An opinion released Monday changes a 2011 interpretation of the Wire Act which prohibited only sports betting. While the federal law specifically prohibits transmission of wagers and related information across state lines, the Justice Department’s new interpretation will impact all online gambling because.

• Why Is Internet Gambling Illegal In Some States Still
• Why Is Internet Gambling Illegal In Some States Allow
• Why Is Internet Gambling Illegal In Some States Going
• Why Is Internet Gambling Illegal In Some States In America

Gambling on the internet has become an extremely popular pastime—even though it is illegal in many states.

Online sports betting, in particular, has increased on sites located in countries where gambling is legal—but is that also a violation of U.S. laws?

In an era when the internet is posing challenges across the entire legal landscape, the time is ripe for testing the validity of the various state gambling laws on their applicability to offshore internet gambling. Such tests would also place in the spotlight the activities of offshore gambling “bookies,” who give their customers the ability to place bets via the internet and collect payments or make payments to the bettors.

Some states have pursued criminal prosecutions against offshore bettors, but many of those prosecutions are based on laws that were enacted long before internet betting existed, in states such as New York. And even in those states where penal codes specifically reference internet betting, those statutes are vulnerable to constitutional argument regarding limiting the use of the web.

The statutes affect a sizeable number of Americans. In a New York Times article published on Dec. 5, columnist Adam Liptak writes, “Americans are estimated to annually place $150 billion in illegal wagers on sports”—an estimate that presumably includes betting activities both inside the U.S. and through offshore sites.

Addressing the legality of offshore gambling represents a challenge to authorities where it hits them hardest: their revenue streams.

Offshore gambling prosecution has become a source of income to state and federal governments. Based on their statutory ability to seize the proceeds of illegal activity, authorities have levied fines, and seized property and cash.

The two elements that trigger prosecution in many of the state gambling statutes are (1) bets must have been accepted by the defendant in the state; and/or (2) the bets must be made in the state.

The argument that a bet is not made in internet gambling until it is received at the offshore site needs to be decided by the various states.

Decisions upholding the theory that when the bet reaches and lands on the site in a foreign country, it is made there—and not in the state—would have far-reaching effects on gambling prosecutions. Such bets would not satisfy the argument that a bookie accepts and receives them.

Pursuant to Title 18 §981(a)(1)(c) of the U.S. penal code, which makes property forfeitable if derived as the proceeds of illegal activity, the government—by merely filing a complaint with the court—may get a warrant issued allowing the seizure of property.

Still, the law is underdeveloped, because plea deals are usually structured to maximize financial benefit for the prosecution and allow those arrested to avoid incarceration. Since gambling is prevalent throughout the U.S. in many legalized forms, and engaged in by a large portion of the population, prosecutors are not comfortable that juries will convict their fellow citizens for these crimes.

If the laws were contested, however, we would see fewer arrests and a stronger negotiating position for defendants against whom charges are brought.

The Federal Gambling Statute (Title 18 §1955) requires a finding of a violation of state gambling laws to bring charges against someone who was involved in such illegal activity. According to the statute, an illegal gambling business is defined as being “in violation of the law of a state or political subdivision….”

Efforts to contest the validity of state gambling laws are likely to result in a finding that many are inapplicable to offshore gambling.

If there is no state law violation, then there is no federal prosecution.

In fact, efforts to contest the validity of state gambling laws are likely to result in a finding that many are inapplicable to offshore gambling. When those laws are invalidated, there can be no federal violation and no property seizures.

The laws of the 50 states concerning gambling are varied and contain significantly different provisions. Many like NY Penal Code §225.10, which defines promoting gambling in the first degree (the felony section), contain the material element that the defendant “receives or accepts … bets … .”

See also: Video Gambling Linked to Crime Spike: Study

Why Is Internet Gambling Illegal In Some States Still

Typically, a defendant is charged with being a bookie because he/she is the person arranging for the bettor to have the ability to use the offshore website to place bets. The bookie also collects and distributes funds to the bettor based on wins or losses. Before internet gambling, the bookie would receive the bets from the bettor.

The law in New York was written to make such activity illegal and required that the defendant “receives or accepts … bets …

Similarly, in Alabama, bookmaking is described as “unlawfully accepting bets from members of the public as a business …” This echoes New York’s requirement that bets must be accepted to violate the law.

However, under Alaska’s penal code §11.66.200(a) “a person commits the crime of promoting gambling in the first degree if the person promotes or profits from the unlawful gambling enterprise.”

Here, there is no requirement of accepting bets to violate the statute. Additionally, Indiana’s penal code §35-45-5.3 declares that gambling is committed if one “… accepts or offers to accept, for profit money or property risked in gambling …”

The mere acceptance of money or property without the requirement of accepting bets violates the Alabama statute. With internet gambling, the defendant never receives nor accepts bets. The bets are sent by computer to a site in a country where gambling is legal and where the bets are received and accepted.

