During the 1990s, online gambling became popular, and anyone with a web browser could find an internet gambling site. In many countries, this type of online gambling is illegal. In some places, accessing an online casino is even a felony.
In the US, however, the legality of online gambling is largely a matter of state law. Some states have enacted laws that prohibit fantasy sports betting and sweepstakes, while others have allowed some forms of online gambling. The federal government has attempted to prohibit interstate gambling, but has had little success. In addition, a recent court ruling has found that awarding in-game prizes that give the player the ability to replay the game is unlawful gambling.
In order to operate an online gambling business, a company must obtain a license. Generally, a casino has to partner with a land-based casino in order to get the license. If the site is licensed, the site must also follow standard protocols for conducting its business. It is illegal to use an offshore site to operate an online casino in the United States. Fortunately, more states are passing laws to allow for some form of online gaming, including poker and fantasy sports.
In recent years, the United States Department of Justice has attempted to regulate the industry, but has failed to gain a foothold. In a recent case, an Internet financial services company was accused of aiding illegal offshore gambling agreements. In a civil agreement, the company paid $10 million. But the company was warned by federal prosecutors that it might face prosecution.
The Department of Justice has seized assets in online gaming cases, including PayPal. It has also fined media outlets millions of dollars for past promotion of online gambling sites. In 2006, Congress passed the Unlawful Internet Gambling Enforcement Act, which imposes a number of penalties on those who engage in illegal online gambling. The federal government has used these laws to target service providers, software developers, and even individuals who have engaged in openly using gambling programs.
In 2010, the Fifth Circuit ruled in favor of the United States in a criminal case against K23 Group Financial Services. The case charges the company with violating the Unlawful Internet Gambling Enforcement Act (UIGEA) and money laundering. The company had been marketing virtual gambling operations and accepting money for them.
The issue of whether or not a gambling operation can be licensed to operate in the United States has become increasingly complicated. In some cases, a casino cannot even be legally permitted to operate within a particular state, as local jurisdictions may attempt to restrict the operation. In other cases, the business can be authorized in a state, but its operators can still be subject to arrest and punishment for operating in an offshore location.
In a few cases, the United States has argued that the Commerce Clause provides protection against the operation of illegal gambling, but the cases have been unable to produce a clear rule on the issue. In other cases, attacks on the First Amendment guarantee of free speech have proved fruitless.