Online Gaming Law
Gambling Law: An Overview. Gambling, though widespread in the United States, is subject to legislation at both the state and federal level that bans it from certain areas, limits the means and types of gambling, and otherwise regulates the activity. GREY – online gambling is generally not permitted and the legislation there is not existing or minimal. ORANGE – online gambling is unregulated and/or in the early stages of the legislation process. BLUE – online gambling is currently in the process of regulation and operators are emerging. Michigan Gaming Control Board authorizes Four Winds Casinos, provider partner Pala for Feb. 15 online gaming and sports betting launch; Detroit casinos report $90.84 million in revenue for January while operating at limited capacity; Michigan Gaming Control Board authorizes online gaming and sports betting for Odawa, online gaming for Greektown. Unlawful Internet Gambling Enforcement Act - UIGEA This is one of the most misunderstood US gambling laws and is surrounded by layers of misinformation and misconception. Many players believe that this law prohibits USA residents from participating in online gambling. This is not true. Unlawful Internet Gambling Enforcement Act. This law applies to online gambling operators accepting financial instruments to fund accounts for players. Including online casinos.
China Online Gaming Laws
Gaming and gambling in the United States have undergone a great boom in recent years. During the past decade, most states have expanded legalized gaming, including regulated casino-style games, sports betting, and lotteries. There has also been an explosion in opening Native American casinos, and the popularity of online gambling in the US has increased exponentially.
Decades ago, gambling used to be illegal almost in every part of the continental US, except for Nevada and New Jersey. However, as time flew by, more and more states have made various types of gambling legal, ranging from Indian casinos, bingo and poker rooms, off-track horse race betting, and more. While some states have approved certain types of gambling, other types have remained “illegal”, so to speak, like online gambling. Almost all states have laws that ban at least some form of gambling.
Understanding US gambling laws is not only important for those involved in the industry, but also for average gamblers who want to know whether he or she can start a fantasy football league, a home poker game, or an NCAA tournament betting pool at the workplace.
As of this writing, a lot of things have changed in the US gambling laws. What was once considered illegal on a federal level is now being made legal by the individual US States, provided that casino operators, and in some cases online gambling operators, apply for the necessary permits and licenses within the jurisdiction in which they wish to operate. If gambling was only allowed in Vegas and Atlantic City before, now states like Colorado, West Virginia, Indiana, Iowa, and Pennsylvania are also coming around, with more and more US states following suit.
Federal Gambling Laws
Below you’ll find links to various U.S. Federal Gambling Laws.
- Unlawful Internet Gambling Enforcement Act. This law applies to online gambling operators accepting financial instruments to fund accounts for players. including online casinos.
- Wire Act of 1961 (See also: Wire Act Violation: Internet v. Phone)
Additional Federal Statutes
Transportation of Gambling Devices Act of 1951.
In 1951, Congress enacted the Transportation of Gambling Devices Act. [236] The Act, more commonly known as the Johnson Act, [237] which has been amended several times during the intervening years, makes it unlawful to knowingly transport a gambling device to a state where such a device is prohibited by law. [238] The manufacturers and distributors of gaming devices for interstate commerce must register each year with the United States Department of Justice, and the devices must be appropriately marked for shipment. [239]
Online Gaming Laws Australia
(a) The term “gambling device” means–
(1) any so-called “slot machine” or any other machine or mechanical device an essential part of which is a drum or reel with insignia thereon, and
(A) which when operated may deliver, as the result of the application of an element of chance, any money or property, or
(B) by the operation of which a person may become entitled to receive, as the result of the application of an element of chance, any money or property; or
(2) any other machine or mechanical device (including, but not limited to, roulette wheels and similar devices) designed and manufactured primarily for use in connection with gambling, and
(A) which when operated may deliver, as the result of the application of an element of chance, any money or property, or
(B) by the operation of which a person may become entitled to receive, as the result of the application of an element of chance, any money or property; or
(3) any subassembly or essential part intended to be used in connection with any such machine or mechanical device, but which is not attached to any such machine or mechanical device as a constituent part. [240]
The interstate shipment of hardware or software for use in connection with an Internet or Interactive gaming system may trigger the Johnson Act, as well as the Interstate Transportation of Wagering Paraphernalia Act discussed above. [241]
Bank Records and Foreign Transaction Act of 1970.