This material element of the New York statute is not violated by internet gambling.

This issue was never tested in New York, although hundreds of offshore gambling cases have been brought under this statute. In a September, 2017 case in the Supreme Court of Queens County (New York), I made a motion to dismiss an indictment under this theory.

While the Court denied the motion, the defendant was offered a far better plea resolution than the prosecution might have presented if there were no risk to the prosecutors of a reversal on appeal.

There are states whose gambling statutes make it illegal to use the internet to promote gambling. An example is the above-mentioned Indiana Statute, which states that a person commits professional unlawful gambling when he or she is “an operator who knowingly or intentionally uses the internet to engage in unlawful gambling in Indiana.”

This is a felony.

While most states have not reached this level of sophistication, the challenges passed by such laws differ from those discussed above. However, because of the various constitutional issues involved in criminalizing the use of the Internet, there are often safe havens that exist in the statute.

Indiana’s law states that “a prosecuting attorney may send written notice to an operator … The notice must (1) specify the illegal gambling activity; (2) state that the operator has not more than thirty (30) days…to remove the illegal gambling activity and…” if he does not do so he can be criminally prosecuted.

This section specifically refers to an operator who is defined as “a person who owns, maintains or operates an internet site that is used for interactive gambling.”

Thus, compliance with notice would seem to avoid criminal prosecution.

Again, since internet offshore gambling did not exist when many of these laws were written, they cannot be held to be applicable.

It’s time to litigate the underlying premises of the various state illegal gambling statutes, particularly those that require the acceptance of bets.

Jeffrey C. Hoffman is a white-collar defense and corporate investigation lawyer at Windels Marx Lane & Mittendorf, LLP, a full-service law firm headquartered in New York City. In his 40-plus years as a lawyer, he has tried more than 100 criminal jury trials and has represented clients in matters involving money laundering, criminal forfeiture of property and restitution. He can be reached at jhoffman@windelsmarx.com. He welcomes readers’ comments.

There’s never been a better time to be an esports bettor than right now. Esports gambling is now available at countless sportsbooks and even dedicated “esportsbooks.”

You may be excited about wagering on competitive gaming. But if you’re from the US, you might have questions about the legality of the matter.

Esports betting is, after all, fairly new.

It’s offered alongside traditional sports in many cases, but it’s not always treated the same from a legal standpoint.

The US government hasn’t taken a definitive stance on the subject.

They repealed the Professional and Amateur Sports Protection Act (PASPA) in May 2018. This Supreme Court decision dissolved a federal ban on sports betting. States can now decide whether or not they want to legalize the activity.

Esports gambling seemingly falls under the umbrella of these decisions. However, it’s treated somewhat differently than sports wagering.

I’ll discuss various factors that’ll help you find out if you can legally wager on competitive gaming. But first, I’ll cover what makes betting on esports and sports different.

Why Is Esports Betting Different From Sports Gambling?

Sports and esports betting both have plenty of similarities. They use the same types of odds, wagers, and online betting process.

But one area where esports differ drastically is the inclusion of minors. In some cases, you’ll be wagering on players under the age of 18.

Most states are staunchly against wagering on the performance of minors. Meanwhile, esports organizations accept young pros if they have the skills.

This situation creates an extra layer to sports betting’s legality in each state. New Jersey, for example, made a complex ruling on the matter.

They approved esports wagering.

However, the catch is that all players involved in any contest must be 18 or older.

The one other way that betting on esports differs from traditional sports wagering is match fixing. The former has a bigger problem with corruption.

This isn’t to say that esports matches are fixed left and right. But competitive gaming does feature more corruption than famous leagues like, say, the NFL or Premier League.

Regulated vs. Unregulated Esports Gambling

Another challenge when determining if you can bet on esports is figuring out the murkiness of unregulated markets.

Some people think that it’s flat out illegal for them to wager on gaming or sports. They may live in states that haven’t regulated betting and believe anything that’s not legal should be assumed illegal.

They’re not completely off base here. In 2011, the US Department of Justice offered an amended opinion on the Federal Wire Act of 1961.

The DoJ gave their opinion that this law only applies to sports betting.

Odds are, the DoJ would’ve also put esports wagering into this same category. But the key point is that they were only commenting on operators — not gamblers.

Even the offshore operators that serve these states seemingly have little chance of getting busted. Unlike with online poker, the DoJ hasn’t taken any extreme action against offshore bookmakers.

Why Is Internet Gambling Illegal In Some States Allow

As a result, many online sportsbooks housed in Caribbean and Central American locations continue operating in the US.

