Internet Gambling: An Overview of Federal Criminal Law

Congressional research reportJan 24, 2012

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Internet Gambling: An Overview of

Federal Criminal Law

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Senior Specialist in American Public Law

January 24, 2012

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CRS Report for Congress

Prepared for Members and Committees of Congress

Internet Gambling: Overview of Federal Criminal Law

Summary

This is a summary of the federal criminal statutes implicated by conducting illegal gambling

using the Internet. Gambling is primarily a matter of state law, reinforced by federal law in

instances where the presence of an interstate or foreign element might otherwise frustrate the

enforcement policies of state law. State officials and others have expressed concern that the

Internet may be used to bring illegal gambling into their jurisdictions.

Illicit Internet gambling implicates at least seven federal criminal statutes. It is a federal crime (1)

to conduct an illegal gambling business under the Illegal Gambling Business Act, 18 U.S.C.

1955; (2) to use the telephone or telecommunications to conduct an illegal gambling business

involving sporting events or contests under the Wire Act, 18 U.S.C. 1084; (3) to use the facilities

of interstate commerce to conduct an illegal gambling business under the Travel Act, 18 U.S.C.

1952; (4) to conduct the activities of an illegal gambling business involving either the collection

of an unlawful debt or a pattern of gambling offenses, the Racketeer Influenced and Corrupt

Organizations (RICO) provisions, 18 U.S.C. 1962; (5) to launder the proceeds from an illegal

gambling business or to plow them back into such a business under money laundering provisions

of 18 U.S.C. 1956; (6) to spend more than $10,000 of the proceeds from an illegal gambling

operation at any one time and place under the money laundering provisions, 18 U.S.C. 1957; or

(7) for a gambling business to accept payment for illegal Internet gambling under the Unlawful

Internet Gambling Enforcement Act (UIGEA), 31 U.S.C. 5361-5367.

Enforcement of these provisions has been challenged on constitutional grounds. Attacks based on

the Commerce Clause, the First Amendment’s guarantee of free speech, and the Due Process

Clause have enjoyed little success. The commercial nature of a gambling business seems to

satisfy doubts under the Commerce Clause. The limited First Amendment protection afforded

crime facilitating speech encumbers free speech objections. The due process arguments raised in

contemplation of federal prosecution of offshore Internet gambling operations suffer when

financial transactions with individuals in the United States are involved.

Citations to state and federal gambling laws, and the text of the statutes cited above, are included.

This report appears in abridged form, without footnotes, full citations, or supplementary material,

as CRS Report RS21984, Internet Gambling: An Abridged Overview of Federal Criminal Law.

Related CRS reports include CRS Report RS22749, Unlawful Internet Gambling Enforcement

Act (UIGEA) and Its Implementing Regulations, and CRS Report R41614, Remote Gaming and

the Gambling Industry.

Congressional Research Service

Internet Gambling: Overview of Federal Criminal Law

Contents

Introduction...................................................................................................................................... 1

The Wire Act.................................................................................................................................... 2

Illegal Gambling Businesses............................................................................................................ 8

Travel Act ...................................................................................................................................... 13

Unlawful Internet Gambling Enforcement Act (UIGEA).............................................................. 16

Racketeer Influenced and Corrupt Organizations (RICO)............................................................. 24

Money Laundering......................................................................................................................... 27

Laundering the Proceeds................................................................................................................ 28

Promotion ................................................................................................................................ 28

Concealment ............................................................................................................................ 31

Tax Evasion and Report Evasion............................................................................................. 33

Spending the Proceeds............................................................................................................. 33

Constitutional Considerations........................................................................................................ 36

Commerce Clause.................................................................................................................... 36

First Amendment ..................................................................................................................... 37

Due Process ............................................................................................................................. 38

Selected Federal Anti-Gambling Laws (Text) ............................................................................... 40

Wire Act (18 U.S.C. 1084) ...................................................................................................... 40

Illegal Gambling Business Act (18 U.S.C. 1955).................................................................... 41

Travel Act (18 U.S.C. 1952).................................................................................................... 42

Unlawful Internet Gambling Enforcement Act (31 U.S.C. 5361 et seq.) ................................ 42

RICO (18 U.S.C. 1961 et seq.) ................................................................................................ 48

Money Laundering (18 U.S.C. 1956, 1957) ............................................................................ 50

Federal Anti-Gambling Laws (Citations) ...................................................................................... 56

State Anti-Gambling Laws (Citations)........................................................................................... 58

Contacts

Author Contact Information........................................................................................................... 58

Congressional Research Service

Internet Gambling: Overview of Federal Criminal Law

Introduction

Internet gambling is gambling on, or by means of, the Internet. It encompasses placing a bet

online with a bookie, betting shop, or other gambling enterprise. It also includes wagering on a

game played online. A few states ban Internet gambling per se.1 Most states, however, rely upon

their generally applicable gambling laws.2 Gambling that is unlawful when conducted in person is

ordinarily unlawful when conducted online.3 There are many federal gambling laws, most enacted

to prevent unwelcome intrusions of interstate or international gambling into states where the

activity in question has been outlawed.4

In very general terms, it is a federal crime

•

to use wire communications to place or receive bets on, or to transmit gambling

information relating to, sporting contests or events;5

•

to conduct a large-scale gambling business in violation of state law;6

•

to travel interstate or overseas, or to use any other facility of interstate or foreign

commerce, to facilitate the operation of an illegal gambling business;7

•

to conduct a gambling business and accept payment for illegal Internet gambling

participation;8

•

to systematically commit these crimes in order to acquire or operate a

commercial enterprise;9

•

to launder the proceeds of an illegal gambling business or to plow them back into

the business;10

•

to spend or deposit more than $10,000 of the proceeds of illegal gambling in any

manner;11 or

•

to conspire with others, or to aid and abet them, in their violation of any of these

federal laws.12

E.g., ILL.COMP.STAT.ANN. ch. 720 §5-28-1(a)(12); IND.CODE ANN. §35-45-5-2; LA.REV.STAT.ANN. §14:90.3;

MICH.COMP. LAWS ANN. §§750.301, 752.796; MONT.CODE ANN. §23-5-112; ORE.REV.STAT. §167.109; S.D.COD.LAWS

ANN. §§22-25A-1 to 22-25A-15; WASH.REV.CODE ANN. §9.46.240; WIS.STAT.ANN. §§945.01, 945.03.

The citations to the various state anti-gambling laws are listed at the end of this report. The particulars of those laws

are generally beyond the scope of this report.

E.g., People ex rel. Vacco v. World Interactive Gaming Corp., 185 Misc.2d 852, 859-60, 714 N.Y.S.2d 844, 850-51

(2010)(the New York gambling statutes apply to online betting in New York); United States v. Cohen, 260 F.3d 68, 73

(2d Cir. 2001)(same); OP. TEX. ATT’Y GEN. DM-344 (1995)(state gambling laws apply to online gambling); OP. FLA.

ATT’Y GEN. 95-70 (1995)(same).

Citations to federal anti-gambling statutes are listed at the end of this report.

18 U.S.C. 1084.

18 U.S.C. 1955.

18 U.S.C. 1952.

31 U.S.C. 5363.

18 U.S.C. 1962.

18 U.S.C. 1956.

18 U.S.C. 1957.

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Internet Gambling: Overview of Federal Criminal Law

The Wire Act

Commentators most often mention the Wire Act13 when discussing federal criminal laws that

outlaw Internet gambling in one form or another.14 Early federal prosecutions of Internet

gambling generally charged violations of the Wire Act.15 In fact, Cohen, perhaps the most widely

known of federal Internet gambling prosecutions, involved the Wire Act conviction, upheld on

appeal, of the operator of an offshore, online sports book.16

In general terms, the Wire Act outlaws the use of interstate telephone facilities by those in the

gambling business to transmit bets or gambling-related information. Offenders are subject to

imprisonment for not more than two years and/or a fine of the greater of not more than twice the

gain or loss associated with the offense or $250,000 (not more than $500,000 for organizations).17

They may have their telephone service canceled at law enforcement request,18 and conduct that

violates the Wire Act may provide the basis for a prosecution under the money laundering

statutes, the Travel Act, the Illegal Gambling Business Act, RICO, or the Unlawful Internet

Gambling Enforcement Act.19

(...continued)

18 U.S.C. 371, 2.

18 U.S.C. 1084.

Gottfried, The Federal Framework for Internet Gambling, 10 RICHMOND JOURNAL OF LAW AND TECHNOLOGY 26, 46

(2004)(“[T]he Wire Act ... is the federal act most often applied in efforts to prosecute Internet gambling.... ”); Keller,

The Game’s the Same: Why Gambling in Cyberspace Violates Federal Law, 108 YALE LAW JOURNAL 1569, 1580

(1999)(“It is the breadth of the Wire Wager Act that has attracted the most attention in the Internet gambling context

because notwithstanding the possible applicability of other federal laws, it directly prohibits the use of a wire

transmission facility to foster a gambling business”); Do Not Bet on Unilateral Prohibition of Internet Gambling to

Eliminate Cyber-Casinos, 1999 UNIVERSITY OF ILLINOIS LAW REVIEW 1045, 1057; Gambling On-Line: For a Hundred

Dollars, I Bet You Government Regulation Will Not Stop the Newest Form of Gambling, 22 UNIVERSITY OF DAYTON

LAW REVIEW 163, 180 (1996); Goldstein, On-Line Gambling: Down to the Wire? 8 MARQUETTE SPORTS LAW JOURNAL

1, 18 (1997); General Accounting Office [now the Government Accountability Office], Internet Gambling: An

Overview of the Issues 11 (Dec. 2002).

