Among the many federal criminal statutes implicated by illegal Internet gambling are the Wire Act, the Travel Act, and the Illegal Gambling Business Act. These laws, along with state and local laws, are designed to make it illegal to use the Internet to illegally gamble.
Despite these laws, state officials are concerned that the Internet may be used to transport illegal gambling into their jurisdictions. In response, federal prosecutors warned PayPal it could face prosecution. Similarly, the Federal Communications Commission warned its members that they could be sued for providing facilities for illegal Internet gambling. In response, some members of Congress have drafted legislation addressing these issues.
The most impressive law is a telecommunications bill that would prohibit any Internet service provider from accepting payment for illegal Internet bets. It would also make it a crime to receive such payments. Another law that may be relevant is the Racketeer Influenced and Corrupt Organizations (RICO) statute.
Another law of the same ilk is the Gambling Devices Transportation Act, or Johnson Act. This law makes it illegal for anyone to transport gambling devices to other states without proper licensing. Similarly, the aforementioned CRS Report RS21984 includes text and citations to state gambling laws. In addition, the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) has imposed a $200,000 fine on an Internet gambling service provider.
While the best state laws are designed to prevent people from gambling illegally, the federal government is not too far behind. The UIGEA (Unlawful Internet Gambling Enforcement Act), which was enacted in October 2001, contains penalties for illegal Internet gambling operations. In addition to criminal penalties, the owners of these illegal gambling operations are subject to fines of up to five years in prison.