Is Online Sports Betting Legal?

This issue is cloudy, but most U.S. gamblers bet via legal overseas online sites

The addiction of online gambling
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The legality of Internet gambling can appear to be a complex issue for residents of the United States and for good reason: It is. There are disagreements regarding what the law actually says and until those are cleared up, the picture is always going to be a bit cloudy. To better understand the legality question, it's best to look back at some history of anti-gambling legislation.

Federal Regulations

For a number of years, the United States argued against the legality of internet gambling by citing the Interstate Wire Act, which was Congress passed to prohibit sports gambling between states by using the telephone or other wire-containing devices.

As the internet had yet to be invented, a number of legal experts questioned if the law pertained to online gambling.

The other question that arose from the act was whether it pertained to all forms of gambling or just wagering on sporting events. In 2002, the 5th U.S. Circuit Court of Appeals upheld a ruling in Louisiana that dismissed a lawsuit brought by two internet gamblers against credit card companies after running up debts by placing bets on casino games. In the dismissal, the court ruled the Wire Act only pertained to sporting events.

In 2006, Congress passed the SAFE Port Act, which was written to increase the security of U.S. ports, but attached to the legislation was the Unlawful internet Gambling Enforcement Act, which prohibits Americans from using credit cards, electronic funds transfers, or checks to finance internet gambling activity.

Law Regulates Funding

It's important to note, the Gambling Enforcement Act deals only with how internet gambling accounts are funded, not the actual betting.

After its passage of the act, Lawrence Walters, an internet gambling law attorney, appeared on PBS' NewsHour show and stated:

"The bill has no impact on the individual player's activity. The bill is centered on restricting certain financial transactions, requiring that banks identify and block transactions going through their servers and their systems, and requiring that the actual sites, the internet gambling sites, stop and block these transactions."

Keith Whyte, the executive director of the National Council of Problem Gambling, appeared on the same show as Walters and agreed with his statement, saying:

"The bill is interesting, in that it doesn't make gambling on the internet illegal. It makes funding your wager on the internet illegal. The financial transaction is what is criminalized here, not necessarily the state of play."

Onlinesports and other sources note that, despite these laws, to this point — as of fall 2017 — no person has ever been charged with using online book sites to place sports bets.

It's Legal Overseas

Antigua-based Bovada, one of the largest online sports betting sites, says that the only legal way for U.S. sports bettors is to bet offshore with online gambling sites. These sites are based in Antigua or Netherlands Antilles. "They take deposits by processing under international codes and have built up large and loyal followings," Bovada notes.

Though federal and state authorities have never charged individual better, they have indicted operators of these websites. "Forbes" notes that in 2012 the feds indicted  Calvin Ayre, the founder of Bodog, the firm that owns and operates Bovada. But, five years later, in 2017, the feds dropped most of the charges against Ayre, after he pled guilty to a misdemeanor charge of being an accessory after the fact in the transmission of gambling information in violation of the federal Wire Act, "Forbes" noted in a follow-up article.

In 2013, 17 people were charged with operating an illegal gambling ring in the U.S. But, their operations were based in the U.S., which is illegal. Online gambling sites, however, are perfectly legal overseas, a point that countries that allow these sites have successfully argued in international tribunals.

In 2003, the country of Antigua and Barbuda filed a complaint with the World Trade Organization against the United States on the basis that the government's ban on internet gambling violated their rights as WTO members, and the organization ruled in favor of Antigua and Barbuda. The United States appealed the ruling, but the WTO has upheld the original ruling in several appeals. The United States eventually admitted that its opposing internet gambling was in violation of the WTO, and even agreed to pay $1 million in damages.

Considerations

The long and short of all of these conflicting regulations is that you — an individual — can bet online via legal offshore websites, with relative assurance that you won't be charged with any crimes because overseas gambling sites are legal. You can't, however, transfer and receive money for specific bets or even a series of bets online. Instead, notes Bovada, you deposit funds with the overseas online betting site and use that money (which is already deposited overseas) to fund your bets. 

If you're successful, you can't receive your winnings via that credit card. Instead, says Bovad, you'll receive your funds through a paper check written to you by the online site or via a money transfer service.

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Your Citation
Moody, Allen. "Is Online Sports Betting Legal?" ThoughtCo, Sep. 9, 2017, thoughtco.com/is-online-sports-betting-legal-3116839. Moody, Allen. (2017, September 9). Is Online Sports Betting Legal? Retrieved from https://www.thoughtco.com/is-online-sports-betting-legal-3116839 Moody, Allen. "Is Online Sports Betting Legal?" ThoughtCo. https://www.thoughtco.com/is-online-sports-betting-legal-3116839 (accessed November 20, 2017).