United States v. Ross, 1999 WL 782749 (S.D.N.Y. Sept. 16, 1999)(denying a motion to dismiss a four count

indictment charging violations of 18 U.S.C. 1084 and 18 U.S.C. 371 (conspiracy) in connection with Internet gambling

business operated out of Curacao in the Netherlands Antilles); see also, People ex rel. Vacco v. World Interactive

Gaming Corporation, 185 Misc.2d 852, 861-62, 714 N.Y.S.2d 844, 852 (1999)(noting in dicta violations of the Wire

Act in connection with an offshore Internet casino that accepted wagers from bettors in New York); cf., United States v.

D’Ambrosia, 313 F.3d 987, 987-89 (7th Cir. 2002)(resolution of sentencing issues associated with Wire Act conviction

of the operators “of an offshore internet-based sports bookmaking operation”); United States v. Tedder, 403 F.3d 836,

838 (7th Cir. 2005); see also, Indictment, United States v. Kaplan, No. 4:06-CR-337(CEJ)(E.D.Mo. June 1, 2006).

United States v. Cohen, 260 F.3d 68 (2d Cir. 2001).

18 U.S.C. 1084(a), 3571(b),(d).

“When any common carrier, subject to the jurisdiction of the Federal Communications Commission, is notified in

writing by a Federal, State, or local law enforcement agency, acting within its jurisdiction, that any facility furnished by

it is being used or will be used for the purpose of transmitting or receiving gambling information in interstate or foreign

commerce in violation of Federal, State or local law, it shall discontinue or refuse, the leasing, furnishing, or

maintaining of such facility, after reasonable notice to the subscriber, but no damages, penalty or forfeiture, civil or

criminal, shall be found against any common carrier for any act done in compliance with any notice received from a

law enforcement agency. Nothing in this section shall be deemed to prejudice the right of any person affected thereby

to secure an appropriate determination, as otherwise provided by law, in a Federal court or in a State or local tribunal or

agency, that such facility should not be discontinued or removed, or should be restored,” 18 U.S.C. 1084(d).

18 U.S.C. 1956, 1957, 1084, 1955, 1962, and 31 U.S.C. 5363, respectively. Each of these statutes is discussed, infra,

and the text of each appears at the end of this report.

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Wire Act prohibitions apply to anyone who

I. being engaged in the business of betting or wagering

II. knowingly

III. uses a wire communication facility

IV. A. for the transmission in interstate or foreign commerce

1. of bets or wagers or

2. information assisting in the placing of bets or wagers on any sporting event or

contest, or

B. for the transmission of a wire communication which entitles the recipient to receive

money or credit as a result of bets or wagers, or

C. for information assisting in the placing of bets or wagers.... 18 U.S.C. 1084(a).20

As a general matter, the Wire Act has been more sparingly used than some of the other federal

gambling statutes, and as a consequence it lacks some of interpretative benefits which a more

extensive case law might bring. The act is addressed to those “engaged in the business of betting

or wagering” and therefore apparently cannot be used to prosecute simple bettors.21

The government must prove that the defendant was aware of the fact he was using a wire facility

to transmit a bet or gambling-related information; it need not prove that he knew that such use

was unlawful.22 The courts have also rejected the contention that the prohibition applies only to

those who transmit, concluding that “use for transmission” embraces both those who send and

those who receive the transmission.23

“In order to prove a §1084(a) violation, the government must show that (1) ‘the defendant regularly devoted time,

attention and labor to betting or wagering for profit,’ (2) the defendant used a wire communication facility: (a) to place

bets or wagers on any sporting event or contest; or (b) to provide information to assist with the placing of bets or

wagers [on any sporting event or contest]; or (c) to inform someone that he or she had won a bet or wager and was

entitled to payment or credit,’ and (3) the transmission was made from one state to another state or foreign country,”

United States v. Lombardo, 639 F.Supp.2d 1271, 1278 (D.Utah 2007). A Justice Department Office of Legal Counsel

opinion argues for inclusion of the language in italics; see Whether Proposals by Illinois and New York to Use the

Internet and Out-of-State Transaction Processors to Sell Lottery Tickets to In-State Adults Violate the Wire Act, 35 Op.

O.L.C. __, ___ (Sept. 20, 2011), available at http://www.justice.gov/OLC/2011/state-lotteries-opinion.pdf.

United States v. Scavo, 593 F.2d 837, 843 (8th Cir. 1979)(“If an individual performs only an occasional or

nonessential service or is a mere bettor or customer, he cannot property be said to engage in the business”); see also,

Rewis v. United States, 401 U.S. 808, 810-11 (1971)(noting that the absence of a Congressional intent to include “mere

bettors” among those who, by operation of 18 U.S.C. 2, might be convicted of aiding or abetting a violation of the

Travel Act, 18 U.S.C. 1952 (relating to interstate travel to carry on a gambling business, inter alia), but see, United

States v. Southard, 700 F.2d 1, 20 n.24 (1st Cir. 1983) (“The district court held that the statute did not prohibit the

activities of ‘mere bettors.’ We take no position on this ruling except to point out that the legislative history is

ambiguous on this point at best”).

United States v. Blair, 54 F.3d 639, 642-43 (10th Cir. 1995); United States v. Ross, 1999 LW 7832749, Slip at 8-9

(S.D.N.Y. Sept. 16, 1999); cf., United States v. Cohen, 260 F.3d 68, 71-3 (2d Cir. 2001)(conviction for conspiracy to

engage in conduct in violation the Wire Act does not require proof that the defendant knew that the conduct was

unlawful); contra, Cohen v. United States, 378 F.2d 751, 756-57 (9th Cir. 1967).

United States v. Pezzino, 535 F.2d 483, 484 (9th Cir. 1976). United States v. Sellers, 483 F.2d 37, 44-5 (5th Cir.

1973); United States v. Tomeo, 459 F.2d 445, 447 (10th Cir. 1972); Sagansky v. United States, 358 F.2d 195, 200 (1st

Cir. 1966); contra, United States v. Stonehouse, 452 F.2d 455 (7th Cir. 1971).

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Internet Gambling: Overview of Federal Criminal Law

Grammatically, interstate transmission appears as a feature of only half of the elements (compare,

“for the transmission in interstate or foreign commerce of bets or wagers or information assisting

in the placing of bets or wagers on any sporting event or contest,” (IV.A.1 & 2. above), with, “for

the transmission of a wire communication which entitles the recipient to receive money or credit

as a result of bets or wagers, or for information assisting in the placing of bets or wagers,” (4.B.

& C. above). Nevertheless, virtually every court to consider the question has concluded that a

knowing, interstate or foreign transmission is an indispensable element of any Wire Act

prosecution.24

As a practical matter, the Justice Department appears to have resolved the question of whether

the section applies only to cases involving gambling on sporting events (compare IV.A.1 & 2.

with IV.B. & C. again). The vast majority of prosecutions involve sports gambling, but cases

involving other forms of gambling under the Wire Act are not unknown.25 One federal appellate

panel concluded that the Wire Act applies only to sports gambling;26 while a subsequent district

court concluded that it applies to non-sports gambling as well.27 The Justice Department’s Office

of Legal Counsel, however, ultimately opined that “interstate transmissions of wire

communications that do not relate to a ‘sporting event or contest,’ 18 U.S.C. §1084(a), fall

outside the reach of the Wire Act.”28

Construction of the Wire Act is complicated by the defense available under subsection 1084(b)

for the transmission of gambling information.29 Read casually it might suggest a general defense,

but the district court in the Internet gambling case in the Southern District of New York has

highlighted its more restrictive scope, “the §1084(b) exemption by its terms applies only to the

transmission of information assisting in the placing of bets, not to the other acts prohibited in

§1084(a), i.e., transmission of (1) bets or wages or (2) wire communications entitling the recipient

to money or credit as a result of bets or wagers. With regard to transmissions of information

assisting in the placing of bets, the exemption is further narrowed by its requirement that the

betting at issue be legal in both jurisdictions in which the transmission occurs. No exemption

applies to the other wire communications proscribed in §1084(a) even if the betting at issue is

legal in both jurisdictions. See United States v. McDonough, 835 F.2d 1103, 1105 (5th Cir.

1988).”30 The Second Circuit panel in Cohen, endorsed the court’s construction.31

United States v. Southard, 700 F.2d 1, 24 (1st Cir. 1983), citing inter alia, Sagansky v. United States, 358 F.2d 195,

199 n.4 (1st Cir. 1966); United States v. Barone, 467 F.2d 247, 249 (2d Cir. 1972); Cohen v. United States, 378 F.2d

751, 754 (9th Cir. 1967); contra, United States v. Swank, 441 F.2d 264, 265 (9th Cir. 1971).

E.g., AT&T Corp. v. Coeur d’Alene Tribe, 45 F.Supp.2d 995 (D.Idaho 1998) (lottery); United States v. Smith, 390

F.2d 420, 421 (4th Cir. 1968); United States v. Chase, 372 F.2d 453, 457 (4th Cir. 1967). Smith and Chase both involved

“numbers” and seem to have arisen under the same facts. None of these cases specifically reject, or even mention, a

“sporting event” limitation.

