Federal Law Against Illegal Gambling

The Supreme Court struck down a federal law that prohibits sports gambling Monday in a landmark decision that gives states the go-ahead to legalize betting on sports. The court ruled 6-3 to strike. Federal Act on Gambling (Gambling Act): results Gaetan Bally - Keystone A lot of people enjoy gambling, playing games like roulette or poker, or buying lottery tickets. But these games can also lead to gambling addictions, or be exploited to commit fraud or money laundering offences. The operative language is the so-called 'defraud clause,' that prohibits conspiracies to defraud the United States. This clause creates a separate offense from the 'offense clause' in Section 371. Both offenses require the traditional elements of Section 371 conspiracy, including an illegal agreement, criminal intent, and proof of an overt act. A payer is required to issue you a Form W-2G, Certain Gambling Winnings PDF if you receive certain gambling winnings or have any gambling winnings subject to federal income tax withholding. You must report all gambling winnings as 'Other Income' on Form 1040 or Form 1040-SR PDF (use Schedule 1 (Form 1040 or 1040-SR) PDF ), including winnings.

1. Federal Law Against Illegal Gambling Laws
2. Federal Law Against Illegal Gambling Rules
3. Federal Law Against Illegal Gambling Losses
4. Federal Law Against Illegal Gambling Philippines

The general conspiracy statute, 18 U.S.C. § 371, creates an offense '[i]f two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose. (emphasis added). See Project, Tenth Annual Survey of White Collar Crime, 32 Am. Crim. L. Rev. 137, 379-406 (1995)(generally discussing § 371).

The Federal Wire Act Law Of 1961. Federal gambling law prohibits the operation of interstate betting activities in the United States. The Federal Wire Act, also known as the Interstate Wire Act of 1961, specifically made it illegal for illicitly run US-based sports gambling businesses to utilize any form of wire communications to send or accept betting information and wagers from across state lines or foreign US-owned territories.

The operative language is the so-called 'defraud clause,' that prohibits conspiracies to defraud the United States. This clause creates a separate offense from the 'offense clause' in Section 371. Both offenses require the traditional elements of Section 371 conspiracy, including an illegal agreement, criminal intent, and proof of an overt act.

Although this language is very broad, cases rely heavily on the definition of 'defraud' provided by the Supreme Court in two early cases, Hass v. Henkel, 216 U.S. 462 (1910), and Hammerschmidt v. United States, 265 U.S. 182 (1924). In Hass the Court stated:

The statute is broad enough in its terms to include any conspiracy for the purpose of impairing, obstructing or defeating the lawful function of any department of government . . . (A)ny conspiracy which is calculated to obstruct or impair its efficiency and destroy the value of its operation and reports as fair, impartial and reasonably accurate, would be to defraud the United States by depriving it of its lawful right and duty of promulgating or diffusing the information so officially acquired in the way and at the time required by law or departmental regulation.

Hass, 216 U.S. at 479-480. In Hammerschmidt, Chief Justice Taft, defined 'defraud' as follows:

To conspire to defraud the United States means primarily to cheat the Government out of property or money, but it also means to interfere with or obstruct one of its lawful governmental functions by deceit, craft or trickery, or at least by means that are dishonest. It is not necessary that the Government shall be subjected to property or pecuniary loss by the fraud, but only that its legitimate official action and purpose shall be defeated by misrepresentation, chicane or the overreaching of those charged with carrying out the governmental intention.

Hammerschmidt, 265 U.S. at 188.

The general purpose of this part of the statute is to protect governmental functions from frustration and distortion through deceptive practices. Section 371 reaches 'any conspiracy for the purpose of impairing, obstructing or defeating the lawful function of any department of Government.' Tanner v. United States, 483 U.S. 107, 128 (1987); seeDennis v. United States, 384 U.S. 855 (1966). The 'defraud part of section 371 criminalizes any willful impairment of a legitimate function of government, whether or not the improper acts or objective are criminal under another statute.' United States v. Tuohey, 867 F.2d 534, 537 (9th Cir. 1989).

