Internet gambling is an essentially borderless activity that poses regulatory and enforcement challenges. The legal framework for regulating it in the United States and overseas is complex. U.S. law as it applies to internet gambling involves both state and federal statutes.
In general, gambling is regulated at the state level, with each state determining whether individuals can gamble within its borders and whether gaming businesses can legally operate there. Five states (Illinois, Louisiana, Nevada, Oregon, and South Dakota) have enacted laws that specifically prohibit certain aspects of Internet gambling, but laws in other states that prohibit some types of gambling activities generally apply to Internet gaming as well.
Federal law recognizes that state laws vary and seeks to ensure that neither interstate or foreign commerce is used to circumvent them.
Law enforcement officials said they believed that Internet gambling could potentially be a powerful vehicle for laundering criminal proceeds at the relatively obscure "layering" stage of money laundering. They cited several characteristics of Internet gambling that they believed made it vulnerable to money laundering, including the volume, speed, and international reach of internet transactions and the offshore locations of Internet gambling sites. In their view, these characteristics promoted a high level of anonymity and gave rise to complex jurisdictional issues.
Professor Nelson Rose said:
- "The United States government has also been putting pressure on foreign governments, such as Antigua, which have a major presence on the Internet. The major concern is money laundering, and individuals involved with the development of Antigua=s laws on Internet gambling have been visited by the Department of the Treasury's Financial Crimes Enforcement Network, commonly known as 'FinCEN.' "
Mark Kossman wrote:
- "Most people see internet gambling as a recreational and leisure activity. However, for other people internet gambling can become a trap. It can gradually, or sometimes quickly, become the only thing important. All of an individual’s resources and interests become focused on the next chance to gamble on the Internet."