In re MasterCard International Inc., 313 F.3d 257, 262 (5th Cir. 2002)(“The district court concluded that the Wire

Act concerns gambling on sporting events or contests and that the [RICO] plaintiffs had failed to allege that they had

engaged in internet sports gambling. We agree ... ”).

United States v. Lombardo, 639 F.Supp.2d 1271, (D.Utah 2007).

Whether Proposals by Illinois and New York to Use the Internet and Out-of-State Transaction Processors to Sell

Lottery Tickets to In-State Adults Violate the Wire Act, 35 Op. O.L.C. __, ___ (Sept. 20, 2011), available at

http://www.justice.gov/OLC/2011/state-lotteries-opinion.pdf.

“Nothing in this section shall be construed to prevent the transmission in interstate or foreign commerce of

information for use in news reporting of sporting events or contests, or for the transmission of information assisting in

the placing of bets or wagers on a sporting event or contest from a State or foreign country where betting on that

sporting event or contest is legal into a State or foreign country in which such betting is legal,” 18 U.S.C. 1084(b).

United States v. Ross, 1999 WL 782749 (S.D.N.Y. Sept. 16, 1999).

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An accomplice who aids and abets another in the commission of a federal crime may be treated as

if he had committed the crime himself.32 The classic definition from Nye & Nissen explains that

liability for aiding and abetting attaches when one “in some sort associates himself with the

venture, participates in it as in something that he wishes to bring about, [and] seeks by his action

to make it succeed.”33 The Department of Justice advised the National Association of

Broadcasters that its members risked prosecution for aiding and abetting when they provided

advertising for the online gambling operations.34 In addition to such accomplice liability, a

conspirator who contrives with another for the commission of a federal crime is liable for

conspiracy, any completed underlying crime, and for any additional, foreseeable offense

committed by a confederate in furtherance of the common scheme.35

There is some dispute over the application of the Wire Act to certain horse racing activities.

Some contend that the Wire Act was amended sub silentio by an appropriations rider rewording a

(...continued)

260 F.3d at 73 (emphasis added) (“Cohen appeals the district court for instructing the jury to disregard the safe

harbor provision contained in §1084(b). That subsection provides a safe harbor for transmissions that occur under both

of the following two conditions: (1) betting is legal in both the place of origin and the destination of the transmission;

and (2) the transmission is limited to mere information that assists in the placing of bets, as opposed to including the

bets themselves”).

“Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its

commission, is punishable as a principal,” 18 U.S.C. 2(a).

Nye & Nissen v. United States, 336 U.S. 613, 619 (1949); see also United States v. George, 658 F.3d 706, 708 (7th

Cir. 2011); United States v. Devries, 630 F.3d 1130, 1133 (8th Cir. 2011); United States v. Petersen, 622 F.3d 196, 208

(3d Cir. 2010); United States v. Hungerford, 465 F.2d 1113, 1117 (9th Cir. 2006).

Advertising for Internet Gambling and Offshore Sportsbook Operations, Letter from United States Deputy Attorney

General John G. Malcolm to the National Association of Broadcasters dated June 11, 2003, filed as Exhibit A with the

complaint in Casino City, Inc. v. United States Department of Justice, Civil Action No. 04-557-B-M3 (M.D.La.),

quoted in, First Amendment as Last Resort: The Internet Gambling Industry’s Bid to Advertise in the United States, 50

ST. LOUIS UNIVERSITY LAW JOURNAL 1289, 1290 (2006).

In other related developments, U.S. marshals seized $3.2 million that Discovery Communications had accepted for ads

from Tropical Paradise, a Web casino operation based in Costa Rica, The Wall Street Journal - Europe, A5 (Aug. 2,

2004), and the federal prosecutors apparently warned PayPal, a money transfer service, that it risked prosecution under

18 U.S.C. 1960 (transmission of funds intended to be used to promote or support unlawful activity) by providing

services to online gambling operations, American Banker, 1 (April 2, 2003); see also, Smith, Interbet, It’s Illegal, But

Online Gambling Mushrooms Anyway, ROCKY MOUNTAIN NEWS 1B (Jan. 30, 2006)(“the Sporting News earlier this

month agreed to pay a $4.2 million fine and launch a $3 million public-service campaign to settle federal charges it had

run illegal online gambling advertising”); Internet Gambling Prohibition Act of 2006: Hearing Before the Subcomm. on

Crime, Terrorism, and Homeland Security of the House Comm. on the Judiciary, 109th Cong. 13 (2006) (Hearing)

(statement of Bruce G. Ohr, Chief of the Organized Crime and Racketeering Section, Criminal Division, United States

Department of Justice)(“[I]n January 2006, the United States Attorney’s Office in St. Louis announced a $7.2 million

settlement with the Sporting News to resolve claims that the Sporting News promoted illegal gambling ... by accepting

fees in exchange for advertising illegal gambling”).

Pinkerton v. United States, 328 U.S. 640, 645-48 (1946); Salinas v. United States, 522 U.S. 52, 62-3 (1997)(“The

partners in the criminal plan must agree to pursue the same criminal objective and may divide up the work, yet each is

responsible for the acts of each other”). The conspiratorial agreement is itself a separate crime under 18 U.S.C. 371 (“If

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, and one or more of such persons do any act to effect the object of

the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both. If, however, the

offense, the commission of which is the object of the conspiracy, is a misdemeanor only, the punishment for such

conspiracy shall not exceed the maximum punishment provided for such misdemeanor”); United States v. Bingham,

653 F.3d 983, 997 (9th Cir. 2011); United States v. Vazquez-Castro, 640 F.3d 19, 24 (1st Cir. 2011); United States v.

Matias, 465 F.3d 169, 173 (5th Cir. 2006).

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Internet Gambling: Overview of Federal Criminal Law

provision in the civil Interstate Horseracing Act.36 The Justice Department does not share this

view.37

The Interstate Horseracing Act is the product of the emergence of state licensed off-track betting

parlors.38 The parlors accepted wagers on races conducted both within the state and without. Race

tracks and those dependent upon their success objected that the tracks were losing customers who

lived proximate to both an in state track and an off-track betting parlor in a neighboring state.39

The Horseracing Act provides for compensation agreements. More precisely, it prohibits

acceptance of interstate off-track wagers except as it provides,40 but permits such acceptance with

the consent of various horse racing associations, state horse racing commissions, state off-track

racing commissions, and horse racing track operators.41 It affords aggrieved states, horse racing

associations and horsemen’s groups a cause of action against violators of its provisions.42 It

neither provides criminal penalties nor explicitly addresses its relationship to other federal and

state gambling laws.43 Although the act calls for the consent of the operators of any track located

within 60 miles of an off-track betting office,44 it does not give track operators a cause of action

for failure to comply with this or any of its other requirements.45

One track operator attempted unsuccessfully to invoke the Wire Act and federal racketeer

influenced and corrupt organization (RICO) provisions to overcome this limitation.46 Suffolk

claimed that the defendant, who operated an off-track betting site within 60 miles of Suffolk,

accepted wagers on interstate races without its consent and that these activities involved the

patterned interstate transmission of gambling-assisting information (race results) from the track to

the off-track betting parlor in violation of the Wire Act and consequently constituted a RICO

violation, id. at 1272. The First Circuit affirmed the lower court’s rejection of the claim on the

basis of the Wire Act exception found in 18 U.S.C. 1084(b) that exempts the interstate

Cabot & Christiansen, Why the Future of Horseracing Is at Risk: The WTO Decision and Senator Kyl, 9 GAMING

LAW REVIEW 201, 204-5 (2005).

Hearing, at 146 (statement of Bruce G. Ohr, Chief of the Organized Crime and Racketeering Section, Criminal

Division, United States Department of Justice).

15 U.S.C. 3001-3007.

S.Rept. 95-554, at 3-5 (1977); see also, S.Rept. 95-1117, at 4 (1978); H.Rept. 95-1733, at 4 (1978).

15 U.S.C. 3003.

15 U.S.C. 3004.

15 U.S.C. 3005, 3006.

The legislative history, however, suggests the absence of an intent to preempt state gambling laws, S.Rept. 95-1117,

at 3 (1978) (“This procedure is intended to conform with the prevailing view that these matters are generally of State

concern and that the States’ prerogatives in the regulation of gambling are in no [way] preempted by this or other

Federal law”); see also, H.Rept. 95-1733, at 3 (1978); Kentucky Division, Horsemen’s Benevolent & Protective Ass’n,

Inc. v. Turfway Park Racing Ass’n, 20 F.3d 1406, 1414 (6th Cir. 1994)(“Under the Act, each state may prohibit

interstate off-track wagering within its borders, and may prohibit a resident racetrack from contracting with an off-track

wagering facility in another state”).

15 U.S.C. 3004(b).

15 U.S.C. 3005, 3006 (limiting liability to, and a cause of action for the benefit of, “the host State, the host racing

association and the horsemen’s group”).