They’re not going to operate in New York, for example, because they fear a stronger chance of legal action.

Can You Safely Bet on Esports?

Based on everything covered above, you’re probably okay to wager on esports if you live in an unregulated state.

I’ve only seen one instance where somebody was arrested and charged with illegal online betting in an unregulated state.

This case involved extreme circumstances as well.

But you can’t just take for granted that you can bet online with no consequences. The most important matter is to figure out the legality of your given state.

You probably won’t get caught when placing esports wagers in the Evergreen State, but you’re violating the law when doing so.

Certain states, like Louisiana, for example, prohibit online gambling in their state constitution.

One excerpt from the Bayou State’s gambling laws reads:

“Gambling by computer is the intentional conducting of any game or contest whereby a person risks the loss of anything of value in order to realize a profit when accessing the Internet, World Wide Web, or any part thereof by way of any computer […].”

You’d likely still get away with online esports betting in Louisiana, too. But it’s always good to know the state gambling laws anyway so that you understand the potential consequences.

Some States Offer Legal Esports Betting

The ideal scenario for wagering on esports is to do it in a safe and legal environment. A handful of states already provide this opportunity following the repeal of PASPA.

Nevada, New Jersey, Tennessee, and West Virginia have all clearly deemed esports betting to be legal. Others, like Maine, have legislation on the table to specifically allow esports wagering.

As mentioned before, New Jersey struggled with their decision at first. Their original sports gambling legislation left gaming out of the equation.

However, they amended it to include esports betting, so long as the competitors are adults.

Another group of states feature legal sports betting. But they’ve made no clear ruling on where esports gambling stands. Arkansas, Delaware, New York, Iowa, Illinois, Michigan, Rhode Island, Montana, New Mexico, Oregon, and Pennsylvania are all examples. You can likely wager on competitive gaming in these states until further notice.

One more aspect to consider is whether you can bet on esports at both land-based and online sportsbooks. Some states legalized brick-and-mortar sportsbooks, but not internet betting sites.

Arkansas is an example of the latter. They’ve given no timetable on when they plan to review online gambling. Chances are that you’ll know whether or not you can place legal online esports bets by the options available. But you should still make the distinction just in case.

Legal Sports Betting Doesn’t Necessarily Mean Legal Esports Gambling

One more important matter to consider is if both sports and esports betting are legal in your state. I touched on this topic earlier, but now, I want to dive further into it.

Why Is Internet Gambling Illegal In Some States Going

Just because a state legalizes sports betting doesn’t necessarily indicate that they automatically approve of esports wagering. Indiana is a perfect example of this fact.

The Hoosier State was one of the first to pass sports gambling legislation. However, this legislation specifically outlaws betting on esports.

Many states are still in the process of legalizing sports and/or esports wagering.

It’s unknown how each of them will treat the matter. But certain states will likely follow Indiana’s path when they do pass legislation.

What Does the Future Hold for Esports Gambling?

Esports betting is thriving in unregulated markets. It has grown rapidly along with the competitive gaming industry as a whole.

But regulation could throw a wrench in esports gambling’s growth. Little is known about how every state will view esports wagering as regulation sweeps across America.

Some states have already approved both types of gambling in online and land-based settings.

Others have also legalized esports and sports betting, albeit without the online aspect.

Certain states passed sports wagering legislation, but have yet to address esports. Indiana, meanwhile, approved sports gambling, but chose not to do the same for video gaming.

Some states will embrace esports wagering, while others won’t.

But at the end of the day, regulation should help the activity. Gambling sites will actually be able to advertise their esports betting through mainstream outlets.

Laymen will feel more comfortable wagering at sites that are backed by trusted names. Regulated states should see esports gambling grow faster than if it were still stuck in the unregulated sector.

Conclusion

Why Is Internet Gambling Illegal In Some States In America

Many states have enthusiastically rushed to legalize sports betting after the fall of PASPA. But not all of them have given clarification on the legal situation regarding esports gambling.

Therefore, you may have questions about if this type of betting is legal in your state.

The easiest way to figure this out is by looking at the gambling section of your state’s constitution.

Reading laws isn’t exactly the most-exciting way to pass the time. But it will at least give you an indication on if you can legally place esports bets. Odds are that you currently live in an unregulated state. In this case, you’ll be dealing with offshore providers.

You probably won’t be violating any laws by wagering with these remote bookmakers.

Ideally, you’ll live in a state that offers legal esports betting. You can wager on gaming matches without worry in this case. But not many states offer this situation as of now. This leaves you having to do some digging to figure out what’s going on with your specific state.

Hopefully, this situation changes in the future as regulation spreads. As of now, much of the US is in a gray area regarding the legality of esports betting, but very few have outlawed it.