The word 'defraud' in Section 371 not only reaches financial or property loss through use of a scheme or artifice to defraud but also is designed and intended to protect the integrity of the United States and its agencies, programs and policies. United States v. Burgin, 621 F.2d 1352, 1356 (5th Cir.), cert. denied, 449 U.S. 1015 (1980); seeUnited States v. Herron, 825 F.2d 50, 57-58 (5th Cir.); United States v. Winkle, 587 F.2d 705, 708 (5th Cir. 1979), cert. denied, 444 U.S. 827 (1979). Thus, proof that the United States has been defrauded under this statute does not require any showing of monetary or proprietary loss. United States v. Conover, 772 F.2d 765 (11th Cir. 1985), aff'd, sub. nom. Tanner v. United States, 483 U.S. 107 (1987); United States v. Del Toro, 513 F.2d 656 (2d Cir.), cert. denied, 423 U.S. 826 (1975); United States v. Jacobs, 475 F.2d 270 (2d Cir.), cert. denied, 414 U.S. 821 (1973).

Thus, if the defendant and others have engaged in dishonest practices in connection with a program administered by an agency of the Government, it constitutes a fraud on the United States under Section 371. United States v. Gallup, 812 F.2d 1271, 1276 (10th Cir. 1987); Conover, 772 F.2d at 771. In United States v. Hopkins, 916 F.2d 207 (5th Cir. 1990), the defendants' actions in disguising contributions were designed to evade the Federal Election Commission's reporting requirements and constituted fraud on the agency under Section 371.

The intent required for a conspiracy to defraud the government is that the defendant possessed the intent (a) to defraud, (b) to make false statements or representations to the government or its agencies in order to obtain property of the government, or that the defendant performed acts or made statements that he/she knew to be false, fraudulent or deceitful to a government agency, which disrupted the functions of the agency or of the government. It is sufficient for the government to prove that the defendant knew the statements were false or fraudulent when made. The government is not required to prove the statements ultimately resulted in any actual loss to the government of any property or funds, only that the defendant's activities impeded or interfered with legitimate governmental functions. SeeUnited States v. Puerto, 730 F.2d 627 (11th Cir.), cert. denied, 469 U.S. 847 (1984); United States v. Tuohey, 867 F.2d 534 (9th Cir. 1989); United States v. Sprecher, 783 F. Supp. 133, 156 (S.D.N.Y. 1992)(þit is sufficient that the defendant engaged in acts that interfered with or obstructed a lawful governmental function by deceit, craft, trickery or by means that were dishonest'), modified on other grounds, 988 F.2d 318 (2d Cir. 1993).

In United States v. Madeoy, 912 F.2d 1486 (D.C. Cir. 1990), cert. denied, 498 U.S. 1105 (1991), the defendants were convicted of conspiracy to defraud the government and other offenses in connection with a scheme to fraudulently obtain loan commitments from the Federal Housing Administration (FHA) or Veterans Administration (VA). The court held that the district court had properly instructed the jury that:

the Government must prove beyond a reasonable doubt the existence of a scheme or artifice to defraud, with the objective either of defrauding the FHA or the VA of their lawful right to conduct their business and affairs free from deceit, fraud or misrepresentation, or of obtaining money and property from the FHA by means of false and fraudulent representations and promises which the defendant knew to be false.

Madeoy, 912 F.2d at 1492.

Prosecutors considering charges under the defraud prong of Section 371, and the offense prong of Section 371 should be aware of United States v. Minarik, 875 F.2d 1186 (6th Cir. 1989) holding limited, 985 F.2d 962 (1993), and related cases. SeeUnited States v. Arch Trading Company, 987 F.2d 1087 (4th Cir. 1993). In Minarik, the prosecution was found to have 'used the defraud clause in a way that created great confusion about the conduct claimed to be illegal,' and the conviction was reversed. 875 F.2d at 1196. After Minarik, defendants have frequently challenged indictments charging violations of both clauses, although many United States Courts of Appeals have found it permissible to invoke both clauses of Section 371. Arch Trading Company, 987 F.2d at 1092 (collecting cases); see alsoUnited States v. Licciardi, 30 F.3d 1127, 1132-33 (9th Cir. 1994)(even though the defendant may have impaired a government agency's functions, as part of a scheme to defraud another party, the government offered no evidence that the defendant intended to defraud the United States and a conspiracy to violate an agency regulatory scheme could not lie on such facts).