Sterling Suffolk Racecourse Ltd. v. Burrillville Racing Ass’n, Inc., 989 F.2d 1266 (1st Cir. 1993). RICO prohibits the

acquisition or operation of an enterprise whose activities affect interstate or foreign commerce through the patterned

commission of two or more “racketeering activities,” that is, two or more other specifically designated offenses (such

as violations of 18 U.S.C. 1084(a)(the Wire Act)), 18 U.S.C. 1961-1968. Anyone injured in his business or property by

a RICO violation enjoys a cause of action for treble damages, 18 U.S.C. 1964(c).

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Internet Gambling: Overview of Federal Criminal Law

transmission of sports gambling-assisting information to and from jurisdictions where gambling

on such sporting events or contests is legal.47 Summarizing in general terms, the court declared:

To recapitulate, we think it clear that Congress, in adopting section 1084, did not intend

to criminalize acts that neither the affected states nor Congress itself deemed criminal in

nature. [The defendant’s] acts fall into this chiaroscuro category—perhaps not right, but

certainly not felonious. It follows that these acts, not indictable under section 1084, cannot

constitute a pattern of racketeering activity within RICO’s definitional parameters. Id. at

1273.

The operator of an off-shore Internet gambling site subsequently seized upon this “Congress-didnot-intend-to-criminalize” language when challenging his conviction under the Wire Act. The

Second Circuit in Cohen rejected the challenge with the observation that unlike Suffolk where the

transmission of gambling-related information came within the safe harbor of section 1084(b),

Cohen’s case involved the online (i.e., wire) transmission of wagers themselves, a transmission

that falls outside the safe harbor provision of the section 1084(b).48

The facts that gave rise to Suffolk and Cohen, however, occurred prior to the 2000 amendments to

the Interstate Horseracing Act. P.L. 106-553, which made appropriations for the District of

Columbia as well as for the Departments of Commerce, Justice and State, and which amended the

definition of “interstate off-track wager” in the Interstate Horseracing Act to read:

“interstate off-track wager” means a legal wager placed or accepted in one State with respect

to the outcome of a horserace taking place in another State and includes pari-mutuel wagers,

where lawful in each State involved, placed or transmitted by an individual in one State via

telephone or other electronic media and accepted by an off-track betting system in the same

or another State, as well as the combination of any pari-mutuel wagering pools. 15 U.S.C.

3002(3); sec. 629, P.L. 106-533, 114 Stat. 2762-108 (2000) (language of the amendment in

italics).

The language in italics was added for the first time in conference with the simple accompanying

explanation which in its entirety declares, “the conference agreement includes a new section 629,

to clarify the Interstate Horseracing Act regarding certain pari-mutuel wagers.”49 A critic

objected to the amendment during floor debate.50 Otherwise the only reference was “inserted or

appended, rather than spoken, by a Member of the House on the floor.”51

Id. at 1272 (“Conceding, withal, that wagering of the sort transacted at [defendant’s] facility is permissible under the

relevant laws of all interested states, appellant pins its RICO-related hopes on section 1084(a). But section 1084(a)

carves out a specific exception for circumstances in which wagering on a sporting event is legal in both the sending and

receiving state. See 18 U.S.C. 1084(b). That exception applies here”).

United States v. Cohen, 260 F.3d 68, 73 (2d Cir. 2001).

H.Rept. 106-1005, at 317 (2000).

“I want Members of this body to be aware that section 629 of the conference report would legalize interstate parimutual gambling over the Internet. Under the current interpretation of the Interstate Horse Racing Act in 1978, this type

of gambling is illegal, although the Justice Department has not taken steps to enforce it. This provision would codify

legality of placing wages over the telephone or other electronic media like the Internet,” 146 Cong.Rec. 24938

(2000)(remarks of Rep. Wolf).

“The conference report contains a provision (Section 629) which clarifies that the Interstate Horseracing Act permits

the continued merging of any wagering pools and wagering activities conducted between individuals and state-licensed

and regulated off-track betting systems located in one or more states, whether such wages are conducted in person, via

telephone or other electronic media, provided such wages are placed on a closed-loop subscriber-based service, which

would include an effective customer and age verification process to ensure that all federal state requirements and

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Proponents claim the amendment permits tracks to accept online, out-of-state bets from states

where pari-mutuel betting is legal (although not necessarily where either off-track or online

betting is legal);52 the Justice Department disagrees.53 Uncertainty over the issue apparently led an

Appellate Body of the World Trade Organization (WTO) to conclude that the United States may

permit domestic entities to offer Internet gambling on horse racing, but denies offshore entities

such an opportunity.54 During hearings on the Unlawful Internet Gambling Enforcement Act, the

Justice Department indicated that to confirm its understanding of the law it was conducting “a

civil investigation relating to a potential violation of law regarding this activity.”55

Illegal Gambling Businesses

Section 1955, which outlaws conducting an illegal gambling business, appears on its face to

reach any illegal gambling business conducted using the Internet. Commentators seem to

concur.56 However, early prosecutions under the Wire Act were more prevalent.57

(...continued)

appropriate data security standards are net to prevent unauthorized use by a minor or non-subscriber. The amendment

clarifies that the Interstate Horseracing Act permits wagers made by telephone or other electronic media to be accepted

by an off-track betting system in another state provided that such types of wages are lawful in each state involved and

meet the requirements, if any, established by the legislature or appropriate regulatory body in the state where the person

originating the wager resides,” 146 Cong.Rec. 24979 (2000)(Rep. Rogers)(this statement appears in type face used to

“indicate[] words inserted or appended, rather than spoken by a Member of the House on the floor, 146 Cong.Rec.

24908 (2000)”).

Cabot & Christiansen, Why the Future of Horseracing Is at Risk: The WTO Decision and Senator Kyl, 9 GAMING

LAW REVIEW 201, 204-5 (2005).

Hearing, at 146 (statement of Bruce G. Ohr, Chief of the Organized Crime and Racketeering Section, Criminal

Division, United States Department of Justice).

“[T]he United States has not shown, in light of the Interstate Horseracing Act, that the prohibitions embodied in

those measures [i.e., the Wire Act, the Travel Act, and the Illegal Gambling Business Act] are applied to both foreign

and domestic service suppliers of remote betting services for horse racing,” United States—Measures Affecting the

Cross-Border Supply of Gambling and Betting Services (AB-2005-1), WT/DS285/AB/R, at 126 (April 7, 2005),

available at http://www.wto.org/english/tratop_e/disput_e/cases_e/ds285_e.htm. See generally, CRS Report RL32014,

WTO Dispute Settlement: Status of U.S. Compliance in Pending Cases, at 74-83.

Hearing at 14 (statement of Bruce G. Ohr, Chief of the Organized Crime and Racketeering Section, Criminal

Division, United States Department of Justice).

Winner, Winner, No Chicken Dinner: An Analysis of Interactive Media Ent’mt & Gaming Ass’n v. Att’y Gen. of the

U.S. and the Unjustified Consequences of the UIGEA, 31 LOYOLA OF LOS ANELES ENTERMAINENT LAW REVIEW 55, 59

(2011)(“[T]he Illegal Gambling Business Act (‘IGBA’) appear[s] to apply to Internet gambling”); Geolocation and

Federalism on the Internet: Cutting Internet Gambling’s Gordian Knot, 11 COLUMBIA SCIENCE AND TECHNOLOGY LAW

REVIEW, 41, 45 (2010)(“Currently, four federal statutes make up the principal Internet gambling prohibition regime in

the United States: the Wire Act, the Travel Act, the Illegal Gambling Business Act, and the Unlawful Internet

Gambling Enforcement Act (UIGEA). The first three of these statutes were enacted well before the rise of Internet

gambling, though they have collectively been interpreted to make some, and perhaps all, forms of online gambling

illegal”); Gottfried, The Federal Framework for Internet Gambling, 10 RICHMOND JOURNAL OF LAW AND TECHNOLOGY

26, 53 (2004)(“While section 1955 has yet to be successfully used to prosecute an Internet gaming operation, its

minimal requirements may make it a likely candidate for future use”); General Accounting Office [now the

Government Accountability Office], Internet Gambling: An Overview of the Issues 11 (Dec. 2002); Blackjack or Bust:

Can U.S. Law Stop Internet Gambling? 16 LOYOLA OF LOS ANGELES ENTERTAINMENT LAW JOURNAL 667, 675-77

(1996).

