Remote Gambling: Industry Trends and Federal Policy (CRS Report for Congress)
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| Release Date |
Revised July 2, 2014 |
| Report Number |
R42820 |
| Report Type |
Report |
| Authors |
Michaela D. Platzer, Specialist in Industrial Organization and Business |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
Gambling, once widely outlawed, is now a regulated, taxed activity that is legal in some form—
bingo, card games, slot machines, state-run lotteries, casinos, and even online—in all but two
states. Like so many other industries, the gambling industry is being transformed by technology
that has begun to shift patronage from casinos, bingo halls, or stores selling lottery tickets to
desktop computers and tablets connected to the Internet and to mobile devices that may
communicate by telephone or direct satellite links. This report discusses remote gambling and the
likely implications for the broader gambling industry.
State governments have the main responsibility for overseeing gambling, but Congress
historically has played a key role in shaping the industry. The Unlawful Internet Gambling
Enforcement Act (UIGEA; P.L. 109-347) of 2006 prevents payments to illegal gambling-related
businesses, but does not outlaw all forms of remote gambling. It allows states and Indian tribes to
offer remote gambling within their territory if certain conditions are met. A majority of states
allow Internet betting on horse racing, and a few now permit Internet lottery ticket games. A
number of Indian tribes and gaming companies have created entities to develop remote gambling,
and seem likely to expand them rapidly if the legal issues are clarified.
Another major development was the U.S. Department of Justice (DOJ) clarification of the scope
of long-standing laws it has used to prosecute Internet gambling, including the 1961 Wire Act. In
December 2011, a DOJ interpretation of the Wire Act authorized states to allow online gambling,
except for sports betting. Since then, Delaware, New Jersey, and Nevada have implemented
online gambling programs within their borders. Several more states are considering whether to
legalize online gambling, and some have laws that expressly prohibit online gaming.
Several of the larger casino operators favor expanded remote gambling. Proponents have formed
the Coalition for Consumer and Online Protection, which asserts the need for comprehensive
national regulation and points to anticipated federal revenue from taxes and registration fees
generated by authorized remote gambling sites. In the 113th Congress, bills have been introduced
that would allow and tax remote gaming nationwide, and create a new federal department to
oversee online gambling, with proposals for either an Office of Internet Poker Oversight in the
Department of Commerce or an Office of Internet Gambling Oversight in the Department of the
Treasury. An opposing group that also includes prominent casino owners, the Coalition to Stop
Internet Gambling, supports the Restoration of America’s Wire Act (S. 2159 and H.R. 4301),
which would expressly prohibit all online gambling in the United States. Opponents are
concerned that a national online gaming market could draw customers away from traditional
casino operations, and that remote gambling could result in increased fraud and money
laundering. Congress also faces consideration of the balance of federal and state regulation and
the possible social costs of expanded gaming, including problem gambling.
