Gambling in America - Internet Gambling

Internet gambling first appeared on the World Wide Web in the summer of 1995. By May 1998, according to the 1999 National Gambling Impact Study Commission Report, there were ninety online casinos, thirty-nine lotteries, eight bingos, and fifty-three sports books. In 2003 the River City Group, a research organization specializing in online gaming, estimated that there were over 810 casino-style gambling Web sites and more than 440 sports betting sites. Christiansen Capital Advisors LLC (CCA) projected that global Internet betting would increase from an estimated $5.7 billion in 2003 to nearly $10 billion in 2005. CCA estimated that 45% of the approximately twelve million 2003 online casino customers were from the United States. A survey by Inland Entertainment Corp. of five hundred online gamblers found that 86% were male, 20% were aged eighteen to twenty-five, 31% were twenty-six to thirty-four, 29% were thirty-five to forty-four, and 20% were over forty-five.

The primary legal obstacle to Internet gambling has been the 1961 Interstate Wireline Act (18 U.S.C. section 1084), which makes it illegal to offer or take bets from gamblers over phone lines or through other wired devices unless otherwise authorized by a particular state. Other federal legislation has become stalled in Congress. The Internet Gambling Prohibition Act, introduced in 1997, was passed by the Senate in 1998 but was held up in the House during 1999 because some legislators felt it might adversely affect other forms of e-commerce. Despite many revisions and amendments, the House rejected the act on July 18, 2000, leaving operators of online gambling businesses elated by the outcome. In 2003 the House of Representatives passed a bill to ban the use of financial instruments for the purpose of online gambling, but the necessary Senate passage of a similar measure was not immediately forthcoming.

While more than fifty global jurisdictions have allowed some form of Internet wagering, by 2004 the states of Illinois, Louisiana, Michigan, Oregon, and South Dakota had all passed laws prohibiting it, and attorneys general in other states had brought lawsuits against Internet gambling businesses using existing legislation. The Department of Justice has arrested or caused arrest warrants to be issued for dozens of Internet gambling operators, and several have been indicted.

Many countries, as well as the U.S. Department of Justice, have expressed concerns about the enforceability of any kind of Internet gambling prohibition. Most Internet gambling businesses were operating offshore and were licensed by foreign governments. In 2004, in response to a complaint filed by the Caribbean island nation of Antigua and Barbuda, the World Trade Organization (WTO) issued an interim ruling that found the U.S. government's efforts to curb Internet gambling were in violation of WTO commercial services agreements.