In summary, those activities which courts have held defraud the United States under 18 U.S.C. § 371 affect the government in at least one of three ways:

[cited in JM 9-42.001]

1. They cheat the government out of money or property;
2. They interfere or obstruct legitimate Government activity; or
3. They make wrongful use of a governmental instrumentality.

Gambling in the United States is a very fluid landscape with more than its share of ebb and flow. The parameters change regularly, and now that state-regulated online gambling is allowed, everyone involved is taking a hard look at the laws and policies governing the various elements of the industry.

Those opposed to gambling attempt to use the laws to support their position, while those who support responsible gambling work tenaciously to expand our options within compliance of existing US laws. The complexity of the legal status of gambling in the US in all its various forms can make it difficult to follow and understand specifically what is and is not considered legal betting.

Our objective in adding this information to our LegalBettingOnline.com resource guide is to provide valuable data that empowers players to make highly informed decisions regarding what types of gambling entertainment effectively meet their needs and preferences through legally sanctioned betting opportunities. We are not attorneys and are providing this guide for informational purposes only**.

Unlawful Internet Gambling Enforcement Act - UIGEA

This is one of the most misunderstood US gambling laws and is surrounded by layers of misinformation and misconception. Many players believe that this law prohibits USA residents from participating in online gambling. This is not true. In fact, the UIGEA law does not address player activity at all nor place any type of restrictions on players themselves. Instead, this law targets banks and financial institutions that knowingly process any transactions related to online gambling.

Our page explaining the Unlawful Internet Gambling Enforcement Act will provide an accurate and understandable explanation of what this law was created for, what specific aspects of online gambling it governs, and how its implementation affects players in the US.

Professional And Amateur Sports Protection Act – PASPA

Paspa (also known as the Bradley Act) was directed specifically at the sports betting industry and provided regulation concerning US-based sportsbook gambling. It has been the center of controversy in the industry recently, bringing into question the law's range of power and presence. This law essentially makes US-based sports betting illegal in all but 4 states.

Federal Law Against Illegal Gambling Laws

However, in May of 2018, through a lawsuit initiated by the state of New Jersey, SCOTUS ruled that PASPA was unconstitutional and the law was struck down. This has dramatically changed the US sports gambling market and has given power back to the states to determine their own will to allow or prohibit sportsbooks from operating within their borders.

Our page explaining the Professional and Amateur Sports Protection Act discusses the law's intentions, reach, and parameters, as well as how state opposition coupled with state-regulated gambling initiatives challenged the law head-on and won.

Of all of the US federal gambling laws, The Federal Wire Act one probably has the most interesting origins of them all. Who doesn't love a 'good guys vs the mob 'story? The Federal Wire Act is also one of the most debated pieces of gambling-related legislation and has sparked a great deal of controversy after the DOJ determined that the law's restrictions do include US-based online gambling. Since that time, the DOJ has issued two contradicting legal opinions in 2011 and 2019 respectively that have each redefined the application of the Wire Act and its associated prohibitions.

2011 DOJ Formal Legal Opinion on Interpretation of the Wire Act

Interestingly enough, the DOJ issued a formal legal opinion in 2011 concerning the reach of the Wire Act, indicating that the law only applies to sports gambling, and does not prohibit other forms of state-based online gambling. This literally opened the door to individual states having the authority to license and regulated domestic online casinos and poker rooms, among other forms of gambling, without violating the Wire Act. Learn more from our page dedicated to explaining the Federal Wire Act and how it impacts legal online sports betting for American players.

2019 DOJ Formal Legal Opinion Again Redefines the Reach of the Wire Act

The DOJ reversed their 2011 DOJ Opinion Memo on the Wire Act in 2019 to reflect a prohibition against all US-based interstate gambling. Casino, lottery, poker, sports betting, and information companies were given a 90 day period to meet new compliance standards or face violating Federal Law. This means servers, data, payment processors, etc. must be located individually within the state the business is operating gambling services in.