But see, United States v. Racing Services, Inc., 580 F.3d 710, 713-14 (8th Cir. 2009)(“Here, in the federal

prosecution, proof of a violation of state law was an element of the primary charge, that RSI and Bala violated 18

U.S.C. §1955 by conducting an ‘illegal gambling business.’ In reversing, we held that the government failed to prove a

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Violations are punishable by imprisonment for not more than five years and/or fines of the greater

of not more than twice the gain or loss associated with the offense or $250,000 ($500,000 for an

organization).58 Moreover, the federal government may confiscate any money or other property

used in violation of the section.59 The offense may also provide the foundation for a prosecution

under the Travel Act, the money laundering statutes, and RICO.60

The sanctions of the Illegal Gambling Business Act apply to anyone who

I. A. conducts,

B. finances,

C. manages,

D. supervises,

E. directs, or

F. owns

II. all or part of an illegal gambling business that

III. A. is a violation of the law of a State or political subdivision in which it is conducted;

B. involves five or more persons who conduct, finance, manage, supervise, direct, or own

all or part of such business; and

C. has been or remains in substantially continuous operation for a period in excess of

thirty days or has a gross revenue of $2,000 in any single day.61

“[N]umerous cases have recognized that 18 U.S.C. 1955 proscribes any degree of participation in

an illegal gambling business except participation as a mere bettor.”62 Or as more recently

described, “‘[c]onductors’ extends to those on lower echelons, but with a function at their level

necessary to the illegal gambling operation.”63

(...continued)

state law violation law turned lawful parimutuel account wagering into an illegal gamvling business. 489 F.3d at 34041. But we noted that the ‘government could have avoided this evidentiary insufficiency by proving that RSI entered

the account wagering business never intending to distribute its net proceeds to charity[as state law required].’ Id. at

341”); cf., United States v. Hill, 55 F.3d 1197, 1200 (6th Cir. 1995)(“[U]nder §1955, it is quite obvious that bettors

should not be held criminally liable either under the statute or under §2 and that local merchants who sell the

accounting paper or the computers on which bets are registered are not sufficiently connected to the enterprise to be

included even if they know that their goods will be used in connection with the work of the business. On the other

hand, it seems similarly obvious that the seller of computer hardware or software who is fully knowledgeable about the

nature and scope of the gambling business would be liable under §2 if he installs the computer, electronic equipment

and cables necessary to operate a ‘wire shop’ or a parimutuel betting parlor, configures the software programs to

process betting information and instructs the owners of the gambling business on how to use the equipment to make the

illegal business more profitable and efficient. Such actions would probably be sufficient proof that the seller intended to

further the criminal enterprise”); Superseding Indictment, United States v. Scheinberg, No. S3 10 Cr. 336 (LAK),

S.D.N.Y. March 10, 2011)(charging individuals associated with Internet poker companies with violations of 18 U.S.C.

1955, of UIGEA, and with money laundering); Indictment, United States v. K23 Group Financial Services,

CRIMINAL NO. CCB-11-0239 (D.Md. April, 26, 2011)(charging operators of Internet gambling sites with violations

of 18 U.S.C. 1955 and with money laundering).

18 U.S.C. 1955(a), 3571(d).

18 U.S.C. 1955(d).

18 U.S.C. 1952, 1956, 1957, 1962, respectively.

United States v. Useni, 516 F.3d 634, 647 (7th Cir. 2008)(“[T]o establish a violation of §1955, the government must

show that the defendant conducted, financed, managed, supervised, directed, or owned a gambling business that: (1)

violated state law; (2) involved five or more persons; and (3) was either in substantial continuous operation for more

than 30 days or had gross revenue of $2,000 or more in a single day”).

Sanabria v. United States, 437 U.S. 54, 70-1 n.26 (1978); United States v. Atiyeh, 402 F.3d 354, 372 (3d Cir. 2005).

United States v. O’Brien, 131 F.3d 1428, 1431 (10th Cir. 1997). Perceptions of necessity are not always particularly

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The section bars only those activities that involve illegal gambling under applicable state law and

that meet the statutory definition of such a business.64 Illegal gambling is at the threshold of any

prosecution under the section, and cannot to be pursued if the underlying state law is

unenforceable under either the United States Constitution,65 or the operative state constitution.66

The business element can be satisfied (for any endeavor involving five or more participants)

either by continuity (“has been or remains in substantially continuous operation for period in

excess of thirty days”) or by volume (“has a gross revenue of $2,000 in any single day”).67 The

volume prong is fairly self-explanatory and the courts have been fairly generous in their

assessment of continuity.68 They are divided, however, on the question of whether the

jurisdictional five and continuity/volume features must coincide.69

There is no such diversity of opinion on the question of whether section 1955 lies within the

scope of Congress’s legislative authority under the Commerce Clause. The Supreme Court’s

decision in United States v. Lopez,70 finding the Gun Free School Zone Act (18 U.S.C. 922(q))

beyond the bounds of Congress’s Commerce Clause power, stimulated a host of appellate

decisions here and elsewhere. In the case of section 1955, Lopez challenges have been rejected

with the observation that, unlike the statute in Lopez, section 1955 (a) involves the regulation of a

commercial activity (a gambling business), (b) comes with jurisdictional elements selected to

reserve prosecution to those endeavors likely to substantially affect interstate commerce (five

(...continued)

demanding, see, e.g., United States v. Heacock, 31 F.3d 249, 252-53 (5th Cir. 1994)(may include “everyone from layoff

bettors and line services to waitresses who serve drinks”); United States v. Grey, 56 F.3d 1219, 1221 (10th Cir. 1995)

(bartenders and managers of establishments where the defendant placed his video poker machines and who recording

winnings, made payoffs, and reset the machines were properly counted as conductors of the defendant’s gambling

business); United States v. Mick, 263 F.3d 553, 568-69 (6th Cir. 2001)(“layoff bettors may be considered part of the

requisite five members, so long as their dealings with the gambling business are regular and not just based on one

contact”); United States v. Febus, 218 F.3d 784, 797 (7th Cir. 2000)(emphasis added) (conduct for purposes of section

1955 extends to the performance of “any act, function or duty which is necessary to or helpful in the ordinary operation

of the business” including the owner of a bar who knowingly allowed gamblers to use the bar as a collection site);

United States v. Chance, 306 F.3d 356, 379-80 (6th Cir. 2002)(“regularly helpful or necessary to the operation of the

gambling enterprise”); Requirement of 18 U.S.C. §1955, Prohibiting Illegal Gambling Business, That Such Business

Involve Five or More Persons, 55 ALR FED. 778 (1981 & 2011 Supp.).

United States v. Bala, 489 F.3d 334, 338 (8th Cir. 2007)(Section “1955) only prohibits gambling businesses that are

‘in violation of state penal laws,’ not [those in violation of ] state administrative regulations),” citing accord United

States v. Gordon, 464 F.2d 357, 357-58 (9th Cir. 1972).

Cf., United States v. Hill, 167 F.3d 1055, 1063-64 (6th Cir. 1999).

Cf., United States v. Ford, 184 F.3d 566, 582-83 (6th Cir. 1999).

Sikes v. Teleline, Inc., 281 F.3d 1350, 1366-367 (11th Cir. 2002).

E.g., United States v. Trupiano, 11 F.3d 769, 773-74 (8th Cir. 1993)(“Congress did not purport to require absolute or

total continuity in gambling operations. Consistent with this, substantially continuous has been read not to mean every

day. The operation, rather, must be one that was conducted upon a schedule of regularity sufficient to take it out of the

casual nonbusiness category”).

Compare, United States v. Nicolaou, 180 F.3d 565, 568 (4th Cir. 1999)(“the five-person requirement must be satisfied

in conjunction with the third element. That is ... section 1955 covers only those gambling operations that involve at all

times during some thirty day period at least five persons ... or that involve at least five persons on any single day on

which it had gross revenues of $2,000”), with, United States v. Boyd, 149 F.3d 1062, 1064-65 (10th Cir. 1998)(“the

government is not required to demonstrate the involvement of five or more persons for a continuous period of more

than thirty days to support a conviction under §1955, but rather need only demonstrate that the operation operated for a

continuous period of thirty days and involved five or more persons at some relevant time”).

514 U.S. 549 (1996).

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Internet Gambling: Overview of Federal Criminal Law

participants in a substantial gambling undertaking), and (c) was preceded by Congressional

findings evidencing the impact of substantial gambling operations upon interstate commerce.71

The accomplice and conspiratorial provisions attend violations of section 1955 as they do

violations of the Wire Act. Although frequently difficult to distinguish in a given case, the

difference is essentially a matter of depth of involvement. “[T]o be guilty of aiding and abetting a

section 1955 illegal gambling business ... the defendant must have knowledge of the general

scope and nature of the illegal gambling business and awareness of the general facts concerning

the venture ... [and he] must take action which materially assists in ‘conducting, financing,

managing, supervising, directing or owning’ the business for the purpose of making the business

succeed.”72 Unlike conspiracy, one may only be prosecuted for aiding and abetting the

commission of a completed crime; “before a defendant can be found guilty of aiding and abetting

a violation of section 1955 a violation of section 1955 must exist ... [and] aiders and abettors

cannot be counted as one of the statutorily required five persons.”73

As a general rule, a federal conspiracy exists when two or more individuals agree to commit a

federal crime and one of them commits some overt act in furtherance of their common scheme.74

“A conspiracy may exist even if a conspirator does not agree to commit or facilitate each and

every part of the substantive offense. The partners in the criminal plan must agree to pursue the

same criminal objective and may divide up the work, yet each is responsible for acts of each

other. If the conspirators have a plan which calls for some conspirators to perpetrate the crime and

others to provide support, the supporters are as guilty as the perpetrators.”75 Conspiracy is a

separate crime and thus conspirators may be convicted of both substantive violations of section

1955 and conspiracy to commit those violations.76 In fact, under the Pinkerton doctrine, coconspirators are liable for conspiracy, the crime which is the object of the conspiracy (when it is

committed), and any other reasonably foreseeable crimes of their confederates committed in

furtherance of the conspiracy.77

The application of the Illegal Gambling Business Act to offshore gambling operations that take

wagers from bettors in the United States involves two questions. First, does state law proscribing

the gambling in question apply when some of the elements of the offense are committed outside

its jurisdiction? Second, did Congress intend the section to apply beyond the confines of the

United States?

