Legality

Unfortunately, once the subject of online gambling is raised, folks immediately bring up the question of its legality. While different jurisdictions have different laws and circumstances, generally speaking the two topics, nonetheless, seem to go hand-in-hand.

Accordingly, we'd like to welcome you to the 'legality section' of our GamblingPlanet, where we try to provide a broad picture in terms of the main legal issues associated with online gambling and those that any player should be aware of. What follows, however, does not represent a definitive or comprehensive analysis of the subject but merely an introduction of sorts that should provide a bit of background and a general outline of the current legal environment.

The information here has been divided into two parts: one for the EU and the other for the US, as sharp differences exist between the two regions. Furthermore, laws regarding online gambling can be quite unclear at times; this is especially the case for the US and increasingly so for the EU. Quite naturally, it is important for all players, regardless of their nationality, to be aware of the legal foundations of online gambling.

In the case of the EU, European Union officials have taken a pretty clear pro-online gambling position and even though some individual member states have attempted to legislate on the activity, bans are generally prohibited and run counter to EU law which must feature conformity across the Union. In the US, for a long time, attempts were made to legislate against online gambling, but such attempts were generally made on a state-by-state basis and they all focused on different laws and practices regarding online gambling. Until recently, the activity was generally considered a legal grey area (especially in the US). Recent anti-gambling US legislation and the UIGEA, however, has changed all of that.

The material presented below is aimed at presenting you an overview of the various laws that have been voted through regarding the activity of online casinos. As mentioned above, this section does not pretend to be perfectly comprehensive and should not be treated as legal advice. We do hope, however, that you will find it useful!

Disclaimer: GamblingPlanet.org is not a legal authority. In no way should the information presented here be regarded as formal legal advice. All of the information given on these pages has been taken from several assorted news releases and articles and its accuracy is not guaranteed. For more accurate and formal information considering the legality of online gambling, consult the specific laws of the area in which you reside or jurisdiction in which you are playing.

Online Casinos & EU Legislation

The EU member states are legally bound to accept goods and services from other member states. However, the European Court of Justice has recently declared that the issue of gambling is exclusively that of member state competence, meaning that EU countries have full jurisdiction in deciding whether online gambling is legal or not. Consequently, sharp divergence can be seen from country to country in the European Union.

It should be said, however, that the overwhelming majority of EU member-states tolerate online gambling. In fact, it is common practice among EU member states that such business is regulated, instead of being prohibited. Online casinos are enjoying a sustained interest across Europe. Scandinavian countries, Germany, Austria, France and Ireland are examples of countries, which have seen the highest growth in terms of online casino club creation. Enhanced Internet access in Eastern European countries has quite naturally led to a growth of participation in online gambling websites. Most states in Europe have managed to exert a level of control over online gambling thanks to licensing. Indeed, legislation is often present to oblige casinos to obtain specific licenses, themselves, endorsing specific rules about online gambling practices. In the Netherlands for instance, online casinos are perfectly legal. At the same time, the Dutch Gaming Act does not allow Dutch nationals to take part in online casino games operated by a company which does not have a Dutch gaming license, showing how diversified legislation can be in the EU when it comes to online gambling. In the case of the UK, legislation not only tolerates the activity altogether, it also supports foreign operators coming to the UK and running their activity from there. The advantage of such an attitude towards online gambling is that the state is able to regulate the activity effectively, thus enabling British public authorities to tackle issues of fraud and money laundering.

As in the US where states have their own laws, countries in the EU enjoy a noticeable amount of legal `liberty` when it comes to regulations affecting their citizens. The general framework is that European states allow their nationals to participate in online casinos as long as such practices are legal. Because there is no specific legislation about online gambling, and given the lack of interest from the political class, there is no common legal framework across EU countries. To sum up, online casinos are generally legal in Europe, but GamblingPlanet.org does invite you to find out more about the type of laws and regulations existing in the country where you reside before playing online. There has been several worrying developments in a number of EU countries in terms of online gambling legislation. But, as we said before, the EU has taken a pretty clear stance on this and the legality of any proposals to ban or restrict online gambling in individual member states is sure to be challenged at EU level and would be difficult, if not impossible, to uphold.

Disclaimer: GamblingPlanet.org is not a legal authority. In no way should the information presented here be regarded as formal legal advice. All of the information given on these pages has been taken from several assorted news releases and articles and its accuracy is not guaranteed. For more accurate and formal information considering the legality of online gambling, consult the specific laws of the area in which you reside or jurisdiction in which you are playing.