In 1970, Congress passed the Bank Records and Foreign Transaction Act, [242] which is better known as the Bank Secrecy Act (BSA). [243] The BSA required “financial institutions” to report all currency transactions greater than $10,000 in effort to fight money laundering. This obligation was first limited to just banks. In 1985, the United States Treasury Department extended the requirement to casinos through the adoption of regulations. [244] Nevada casinos enjoy an exemption from the CTR reporting requirements of the BSA. [245]
Internet or interactive casinos will certainly be subject to some form of currency reporting requirement whether it is the BSA or Nevada Gaming Commission Regulation 6A, or both.
Money Laundering Control Act of 1986.
In 1986, Congress enacted the Money Laundering Control Act, [246] codified at 18 U.S.C. §§ 1956, 1957. Section 1956 applies to the knowing and intentional laundering of monetary instruments. [247] Section 1957 pertains to monetary transactions involving property that is “derived from specified unlawful activity,” which includes “racketeering activity” under RICO. [248]
Electronic Communications Privacy Act of 1986.
In 1986, Congress enacted the Electronic Communications Privacy Act (ECPA), [249] codified at 18 U.S.C. § 2510 et seq. The legislation amended Title 18 of the United States Code to extend the prohibition against the unauthorized interception of communications from wire and oral communications to “electronic communications,” which are defined as:
“electronic communication” means any transfer of signs, signals, writing, images, sounds, data, or intelligence of any nature transmitted in whole or in part by a wire, radio, electromagnetic, photoelectronic or photooptical system that affects interstate or foreign commerce, but does not include–
(A) any wire or oral communication;
(B) any communication made through a tone only paging device;
(C) any communication from a tracking device (as defined in section 3117 of this title); or
Online Gaming Laws
(D) electronic funds transfer information stored by a financial institution in a communications system used for the electronic storage and transfer of funds. [250]
The term “intercept” means “the aural or other acquisition of the contents of any wire, electronic, or oral communication through the use of any electronic, mechanical, or other device.” [251]
ECPA provides exceptions for the law enforcement to intercept communications where either (1) law enforcement is a party to the communication, or (2) where one of the parties to the communication has given prior consent to such interception. [252] The Nevada Gaming Control Board and Nevada Gaming Commission could take advantage of this exemption and be excluded from the reach of ECPA either through the promulgation of a regulatory provision (i.e., that licensees will permit the Board and Commission to monitor all electronic communications with patrons) or by imposing conditions on the licenses o f operators of Interactive gaming.
References
Federal
- Code of Federal Regulations: Title 25, Chapter 3: National Indian Gaming Commission, Department of the Interior
- Proposed Internet Gambling Prohibition Act of 1997 (not passed)
Federal Judicial Decisions
- AT&T Corporation v. Coeur d’Alene Tribe, 295 F.3d 899 (9th Cir. 2002)
Other References
- Joel Michael Schwarz, The Internet Gambling Fallacy Craps Out, 14 Berkeley Tech. L.J. 1021 (1999).
- “14 Charged in Internet Betting” (Washington Post, March 5, 1998)
- General Accounting Office’s Overview of Internet Gambling Issues
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Duane Morris gaming lawyers carefully consider and evaluate the impact of any advice – regardless of the task at hand – on our clients’ continued compliance with gaming laws and their reputation among gaming regulators for honesty, integrity and business acumen. That is our value add.
Duane Morris gaming attorneys have decades of experience representing the diverse and growing range of participants in the gaming industry. We have significant experience advising clients including owners and operators of casinos and pari-mutuel wagering facilities, online/mobile operators, manufacturers of gaming equipment and software, eSports entities, key employees, banks and non-traditional lenders, as well as vendors that provide goods and services to casinos. With the advent of internet and mobile gaming and the proliferation of sports wagering after the U.S. Supreme Court’s decision overturning the Professional and Amateur Sports Protection Act in May of 2018, we also represent technology providers for internet and mobile gaming, sports wagering operators and multimedia companies seeking to coordinate, work with and form partnerships with these new industry participants.