E.g., United States v. Riddle, 249 F.3d 529, 538-39 (6th Cir. 2001); United States v. Lee, 173 F.3d 809, 810-11 (11th

Cir. 1999); United States v. Threadgill, 172 F.3d 357, 371-72 & n.12 (5th Cir. 1999); United States v. Ables, 167 F.3d

1021, 1026-28 (6th Cir. 1999)(also rejecting the suggestion that section 1955 exceeded the reach of Congress under the

Commerce Clause because it intruded into an area traditionally reserved to the states); United States v. Boyd, 149 F.3d

1062, 1066 (10th Cir. 1998); United States v. Zizzo, 120 F.3d 1338, 1350 (7th Cir. 1998); United States v. Wall, 912 F.3d

1444, 1445-452 (6th Cir. 1996).

United States v. Hill, 55 F.3d 1197, 1201-202 (6th Cir. 1995).

Id. at 1204.

United States v. Falcone, 311 U.S. 205, 210 (1941); United States v. Rizk, 660 F.3d 1125, 1134 (9th Cir. 2011);

United States v. Cooper, 654 F.3d 1104, 1115 (10th Cir. 2011); United States v. Gore, 636 F.3d 728, 730 (5th Cir. 2011).

Salinas v. United States, 522 U.S. 52, 63-4 (1997).

Iannelli v. United States, 420 U.S. 770 (1975); United States v. Jimenez Recio, 537 U.S. 270, 274 (2003).

Pinkerton v. United States, 328 U.S. 640, 645-48 (1946); United States v. Bingham, 653 F.3d 983, 997 (9th Cir.

2011); United States v. Vazquez-Castro, 640 F.3d 19, 24 (1st Cir. 2011).

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Internet Gambling: Overview of Federal Criminal Law

Section 1955 can only apply overseas when based on an allegation that the gambling in question

is illegal under a state law whose reach straddles jurisdictional lines. For example, a statute that

prohibits recording bets (bookmaking) in Texas cannot be used against a gambling business

which records bets only in Jamaica or Dominican Republic, even if the bets are called in from

Texas.78 On the other hand, an overseas gambling business may find itself in violation of section

1955 if it accepts wagers from bettors in New York, because New York law considers the

gambling to have occurred where the bets are made, inter alia.79

Whether a federal criminal statute applies overseas is a matter of Congressional intent.80 The

intent is most obvious where Congress has expressly stated that a provision shall have

extraterritorial application.81 Section 1955 has no such expression of intended overseas

application. In the absence of an explicit statement, the courts use various interpretive aids to

divine Congressional intent. Unless some clearer indication appears, Congress is presumed to

have intended its laws to apply only within the United States.82 The courts have recognized

contrary indications under several circumstances.83 Congress will be thought to have intended a

criminal proscription to apply outside the United States where one of the elements of the offense,

like the commission of an overt act in furtherance of a conspiracy, occurs in the United States.84

Similarly, Congress will be thought to have intended to outlaw overseas crimes calculated to have

an impact in the United States, for example, false statements made abroad in order to gain entry

United States v. Truesdale, 152 F.3d 443, 446-49 (5th Cir. 1998) (rejecting the argument that the gambling was

illegal under a provision of Texas law not mentioned in indictment or the jury charge).

People ex rel. Vacco v. World Interactive Gaming Corp., 185 Misc.2d 852, 859-60, 714 N.Y.S.2d 844, 850

(1999)(“Respondents argue that the Court lacks subject matter jurisdiction, and that Internet gambling falls outside the

scope of New York state gambling prohibitions, because the gambling occurs outside of New York state. However,

under New York Penal Law, if the person engaged in gambling is located in New York, then New York is the location

where the gambling occurred (See Penal Law §225.02(2)). Here, some or all of those funds in an Antiguan bank

account are staked every time the New York user enters betting information into the computer. It is irrelevant that

Internet gambling is legal in Antigua. The act of entering the bet and transmitting the information from New York via

the Internet is adequate to constitute gambling activity within New York State”).

EEOC v. Arabian American Oil Co., 499 U.S. 244, 248 (1991)(“Congress has the authority to enforce its laws

beyond the territorial boundaries of the United States. Whether Congress has in fact exercised that authority ... is a

matter of statutory construction”); Foley Brothers v. Filardo, 336 U.S. 281, 284-85 (1949) (“The question . . is not the

power of Congress to extend the ... law to ... foreign countries. Petitioners concede that such power exists. The question

is rather whether Congress intended to make the law applicable”); United States v. al Kassar, 660 F.3d 108, 117-18 (2d

Cir. 2011)(“[A]s a general proposition, Congress has the authority to enforce its laws beyond the territorial boundaries

of the United States”); United States v. Martinez, 599 F.Supp.2d 784, 796-97 (W.D.Tex. 2009); see generally, CRS

Report 94-166, Extraterritorial Application of American Criminal Law.

E.g., 18 U.S.C. 2381 (relating to treason committed in the United States “or elsewhere”).

“It is a ‘long-standing principle of American law that legislation of Congress, unless a contrary intent appears, is

meant to apply only within the territorial jurisdiction of the United States,’” Morrison v. National Australia, 130 S.Ct.

2869, 2877 (2010), quoting, EEOC. v. Arabian American Oil Co., 499 U.S. at 248 (1991); see also, Argentine Republic

v. Amerada Hess Shipping, 488 U.S. 428, 440 (1989); Sale v. Haitian Centers Council, Inc., 509 U.S. 155, 173 (1993);

Smith v. United States, 507 U.S. 197, 203 (1993); Small v. United States, 544 U.S. 385, 388-89 (2005)(“This notion has

led the Court to adopt the legal presumption that Congress ordinarily intends its statutes to have domestic, not

extraterritorial application”); but see, United States v. al Kassar, 660 F.3d 108, 118 (2d Cir. 2011)(internal citations

omitted)(“The presumption that ordinary acts of Congress do not apply extraterritorially, does not apply to criminal

statutes”).

United States v. al Kassar, 660 F.3d 108, 118 (2d Cir. 2011)(internal citations omitted)(“When the text of a criminal

statute is silent, Congressional intent to apply the statute extraterritorially must be inferred from the nature of the

offense”).

United States v. MacAllister, 160 F.3d 1304, 1308 (11th Cir. 1998).

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Internet Gambling: Overview of Federal Criminal Law

into the United States.85 Finally, Congress will be thought to have intended extraterritorial

application for a criminal statute where its purpose in enacting the statute would otherwise be

frustrated, for instance, the theft of United States property overseas.86

There is a countervailing presumption interwoven among these interpretive devices. Congress is

presumed not to have intended any extraterritorial application that would be contrary to

international law.87 International law in the area is a matter of reasonableness, of minimal

contacts,88 traditionally described as permitting geographical application of a nation’s laws under

five principles: a country’s laws may be applied within its own territory (territorial principle); a

country’s laws may be applied against its own nationals wherever they are located (nationality

principle); a country’s laws may be applied to protect it from threats to its national security

(protective principle); a country’s laws may be applied to protect its citizens overseas (passive

personality principle); and a country’s laws may be applied against crimes repugnant to the law of

nations such as piracy (universal principle).89

Section 1955 does not say whether it applies overseas. Yet an offshore illegal gambling business

whose customers where located in the United States seems within the section’s domain because of

the effect of the misconduct within the United States.

Travel Act

The operation of an illegal gambling business using the Internet may easily involve violations of

the Travel Act,90 as several writers have noted.91 Like the Illegal Gambling Business Act, Travel

Act convictions result in imprisonment for not more than five years and/or fines of the greater of

not more than twice the gain or loss associated with the offense or $250,000 ($500,000 for an

Ford v. United States, 273 U.S. 593, 620-21 (1927)(“Acts done outside a jurisdiction, but intended to produce and

producing detrimental effects within it, justify a State in punishing the cause of the harm as if he had been present at the

effect”); United States v. Larsen, 952 F.2d 1099, 1100-101 (9th Cir. 1991); United States v. Hill, 279 F.3d 731, 739-40

(9th Cir. 2002).

United States v. Bowman, 260 U.S. 94, 98 (1922)(“Other [crimes] are such that to limit their locus to the strictly

territorial jurisdiction would be greatly to curtail the scope and usefulness of the statute and leave open a large

immunity for frauds as easily committed by citizens ... in foreign countries as at home. In such cases, Congress has not

thought it necessary to make specific provision in the law that the locus shall include ... foreign countries, but allows it

to be inferred from the nature of the offense”); Blackmer v. United States, 284 U.S. 421, 438 (1932)(“The jurisdiction

of the United States over its absent citizen, so far as the binding effect of its legislation is concerned, is a jurisdictional

in personam, as he is personally bound to take notice of the laws that are applicable to him and to obey them”); United

States v. Vasquez-Velasco, 15 F.3d 833, 839 (9th Cir. 1994); United States v. Delgado-Garcia, 374 F.3d 1337, 1345347 (D.C.Cir. 2004).

Weinberger v. Rossi, 456 U.S. 25, 32 (1982)(“It has been a maxim of statutory construction since the decision in

Murray v. the Charming Betsy, that an act of Congress ought never to be construed to violate the law of nations, if any

other possible construction remains”); United States v. Dawn, 129 F.3d 878, 882 (7th Cir. 1997); United States v.

