The legal situation surrounding online gambling in the United States is the cause of much confusion. In this article, we’ll clarify what the current laws and regulations say about online gambling in America.
A Brief Trip Down Memory Lane – the Good Ole Days
Before 2006, online gambling in the US was thriving. US residents spent tens of millions per month on casino games, poker, and sports betting. Millions changed hands, and poker rooms, in particular, were buzzing.
A previous legal challenge to online gambling failed in 2002. The US Court of Appeals of the 5th Circuit ruled that the Federal Wire Act “in plain language does not prohibit internet gambling on games of chance.”
Internet gambling was humming along nicely in the US. And then…
The UIGEA Is Passed and Everything Changes
That all changed in 2006 when the Unlawful Internet Gambling Enforcement Act was passed one the final day before congress adjourned for the elections. It’s reported that not a single person on the Senate-House Conference Committee had read the Act before it was passed.
While it was instantly criticized, the UIGEA made it illegal for a gambling operator to knowingly accept payments from another person in any bet or wager over the internet.
Overnight, the good ole days were over. Operators around the world blocked American players from depositing for fear of encountering the wrath of Uncle Sam.
Does the UIGEA Make It Illegal to Gamble Online in the US?
One of the chief criticisms of the UIGEA is that it was badly worded and not scrutinized properly. It does not, in fact, make the act of gambling online illegal. Instead, it makes accepting gambling transactions illegal, putting the legal burden on operators and payment processors.
US players soon figured out that they could play at offshore casinos and sports betting sites without consequence. They also realized that there were alternative ways to fund their accounts without using US banks. For example, today, many US players use Bitcoin and other cryptocurrencies to fund their online gambling accounts.
Not a single player has ever faced legal trouble for gambling online in the US. Some operators have been raided and shut down, and some players have lost the money in their accounts as a result, but it’s legally safe for players to play casino games, bet on sports, and take part in poker tournaments.
Is It Safe to Gamble Online in the USA?
If you play at legit gambling sites, it is safe. However, before you make the decision to do so, you should be aware of the following points.
Since there is no federal US gambling regulator, there are no regulations which operators are forced to abide by to obtain a license. This can mean that some US gambling sites are subpar.
If you get scammed or tricked by a rogue operator, it’s difficult to do anything about it. You can’t go to US law enforcement, and again, there’s no regulator to report the operator to.
There are no protections for problem gamblers as there are in regulated markets. Offshore casinos and betting sites don’t have to comply with protections for problem gamblers.
The only way to properly address all of these issues is for the US government to repeal or amend UIGEA and properly regulate online gambling. However, you can at least avoid scam gambling sites by reading our US casino reviews.
Why Did the Government Pass UIGEA?
There are lots of theories about this from protecting the revenue of US casinos in Vegas, Atlantic City and elsewhere, to a genuine but botched attempt to stamp out online gambling. However, it has not worked, and the US has even been sued by Antigua through the WTO, which came down on the side of Antigua, over their online gambling restrictions.
The larger point is this – it is not illegal to gamble online in the USA. Several states have legalized it (New Jersey and others), and even President Donald Trump has expressed a desire to reform online gambling in the US.
Will things change? Probably someday, but we wouldn’t hold our breath for federal action to occur. It’s more likely that online gambling will slowly be legalized and taxed on a State-by-State basis. For now, you can still play at safe US casino sites based elsewhere.