The reversal on the DOJ's position on the Wire Act will not dramatically impact those states that have already begun licensing and regulating online gambling within their borders, but it will impact those states that have entered into interstate gambling compacts and already share player pools across state lines. We would not be surprised to see lawsuits against the decision from those states, gambling operators and the software and technology companies providing services in the industry.

In 2014, senators Lindsey Graham of SC and Jason Chaffetz of Utah reintroduced legislation to congress that would restore the wire act. If implemented, RAWA would essentially rewrite and extend the Federal Wire Act of 1961 to make all types of gambling illegal, even if it were already legal on the state level. Marco Rubio of Florida has also recently joined the party and supports RAWA.

What do these 3 senators have in common? They are thought to be in bed with Sheldon Adelson, a multi-billionaire gambling tycoon who operates brick and mortar casinos all over the world. Learn more by reading our page explaining RAWA - Restoration Of Americans Wire Act.

The Interstate Horse Racing Act of 1978, or IHRA, is the law that governs the horse betting industry’s off-track betting locations (OTBs) and interstate betting options in the US. This law, though enacted in 1978, also defines the rules and regulations of simulcast betting on an interstate basis, which was logically extended to domestic online betting with the advent of widespread Internet access in the late 1990s and 2000s.

Though the IHRA makes interstate horse betting legal at the federal level, individual states have the final say as to whether or not they wish to legalize horse racing or offer their residents access to interstate betting. To date, 41 out of 50 US states participate in interstate horseplaying under the auspices of the IHRA, with several other states considering legalizing the industry within their borders.

That said, the Interstate Horse Racing Act does not bar the use of overseas or international racebooks. US residents in most states (excepting WA and CT) can legally use offshore racebooks to bet on the ponies. Best of all, these books offer much greater access to international races, featuring tracks from the US, Canada, Mexico, England, Ireland, the Middle East, Japan, and Australia, among others.

The brick and mortar land-based and floating casinos and poker rooms that are found in various states through the US are all governed by state gambling laws. Each state determines its own laws concerning what type of casino, poker, pari-mutuel, bingo, lottery, and other gambling they will allow within their state borders.

US Federal gambling laws primarily target US-based online gambling and sports betting. The DOJ has determined that each state can also determine their own destiny concerning legal online poker and legal online casino gambling.

It depends on where you are placing your bets. There are no federal laws that prohibit US residents from participating at online casinos, poker sites, bingo sites and legal online sportsbooks that are licensed, regulated and located outside of the United States.

If you restrict your online gambling to these types of legally sanctioned gambling sites, then you will not be breaking the law. We do recommend however that you consider expert input regarding which sites are approved by professionals as providing a safe, high quality and rewarding online gambling experience.

Federal Law Against Illegal Gambling Rules

One of the key elements that we examine during our review process is the security profile of each website. We don't provide our approval for gambling websites that simply meet licensing requirements or the lowest industry standards.

We require that a sophisticated security profile is in place that is comparable to world-class financial institutions. We want to see advanced encryption technology, firewall, and antivirus protection and fraud prevention systems, equipped with a technically trained staff to monitor these systems. These are tall requirements, and only those brands which can meet them are considered for inclusion in our guide.

If you limit your gambling entertainment to websites approved by professionals, then you can be certain that the security and level of protection you are looking for is in place. This is a trait of those sites that are legally licensed and subject to genuine regulatory oversight. Those sites operating outside of legal parameters don't typically take the time to invest in this type of security.

Federal Law Against Illegal Gambling Losses

Because the vast majority of all US friendly gambling sites are located offshore, they must be located in a jurisdiction that already offers legal online gambling. They must also be regulated by a governing body under strict oversight. We have a detailed article explaining what a gaming commission is and which jurisdictions are the most reputable in the industry.

Additional Gambling Laws By Country

Federal Law Against Illegal Gambling Philippines

**We do not hold legal degrees or training and provide this information based on personal experience and research, not as experts in interpreting the law. If you seek professional legal advice or services, we recommend you contact an attorney familiar with gambling laws.