Yousef, 327 F.3d 56, 96 (2d Cir. 2003).

RESTATEMENT (THIRD) OF THE FOREIGN RELATIONS LAW OF THE UNITED STATES §§401 to 423 (1986 & 2006 Supp.).

Jurisdiction with Respect to Crime, 29 AMERICAN JOURNAL OF INTERNATIONAL LAW (SUPP.) 439, 445 (1935).

18 U.S.C. 1952.

Gottfried, The Federal Framework for Internet Gambling, 10 RICHMOND JOURNAL OF LAW AND TECHNOLOGY 26, 52

(2004); Do Not Bet on Unilateral Prohibition of Internet Gambling to Eliminate Cyber-Casinos, 1999 UNIVERSITY OF

ILLINOIS LAW REVIEW 1045, 1057; Schwartz, The Internet Gambling Fallacy Craps Out, 14 BERKELEY TECHNOLOGY

LAW JOURNAL 1021, 1028-29 (1999); General Accounting Office [now the Government Accountability Office],

Internet Gambling: An Overview of the Issues 11 (Dec. 2002).

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organization).92 The act may serve as the foundation for a prosecution under the money

laundering statutes93 and RICO.94 It has neither the service termination features of the Wire Act

nor the forfeiture features of the Illegal Gambling Business Act.

The Travel Act’s elements cover anyone who

I.A. travels in interstate or foreign commerce, or

B. uses any facility in interstate or foreign commerce, or

C. uses the mail

II. with intent

A. to distribute the proceeds of

i. any business enterprise involving unlawful activities (including gambling) in violation

of the laws in which it is conducted or of the laws of the United States; or

ii. any act which is indictable as money laundering; or

B. to otherwise

i. promote,

ii. manage,

iii. establish,

iv. carry on, or

v. facilitate the promotion, management, establishment, or carrying on, of any business

enterprise involving unlawful activities (including gambling) in violation of the laws

in which it is conducted or of the laws of the United States, or any act which is

indictable as money laundering; and

III. thereafter so

A. distributes the proceeds from any business enterprise involving gambling or from any

act indictable as money laundering, or

B. promotes, manages, establishes, carries on, or facilitates the promotion, management,

establishment, or carrying on of any business enterprise involving unlawful activities

(including unlawful gambling) or any act indictable as money laundering.

The courts often abbreviate their statement of the elements: “The government must prove (1)

interstate travel or use of an interstate facility; (2) with the intent to ... promote ... an unlawful

activity and (3) followed by performance or attempted performance of acts in furtherance of the

unlawful activity.”95

18 U.S.C. 1955(a), 3571(d).

18 U.S.C. 1956 and 1957.

18 U.S.C. 1961-1963.

United States v. Escobar-de-Jesus, 187 F.3d 148, 177 (1st Cir. 1999); United States v. Bankston, 182 F.3d 296, 315

(5th Cir. 1999); United States v. Montford, 27 F.3d 137, 138 n.1 (5th Cir. 1994); United States v. Xiong, 262 F.3d 672,

676 (7th Cir. 2001); United States v. Welch, 327F.3d 1081, 1090(10th Cir. 2003); United States v. Nishnianidze, 342

F.3d 6, 15 (1st Cir. 2003); United States v. Driver, 535 F.3d 424, 430 (6th Cir. 2008). When the violation is a

distribution of profits rather than promotional offense, the second element in the abbreviated list of elements is changed

to “with the intent to distribute the proceeds of an unlawful activity,” United States v. Hinojosa, 958 F.2d 624, 629 (5th

Cir. 1992).

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Internet Gambling: Overview of Federal Criminal Law

The Supreme Court determined some time ago that the Travel Act does not apply to the simple

customers of an illegal gambling business, although interstate solicitation of those customers may

certainly be covered.96

When the act’s jurisdictional element involves mail or facilities in interstate or foreign commerce,

rather than interstate travel, evidence that a telephone was used,97 or an ATM,98 or the facilities of

an interstate banking chain99 will suffice.100 The government is not required to show that the

defendant used the facilities himself or that the use was critical to the success of the criminal

venture. It is enough that he caused them to be used 101 and that their employment was useful for

his purposes.102 Moreover, intrastate telephone communications constitute the use of “facilities in

interstate or foreign commerce.”103

Thus in the case of Internet gambling, the jurisdictional element of the Travel Act might be

established at a minimum either by reference to the telecommunications component of the

Internet, to shipments in interstate or foreign commerce (in or from the United States) associated

with establishing operations on the Internet, to any interstate or foreign nexus to the payment of

the debts resulting from the gambling, or to any interstate or foreign distribution of the proceeds

of such gambling.

A criminal business enterprise, as understood in the Travel Act, “contemplates a continuous

course of business—one that already exists at the time of the overt act or is intended thereafter.

Evidence of an isolated criminal act, or even sporadic acts, will not suffice,”104 and it must be

shown to be involved in an unlawful activity outlawed by a specifically identified state or federal

statute.105 Finally, the government must establish some overt act in furtherance of the illicit

business committed after the interstate travel or the use of the interstate facility.106

Unlike 18 U.S.C. 1953 (interstate transportation of certain gambling paraphernalia), section 1952 does not exclude

the interstate or foreign shipment of newspapers (whether soliciting customers or otherwise) from the activities that

may trigger the section’s jurisdictional element, see, e.g., Erlenbaugh v. United States, 409 U.S. 239 (1972)(upholding

a conviction for violation of section 1952 which took the form of interstate delivery newspapers “scratch sheets” to out

of state bookies).

Rewis v. United States, 401 U.S. 808, 811 (1971); United States v. Nishnianidze, 342 F.3d 6, 15 (1st Cir. 2003);

United States v. Baker, 227 F.3d 955, 962 (7th Cir. 2000); United States v. Jenkins, 943 F.2d 167, 172 (2d Cir. 1991);

United States v. Graham, 856 F.2d 756, 760-61 & n.1 (6th Cir. 1988).

United States v. Baker, 82 F.3d 273, 275 (8th Cir. 1996).

United States v. Rogers, 387 F.3d 925, 935 (7th Cir. 2004); United States v. Auerbach, 913 F.2d 407, 410 (7th Cir.

1990).

100

Of course, interstate travel will also suffice, United States v. Xiong, 262 F.3d 672, 676 (7th Cir. 2001).

101

United States v. Baker, 82 F.3d at 275; United States v. Auerbach, 913 F.2d at 410.

102

United States v. Baker, 82 F.3d at 275-76; United States v. McNeal, 77 F.3d 938, 944 (7th Cir. 1996); United States

v. Houlihan, 92 F.3d 1271, 1292 (1st Cir. 1996).

103

United States v. Nader, 542 F.3d 713, 718-20 (9th Cir. 2008).

104

United States v. Roberson 6 F.3d 1088, 1094 (5th Cir. 1993); see also, United States v. James, 210 F.3d 1342, 1345

(11th Cir. 2000); United States v. Saget, 991 F.2d 702, 712 (11th Cir. 1993)(“If the defendant engages in a continuous

course of cocaine distribution rather than a sporadic or casual course of conduct, then the statutory requirement of a

business enterprise involving narcotics is satisfied”); United States v. Iennaco, 893 F.2d 394, 398 (D.C.Cir. 1990).

105

United States v. Griffin, 85 F.3d 284, 287-88 (7th Cir. 1996); United States v. Campione, 942 F.2d 429, 433-36 (7th

Cir. 1991); United States v. Jones, 909 F.2d 533, 536-39 (D.C.Cir. 1990).

106

United States v. Jenkins, 943 F.2d 167, 173 (2d Cir. 1991); United States v. Admon, 940 F.2d 1121, 1125 (8th Cir.

1991); United States v. Burns, 298 F.3d 523, 537-38 (6th Cir. 2002); United States v. Nishnianidze, 342 F.3d 6, 15 (1st

Cir. 2003).

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Internet Gambling: Overview of Federal Criminal Law

Accomplice and co-conspirator liability, discussed earlier, apply with equal force to the Travel

Act.107

The act would only apply to “business enterprises” involved in illegal gaming, so that e-mail

gambling between individuals would likely not be covered. And Rewis, supra, seems to bar

prosecution of an Internet gambling enterprise’s customers as long as they remain mere

customers.108 But an Internet gambling venture that constitutes an illegal gambling business for

purposes of section 1955, supra, and is engaged in some form of interstate or foreign commercial

activity in furtherance of the business will almost inevitably have included a Travel Act violation.

Unlawful Internet Gambling Enforcement Act

(UIGEA)

The Wire Act, the Illegal Gambling Business Act, and the Travel Act implicitly outlaw Internet

gambling and related activity. The Unlawful Internet Gambling Enforcement Act (UIGEA) does

so explicitly. More exactly, it prohibits those who engage in a gambling business from accepting

payments related to unlawful Internet gambling.109 Violations are punishable by imprisonment for

not more than five years and/or a fine of not more than $250,000 (not more than $500,000 for

organizations).110 Offenders may be subject to civil and regulatory enforcement actions as

well.111

The Unlawful Internet Gambling Enforcement Act declares that

I. No person

II. engaged in the business of betting or wagering

III. may knowingly accept

IV. in connection with participation of another person

V. in unlawful Internet gambling

107

United States v. Driver, 535 F.3d 424, 431 (6th Cir. 2008)(aiding and abetting); United States v. Childress, 58 F.3d

at 721 (D.C.Cir. 1995)(citing the Pinkerton principle of co-conspirator liability); see also, United States v. Auerbach,

913 F.2d at 410 (7th Cir. 1990) (co-conspirator liability); United States v. Rogers, 387 F.3d 925, 935 (7th Cir. 2004)

(aiding and abetting); United States v. Lee, 359 F.3d 194, 209 (3d Cir. 2004)(aiding and abetting); United States v.

