncertainty. And now that there's a bit of that, everyone wants in on the action. Is that a little sceptical? Sure. But, then, we do live in a sceptical world. How else do you explain the mad rush to shut down Indian casinos--which can't be taxed--in places like Florida and legalize their non-tribal counterparts in Kentucky, Ohio, Pennsylvania, West Virginia, Colorado, etc., etc., etc...?