Using the Internet for illegal gambling is unlawful under the Wire Act and the Illegal Gambling Business Act. The law also prohibits the acceptance of financial instruments from illegal Internet bets.
Some of the federal criminal statutes that have been implicated by illegal gambling on the Internet include the Wire Act, the Federal Racketeer Influenced and Corrupt Organizations Act (RICO), the Unlawful Internet Gambling Enforcement Act (UIGEA), the Federal Wire Act, the Interstate Transportation of Gambling Proceeds Act, and the Internal Revenue Service’s prohibition of tax deductions for illegal gambling.
The United States has argued that the Commerce Clause gives Congress the power to regulate interstate commerce. However, questions about the government’s ability to exercise that power have been raised, especially in the case of Internet gambling.
The Commerce Clause has been challenged on First Amendment grounds. While some have argued that the First Amendment guarantees the right to free speech, others have raised the question of whether the Commerce Clause guarantees that financial transactions in the United States be conducted under a neutral set of laws.
The law is also being challenged on the grounds that the Internet is a telecommunications medium and the Commerce Clause allows Congress to regulate the furnishing of facilities and the transportation of goods. However, the FCC is allowed to prohibit the leasing or maintaining of facilities, and the Federal Communications Commission could also prohibit the use of facilities by common carriers.
Several internet gambling sites do not pay taxes to their home countries. This frustrates the state’s enforcement policies.