As online gambling progresses in leaps and bounds, local and national lawmakers, as well as gaming companies, are eyeing the lucrative returns. Particularly attractive are the revenues from newly fashionable poker, and the US Government’s stance on online wagering is under attack from within and without the country.

The first online casino ‘opened its doors’ in August 1995 and since then the business has become a boom market with thousands of online gambling operations around the world. Many are well regulated by jurisdictions such as Gibraltar, Alderney, Malta and Antigua. It was a US citizen, Jay Cohen, who became the first casualty of the US determination to outlaw online gambling. As president of World Sports Exchange, licensed and operated in Antigua, Jay Cohen was arrested on his return to the US and charged with contravening the federal Wire Wager Act 1961, and subsequently sentenced to 21 months in jail.

Antigua & Barbuda last year won a World Trade Organization (WTO) ruling against the United States, a decision that the US is to appeal. The WTO declared that the restrictions imposed by the US violate the GATS agreements on international trade, by allowing credit cards to be used for domestic gambling but not online. American citizens are the biggest users of the global online betting sites and the antiquated Wire Act, which prohibits the use of telephones for taking sports bets and does not mention casino games, has been under revision for a decade.

With Great Britain bringing in laws to licence and regulate online gambling, the position held by the United States seems ever more out of touch with reality. Gambling online is a fact of life and many states within the US want a piece of the action. At present it is estimated that over $200 million is daily bet on online poker alone, a staggering increase from $16 million two years ago.

North Dakota has introduced legislation, which has passed the House, to allow Internet poker sites to operate inside the state. The Justice Department has already sent a notice restating the federal ban on Internet gambling, but the state lawmakers are confident that the proposed legislation does not contravene the narrowly worded Wire Act, and are willing to bet on it and go to court. North Dakota, which would need to amend its constitution to allow online poker games, could benefit by millions of dollars in taxes and fees.

Illinois and Georgia are in the process of allowing the sale of lottery tickets online. If such legislation is passed then it would seem just a matter of time before other gambling games or sports wagering become regulated from states within the United States, with the federal government pursuing an avalanche of cases through the courts. Decisions made by the UK, the Isle of Man, and other online gambling jurisdictions not to outlaw bets from United States citizens will not make things any easier. Neither will the fact that the US army operates casinos at its bases abroad, even where local laws prohibit it, make its ‘moral’ objections to online gaming acceptable to the WTO.

The online gambling industry is presently worth in the region of $10 billion a year, and players and profits are rising. With over 50% of bets coming from US citizens, the game is well worth the risk of upsetting the US government. Should the US ever decide on the practical and lucrative solution of licensing online gaming operators, there are plenty of big name land-based operators ready to apply. (E-03.16.05)

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