Internet Gambling: Policy Issues for Congress (CRS Report for Congress)
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| Release Date |
Nov. 7, 2016 |
| Report Number |
R44680 |
| Report Type |
Report |
| Authors |
Michaela D. Platzer, Specialist in Industrial Organization and Business |
| Source Agency |
Congressional Research Service |
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 states
except Hawaii and Utah. 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. According to one private
estimate, annual revenue in the global Internet gambling market, less gamblers’ winnings, is
around $50 billion.
State governments have the main responsibility for overseeing gambling. Congress, however,
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 Internet gambling. In December 2011, a Department
of Justice (DOJ) interpretation of the 1961 Wire Act (18 U.S.C. §1084), which has been used to
prosecute Internet gambling, authorized states to allow online gambling, except for sports betting.
As a result, states and Indian tribes are allowed to permit Internet gambling within their territory
if certain conditions are met.
With the increasing interest in online gambling, debate over the appropriate federal role has
become more prominent. A survey by the American Gaming Association reported that 4% of U.S.
adults who gambled in 2014 did so over the Internet. Currently, a majority of states allow Internet
betting on horse racing, and a few now permit Internet lottery games. A number of Indian tribes
and gaming companies have created entities to develop Internet gambling, and seem likely to
expand them rapidly if the legal issues are clarified. Delaware, Nevada, and New Jersey have
implemented online gambling programs within their borders. Several more states are considering
whether to legalize Internet gambling, although some have laws that expressly prohibit online
gambling. A growing number of states have taken a legislative interest in new forms of online
gaming, such as daily fantasy sports.
The gambling industry is divided over Internet gambling. Some companies and Indian tribes see
it as a promising revenue source. Others fear loss of patronage at brick-and-mortar casinos. One
bill introduced in the 114th Congress, H.R. 2888, would allow online poker, overseen by a new
Office of Internet Poker Oversight in the Department of Commerce. An opposing group that also
includes prominent casino owners, the Coalition to Stop Internet Gambling, supports the
Restoration of America’s Wire Act (H.R. 707, S. 1668), which would prohibit the use of
communications networks to gamble over the Internet. Another bill, S. 3376, would prohibit
financial institutions from processing Internet gambling transactions. Perhaps reflecting divisions
within the gambling industry, Congress has not acted on any of these proposals. No legislation
affecting Internet gambling has been enacted since UIGEA.
