Findlaw: Is Internet Gambling Legal

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Also has a couple of paragraphs on advertising toward the end.

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<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Many gaming businesses maintain Internet sites to allow enthusiasts to gamble on-line. Several types of betting are available through such services, including sports wagers, casino-style games (including blackjack and baccarat), lotteries, bingo, and off-track betting.

The legal status of Internet gambling is uncertain because the games are more difficult to define. Internet systems contain aspects of many different types of traditional gaming pursuits. For example, courts may need to decide whether on-line blackjack should be regulated as a casino game or as an electronic gambling device. Federal laws involving interstate electronic transmissions may affect the legality of these operations, although the exact status of these regulations is evolving through court interpretations.

Example: The Interstate Wire Act contains provisions limiting the ability of operators to carry on electronic gambling across state lines or internationally. Operators may not knowingly use a wire communication facility to transmit sporting event bets or related information in these instances. However, intrastate transmission is not covered by the Act.

Additionally, some states explicitly regulate Internet gambling based on whether the player is physically present in that state when the gambling takes place.

Example: Nevada law makes it a misdemeanor to accept an on-line wager from someone physically present in Nevada, regardless of the location of the site operator.

Internet gambling raises related consumer credit and protection issues. Usually, Internet gambling operations require that players deposit some money up front by credit or debit card or other payment. These payments cover the player's transactions. Creditors usually may not enforce gambling debts, so this procedure protects the operator from losing money from nonpayment of losses. More recently, some sites offer gambling with no prior deposits, bringing these sites under regulation as sweepstakes in most instances.

Off-shore operations often claim to hold foreign licenses that allow on-line gambling. Depending on the licensing jurisdiction, regulatory oversight and initial background checks may be spotty at best, so gamers should proceed with caution. Other businesses avoid Internet connections and allow gamers to connect directly to the operator's computer system. Other systems allow gamers to dial in to an interactive gambling system through which they can place wagers using a touch-tone phone. Technologies such as interactive television and stand-alone arcade-style gaming devices raise additional opportunities for gaming, as well as additional regulatory issues.

Federal communications law prohibits radio or television broadcast advertising of any "lottery, gift enterprise, or similar scheme, offering prizes dependent in whole or in part upon lot or chance." The Federal Communications Commission (FCC) enforces this rule, and promulgates regulations clarifying the scope of the ban. The FCC regulations provide the following exemptions:

state-run lotteries advertised within the state;
fishing contests;
Native American gaming enterprises;
certain nonprofit fund-raisers; and
certain business promotions that are clearly ancillary to normal business activities.

However, several courts have considered constitutional challenges to this rule based on gambling operators' assertions that the prohibition denies First Amendment free speech rights. Many courts hold that the governmental interest in regulating the industry and in preventing adverse effects of gambling allows restrictions on this area of advertising, but other decisions are opening the door to allowing advertising of gambling in at least some U.S. jurisdictions. The law in this area is not yet settled, and operators should contact an attorney for the current state of the law prior to advertising.

The United States Supreme Court has ruled twice on the statute Congress passed and the FCC's regulations implementing the statute. First, it has ruled that a state may prohibit a broadcaster from advertising another state's lottery when the broadcaster's state does not authorize a lottery. Second, a local association of FCC-licensed broadcasters challenged the law and rules as a violation of their First Amendment right to free speech. The court agreed. It concluded that because Native American casinos are allowed to broadcast advertisements, private casinos must be allowed to advertise on TV or on the radio in the state it is authorized to operate, even though the broadcast signals might be heard in neighboring state that does not authorize privately run casinos. A lawyer can help you figure out if your state has rules governing broadcast advertisements for private casinos, now that advertising is permitted.
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