Congress has never definitely prohibited Internet gambling. However, two federal statutes have been used by federal prosecutors to prohibit such activity. The Federal Wire Act (Pub. Law No. 87-216), passed in 1961, was intended to prohibit telephone and telegraph betting, but with the advent of the Internet, was later interpreted more broadly by the U.S. Department of Justice to prosecute online gaming enterprises. However, the full reach of this law remained unclear. In December 2011, the Department of Justice abruptly reversed its course and said that this law applied only to sports betting via wire communication.
In 2006, the Unlawful Internet Gambling Enforcement Act (UIGEA) (32 U.S. Code §§ 5361-67) was signed into law. UIGEA seeks to cut off the flow of revenue to "unlawful Internet gambling" businesses by enlisting the assistance of banks, credit card issuers, and other payment system participants, who stop payments to these businesses. The law also authorizes federal and state authorities to sue private entities to prevent or restrain violations of its provisions, including requiring Internet service providers to remove Internet gaming sites and their links, but not requiring them to monitor site activity. However, the law does not clearly define what unlawful Internet gambling is.
Internet gambling is a phenomenon that is not going away. The industry generates $30 billion in revenue each year, and online gaming is currently legal in 85 different countries. Americans already play online casino games at more than 1,700 offshore websites, but these consumers are currently inadequately protected by U.S. law.
In recent years, two legislative proposals in the House would legalize Internet gaming: the Internet Gambling Regulation, Consumer Protection, and Enforcement Act, and the Internet Gambling Prohibition, Poker Consumer Protection, and Strengthening UIGEA Act. These bills would also provide various consumer protections, mandate age and location verification of players, promote responsible gaming, and develop a framework to encourage coordination and information-sharing between states and to provide regulatory predictability and consistency among operators. The two bills also have some significant differences. Notably, the former only legalizes Internet poker, a game of skill at which it is more difficult to cheat, while the latter legalizes all Internet gambling except sports betting. The Internet Gambling Prohibition, Poker Consumer Protection, and Strengthening UIGEA Act also vests regulatory authority in the states and tribes, with oversight only by the U.S. Secretary of Commerce, while the Internet Gambling Regulation, Consumer Protection, and Enforcement Act provides strictly for federal regulation by the U.S. Secretary of Treasury.
I recognize the vital role the gaming industry plays in our State and what additional opportunities Internet gaming would present for our economy. I also agree that this is a sensible way to increase revenues without raising taxes. Online gaming is still in its infancy, and Nevada has proven itself to be the worldwide leader in the administration of a responsible gaming industry that benefits both the public and private sectors. Our State was also the first to implement a regulatory system for Internet gambling. I believe that Nevada should play a central role in any federal legislation that would create nationwide regulation of online gaming.
For this reason, I co-sponsored the Internet Gambling Prohibition, Poker Consumer Protection, and Strengthening UIGEA Act, given its focus on State-initiated regulation. Both bills are currently under consideration by the House Energy & Commerce Committee, the Financial Services Committee and the Judiciary Committee. I will continue to work with my colleagues to advance policy that will responsibly regulate online poker at the federal level while finally making it legal to play online.