Licensing, Findings of Suitability and Approvals
All gaming industry participants, from the largest operators and national banks to the vendors in the food court, share a common element: participation in the gaming industry requires a license or approval from a state or tribal gaming regulatory authority and/or an approval by a corporate compliance committee, who issue findings of suitability after conducting rigorous background investigations.
As a core area of our practice, Duane Morris helps clients obtain and maintain these valuable licenses and approvals, guiding them from the initial application, to the investigation and interview process, to the public hearing on the finding of suitability and issuance of a license or approval, through the ongoing obligation to update regulators. Where permitted by applicable regulations or policies, we deftly pursue waivers or exemptions from licensing requirements on behalf of investors, banks and others who do not exert the requisite control over the gaming enterprise.
Maintaining Compliance with Regulations
Clients frequently seek our advice on such matters as whether a gaming employee’s conduct justifies or requires discipline, whether a patron’s behavior requires exclusion from the casino, or whether an affiliate’s activity in another jurisdiction requires regulatory approval. With our extensive work in the industry, we interpret gaming regulations and work with regulators to address these issues promptly and clearly. Our lawyers regularly attend the monthly meetings of the gaming regulators in the jurisdictions in which we practice to follow closely any trends or changes in regulatory policy that may be under consideration.
Duane Morris gaming lawyers advise compliance committees of casinos and equipment manufacturers on regulatory compliance and reporting requirements, compliance audits and internal investigations. Our goal is not only to help clients conduct the required investigations of those with whom they do business and document those efforts for regulators, but also to identify and address potential issues before they become areas of concern to regulators. We then develop practical solutions to address the issues and fashion disclosures that satisfy legal requirements, while remaining sensitive to our clients’ needs and reputations.
Focusing on the Long Game
With the complex regulatory requirements surrounding gaming, companies can unknowingly commit violations and risk fines or other sanctions through normal business dealings. Negotiating and documenting material agreements, loans and M&A transactions, preparing offering documents, or handling disputes in the gaming industry can present unexpected challenges and consequences. For example, gaming regulators might disapprove if a large industry participant were to seek unreasonable concessions from a small vendor. Duane Morris gaming lawyers carefully consider and evaluate the impact of any advice – regardless of the task at hand – on our clients’ continued compliance with gaming laws and their reputation among gaming regulators for honesty, integrity and business acumen. That is our value add.
Boutique Firm Focus, Full-Service Capabilities
Gambling Laws By State
Duane Morris’ gaming lawyers have the seamless support and resources of our full-service international law firm to assist clients in all facets of their gaming or gaming-related businesses. Our core gaming lawyers focus on regulatory and licensing issues and work closely with other Duane Morris lawyers when clients seek to establish new ventures, expand organically or by acquisition, raise debt or equity capital, or face other issues that arise in the course of business. At our core is a team with extensive experience in corporate transactions and commercial arrangements known for successfully navigating the most complex of matters. The intricate levels of regulatory compliance have made consolidation within the industry an increasingly attractive option. Our years of experience providing complex M&A, structuring and regulatory advice allow us to guide clients through all phases of their growth cycle. For example, in a typical bricks-and-mortar casino acquisition, our gaming lawyers will call upon lawyers from our corporate, real estate, environmental, labor and employment, intellectual property and finance groups as needed for due diligence and to review the provisions of transaction documents from different legal perspectives. Lawyers from our Trial Practice Group can assess any pending or threatened litigation against the target company. If the transaction involves raising capital, Duane Morris lawyers have extensive experience in syndicated loan or capital markets transactions. Our gaming lawyers manage the entire process to drive efficiencies and help ensure that every aspect of the transaction satisfies regulatory requirements.
Recognized in the Gaming Industry
Duane Morris gaming attorneys are frequently called upon by other firms to serve as special gaming counsel in connection with their clients’ transactions. Our attorneys are prolific authors and speakers on gaming issues and share insights and strategies on the latest developments in gaming law through industry publications, Duane Morris Alerts, the Duane Morris Gaming Law blog, CLE events and industry conferences.
For Additional Information
For additional information, please contact Frank A. DiGiacomo, Robert L. Ruben or any of the lawyers referenced on the Attorney Listing.