Regulation of Online Gambling

Abstract

This chapter addresses the regulatory challenges presented by Internet gambling. As will be explored below, current U.S. laws leverage federal power to limit financing and other logistical support for Internet gambling enterprises based abroad, thereby injecting some friction into Internet-based business models but hardly stopping their operations. However, federal enforcement policy changes announced in 2011 have created new opportunities for firms seeking to tap the U.S. gambling market. Three U.S. states now permit some forms of domestic Internet gambling operations, although limited to residents of those states. Meanwhile, new forms of gaming, such as fantasy sports leagues, are pushing regulatory boundaries.

Part II provides a brief overview of the legal foundations for regulation in the U.S. federal system, in which authority is divided between states and the federal government, with the federal government primarily addressing interstate matters. Part III provides an overview of significant federal legislation affecting interstate operations. Part IV discusses state efforts to regulate Internet gambling in Nevada, Delaware, and New Jersey, as well as some efforts in other states to thwart Internet operations. Finally, Part V addresses regulatory concerns that are rooted in free trade considerations, as exemplified in the enforcement efforts of EU member states and in World Trade Organization proceedings against the United States.