Despite the popularity of online gambling, there are a number of negative factors associated with this form of entertainment. In addition to financial ruin, gambling can lead to poor performance in school and depression. In addition, there is a high rate of scams and deceivers associated with online gambling. There is also the possibility of addiction, which can lead to a lifetime of debts.
Many states have expressed concern that the internet could be used to bring illegal gambling into their jurisdictions. As a result, federal law has been reinforced in cases. However, these policies have been challenged on constitutional grounds. In particular, questions have been raised about the extent of the federal government’s power under the Commerce Clause. The First Amendment guarantees freedom of speech and free expression, but it does not grant the government the power to regulate the commercial activity of gambling.
Section 1956 provides for several distinct crimes in connection with Internet gambling. These include laundering with intent to promote illicit activity, laundering to conceal illicit activity, laundering to avoid taxes, and laundering to disguise the identity of the person who engages in Internet gambling. Several questions have been raised concerning the constitutionality of these crimes. However, the commercial nature of the gambling business seems to satisfy the Commerce Clause doubts.
Other issues have been raised regarding the constitutionality of the Unlawful Internet Gambling Enforcement Act (UIGEA). These concerns have been based on the notion that the Commerce Clause prohibits the federal government from regulating commercial activity. However, these arguments have been unsuccessful.
The UIGEA was challenged in court in the United States v. K23 Group Financial Services. Among other things, the court held that Internet poker operators are prohibited from accepting financial instruments from individuals who place illegal Internet bets. In this case, the government alleges that K23 is violating 18 U.S.C. 1955 by laundering money. The case is currently on appeal.
The question of whether the Federal Communications Commission has the power to regulate the internet has been raised in connection with the UIGEA. The Commission has jurisdiction over common carriers, and it has the power to regulate the furnishing and leasing of facilities. However, it may also decline to supervise Internet gambling transactions.
In December 2002, the Government Accountability Office issued a report on Internet Gambling: Overview of Issues. The report noted that, at the time, many countries did not accept Internet gambling as entertainment. In addition, the report noted that many banks have refused to process online gambling transactions in certain countries. In other cases, banks have warned online payment services such as PayPal that they could face prosecution. This report is also available in abridged form.
The CRS Report RS21984 also addresses these issues. It contains citations to state gambling laws and a list of statutes that may be relevant to internet gambling. The report also lists elements in the Lopez Amendment that weed out low-level gambling cases. In addition, the report includes Congressional findings on the impact of these laws on interstate commerce. These findings are particularly interesting in the context of online gambling, as interstate or foreign elements can frustrate state enforcement policies.