Online Casinos & US Legislation

In a nutshell, US legislation about online gambling has been and continues to be very unclear. We used to say that the main point to remember is that no federal law exists preventing US nationals from engaging in online gambling or any related activity. Even after the UIGEA, this remains the case. Online gambling ‘expert’ Professor I. Nelson Rose, explicitly states that online gambling should be regarded as perfectly legal as “no United States federal statute or regulation explicitly prohibits online gambling, either domestically or abroad.” Reinforcing the argument, estimates show that 70% of all online wagers are US-based, Americans account for over 80% of online poker players and participate in more than 55% of the proportion of online gambling activities. It would seem quite extreme to claim that all of those people are not respecting the law!

Different State laws on online gambling can affect citizens who attempt to play, and there have been attempts - most notably the Internet Gambling Enforcement Act of 2006 (H.R. 4411) - to prohibit the activity altogether at the federal level. In the past, online gambling was no different to the culture of legislation in the US: it all depended, and still does in some ways, on the State in which you reside. Nevada, Louisiana, Michigan and Illinois currently outlaw online gambling, and many other state legislatures are about to introduce similar legislation. California, Massachusetts, South Dakota, and Utah outlaw certain forms of online gambling while allowing others.

It must be said, however, that significant loopholes can be identified within those laws, which in reality do not prevent local operators from taking bets online whilst complying with the laws of the state. As US nationals generally take part in online casinos that are legal, it seemed highly improbable that state governments or the federal government would ever be able to acquire a comprehensive legal framework allowing the prohibition of online gambling, as well as the prosecutions of the operators themselves. But, that all changed in 2006.

It has often been said that the Federal Wire Act of 1961 (18 U.S.C. § 1084) constitutes a federal statute which could be interpreted in such a way that it would deal with online gambling. This piece of legislation explicitly prohibits citizens from one state to bet to another using phone lines. However, the act only prohibits 'sports betting', and does not cover other forms of gambling. Again, one should stress that it was originally aimed at combating organized crime, and is therefore not particularly up to date. Even though efforts were made to extend the provisions of the act, one of the consequences of the act was, in fact, restricting the use of credit cards for US citizens wishing to make gambling transactions outside their home state. Adding to the difficulty, online payments are current practice nowadays, but this example illustrates just how difficult it is for the Federal government to regulate online gambling. As mentioned above, most US legislation about gambling was aimed at tackling organized crime, the operators of gambling schemes and their respective activities.

Following the high-profile arrests of several online gambling executives traveling in the US, in September of 2006 (right before mid-term US elections) a bill sponsored by Republican congressmen who cited moral reasoning for its necessity - the Internet Gambling Enforcement Act 2006 -was successfully passed in the Senate after being attached to completely unrelated legislation (the Safe Port Act) in a devious, last-ditch effort to get the bill through before Congress' recess. On October 14th, President Bush signed the legislation into law. Now, as a result of the Act (which makes exceptions for gambling on horse racing, state-run lotteries, and fantasy sports) it is illegal for American financial institutions to process transactions originating from or directed towards any online gambling operator.

Most headlines have described the law as "outlawing internet gambling" and, indeed, in many circles it has been received as such. Yet, while the law, at the Federal level, has now become clearer it still hasn't gone so far as to explicitly outlaw online wagering in each and every aspect. Big, publicly-traded operators like Partygaming and 888.com took a major hit following the legislation and have closed their doors (or, sites) to US players. Several other companies have had to shut down operations as a result of the hit on their revenues and despite the efforts of powerful groups like the Poker Players' Alliance, many Americans undoubtedly have turned away from the activity.

However, aside from the serious financial implications for companies heavily invested in the US market, the effect of the new law is still hard to determine. Several major online casinos and online operators have continued to accept American players and international financial intermediaries have continued to process transactions from American players while others are popping up. Furthermore, larger financial institutions have complained to regulatory officials about the difficulty - and even impossiblity - in enforcing the new laws.

So, for the moment, it appears that the legislation's reach is limited and the ability of US citizens to place bets at online casinos and online poker rooms has only been 'changed' and not completely taken away. Again, in keeping with its tradition, the issue falls into another gray area despite the increased clarity of the law provided by the Internet Gambling Enforcement Act. It's difficult to predict how effective the law will be in preventing Americans from placing online wagers or drastically curbing the popularity of the online gambling sector. As of now, still no US citizen has been prosecuted for placing wagers online and the law remains unclear in this respect. US players should, however, play at their own risk and educate themselves as much as possible beforehand. While many pundits and observers think the recent legislation will ultimately follow the same path as Prohibition laws in the 30s (eventually be overturned) - and, the parallels are staggering - nothing is certain. Whatever the case may be, the situation 'should' become increasingly clear in the coming years.

Disclaimer: GamblingPlanet.org is not a legal authority. In no way should the information presented here be regarded as formal legal advice. All of the information given on these pages has been taken from several assorted news releases and articles and its accuracy is not guaranteed. For more accurate and formal information considering the legality of online gambling, consult the specific laws of the area in which you reside or jurisdiction in which you are playing.