Pardue, 983 F.2d 943, 945-46 (8th Cir. 1993)(aiding and abetting); United States v. Dischner, 974 F.2d 1502, 1521 (9th

Cir. 1992) (aiding and abetting).

108

Contra, Blackjack or Bust: Can U.S. Law Stop Internet Gambling? 16 LOYOLA OF LOS ANGELES ENTERTAINMENT

LAW JOURNAL at 675 (“The Travel Act applies not only to Internet casinos, but it also seems to apply to players who

use interstate facilities for the transportation of unlawful activities [i.e., their wagers]”)(the JOURNAL article does not

discuss Rewis).

109

31 U.S.C. 5363.

110

31 U.S.C. 5366(a), 18 U.S.C. 3571.

111

31 U.S.C. 5364, 5364.

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Internet Gambling: Overview of Federal Criminal Law

VI. a. credit, or the proceeds of credit, extended to or on behalf of such other person

(including credit extended through the use of a credit card; or

b. an electronic fund transfer, or funds transmitted by or through a money

transmitting business, or the proceeds of an electronic fund transfer or money

transmitting service, from or on behalf of such other person; or

c. any check, draft, or similar instrument which is drawn by or on behalf of such

other person and is drawn on or payable at or through any financial institution;

d. the proceeds of any other form of financial transaction, as the Secretary and

the Board of Governors of the Federal Reserve System may jointly prescribe by

regulation, which involves a financial institution as a payor or financial

intermediary on behalf of or for the benefit of such other person.112

UIGEA’s proscription draws meaning from a host of definitions, exceptions, and exclusions—

some stated, others implied. It does not define “person.” Nevertheless, as elsewhere in the

United States Code, “persons” for purposes of UIGEA means individuals as well as

“corporations, companies, associations, firms, partnerships, societies, and joint stock

companies.”113

It does not define the “business of betting or wagering,” although it defines what it is not and

defines the terms that provide the grist for such a business: bets or wagers. The business of

betting or wagering does not encompass the normal business activities of financial or

communications service providers,114 unless they are participants in an unlawful Internet

gambling enterprise.115 On the other hand, Congress chose the term “business of betting or

wagering” rather than the term “illegal gambling business,” found in the Illegal Gambling

Business Act.116 This implies that UIGEA covers businesses regardless of whether they met the

threshold requirements of Illegal Gambling Business Act, that is (1) five participants and (2)

continuous operations for at least thirty days or gross revenues in excess of $2,000 a day.

To come within the statute’s reach, a business must involve “bets or wagers” and must accept

payment relating “unlawful Internet gambling.” To bet or wager is to stake something on the

outcome of a game or event. More exactly, “[t]he term ‘bet or wager’—(A) means the staking or

risking by any person of something of value upon the outcome of a contest of others, a sporting

112

31 U.S.C. 5363.

1 U.S.C. 1.

114

31 U.S.C. 5362 (2)(“The term ‘business of betting or wagering’ does not include the activities of a financial

transaction provider, or any interactive computer service or telecommunications service”).

115

31 U.S.C. 5367 (“Notwithstanding section 5362(2), a financial transaction provider, or any interactive computer

service or telecommunications service, may be liable under this subchapter if such person has actual knowledge and

control of bets and wagers, and—(1) operates, manages, supervises, or directs an Internet website at which unlawful

bets or wagers may be placed, received, or otherwise made, or at which unlawful bets or wagers are offered to be

placed, received, or otherwise made; or (2) owns or controls, or is owned or controlled by, any person who operates,

manages, supervises, or directs an Internet website at which unlawful bets or wagers may be placed, received, or

otherwise made, or at which unlawful bets or wagers are offered to be placed, received, or otherwise made”).

116

18 U.S.C., 1955(b)(1).

113

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Internet Gambling: Overview of Federal Criminal Law

event, or a game subject to chance, upon an agreement or understanding that the person or

another person will receive something of value in the event of a certain outcome.”117

Earlier in UIGEA’s legislative history, the definition of “bet or wager” used the phrase “a game

predominantly subject to chance” rather than simply “a game subject to chance.” The Justice

Department questioned whether the original phrase was “sufficient to cover card games, such as

poker.”118 The change in language appears to accommodate that concern by extending coverage to

games that have an element of chance, even if not necessarily a predominant element.

The definition also explicitly covers lotteries119 and information relating to the financial aspects

of gambling.120 The list of other common activities exempted from the definition includes

securities and commodities exchange activities,121 insurance,122 Internet games and promotions

that do not involve betting,123 and certain fantasy sporting activities.124

117

31 U.S.C. 5362(1)(A).

Hearing at 16 (statement of Bruce G. Ohr, Chief of the Organized Crime and Racketeering Section, Criminal

Division, United States Department of Justice).

119

31 U.S.C. 5362(1)(B),(C)(“The term ‘bet or wager’ ... (B) includes the purchase of a chance or opportunity to win a

lottery or other prize (which opportunity to win is predominantly subject to chance); (C) includes any scheme of a type

described in section 3702 of title 28”). 28 U.S.C. 3702 provides, “It shall be unlawful for—(1) a governmental entity to

sponsor, operate, advertise, promote, license, or authorize by law or compact, or (2) a person to sponsor, operate,

advertise, or promote, pursuant to the law or compact of a governmental entity, a lottery, sweepstakes, or other betting,

gambling, or wagering scheme based, directly or indirectly (through the use of geographical references or otherwise),

on one or more competitive games in which amateur or professional athletes participate, or are intended to participate,

or on one or more performances of such athletes in such games.”

120

31 U.S.C. 5362(1)(D)(“The term ‘bet or wager’ ... (D) includes any instructions or information pertaining to the

establishment or movement of funds by the bettor or customer in, to, or from an account with the business of betting or

wagering”).

121

31 U.S.C. 5362(1)(E)(i)-(iv)(“The term ‘bet or wager’ ... (E) does not include—(i) any activity governed by the

securities laws (as that term is defined in section 3(a)(47) of the Securities Exchange Act of 1934 for the purchase or

sale of securities (as that term is defined in section 3(a)(10) of that Act); (ii) any transaction conducted on or subject to

the rules of a registered entity or exempt board of trade under the Commodity Exchange Act; (iii) any over-the-counter

derivative instrument; (iv) any other transaction that—(I) is excluded or exempt from regulation under the Commodity

Exchange Act; or (II) is exempt from State gaming or bucket shop laws under section 12(e) of the Commodity

Exchange Act or section 28(a) of the Securities Exchange Act of 1934”).

122

31 U.S.C. 5362(1)(E)(v)-(vii)(“The term ‘bet or wager’ ... (E) does not include ... (v) any contract of indemnity or

guarantee; (vi) any contract for insurance; (vii) any deposit or other transaction with an insured depository institution”).

123

31 U.S.C. 5362(1)(E)(viii)(“The term ‘bet or wager’ ... (E) does not include ... (viii) participation in any game or

contest in which participants do not stake or risk anything of value other than—(I) personal efforts of the participants in

playing the game or contest or obtaining access to the Internet; or (II) points or credits that the sponsor of the game or

contest provides to participants free of charge and that can be used or redeemed only for participation in games or

contests offered by the sponsor”).

124

31 U.S.C. 5362(1)(E)(ix)(“The term ‘bet or wager’ ... (E) does not include ... (ix) participation in any fantasy or

simulation sports game or educational game or contest in which (if the game or contest involves a team or teams) no

fantasy or simulation sports team is based on the current membership of an actual team that is a member of an amateur

or professional sports organization (as those terms are defined in section 3701 of title 28) and that meets the following

conditions: (I) All prizes and awards offered to winning participants are established and made known to the participants

in advance of the game or contest and their value is not determined by the number of participants or the amount of any

fees paid by those participants. (II) All winning outcomes reflect the relative knowledge and skill of the participants

and are determined predominantly by accumulated statistical results of the performance of individuals (athletes in the

case of sports events) in multiple real-world sporting or other events. (III) No winning outcome is based—(aa) on the

score, point-spread, or any performance or performances of any single real-world team or any combination of such

teams; or (bb) solely on any single performance of an individual athlete in any single real-world sporting or other

event”).

118

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Internet Gambling: Overview of Federal Criminal Law

“Unlawful Internet gambling” refers to an Internet bet or wager that is illegal in the place where it

is placed, received, or transmitted.125 The term does not encompass various forms of Internet use

by the horse racing industry, regardless of their legal status over other provisions of law.126 If

certain conditions are met, the definition also exempts from UIGEA’s prohibitions certain

intrastate and intratribal forms of gambling, like state lotteries and Indian casinos that operate

under state regulations or compacts.127

To qualify for the intrastate exception, a bet must: (1) be made and received in the same state;128

(2) comply with applicable state law that authorizes the gambling and the method of transmission

including any age and location verification and security requirements;129 and (3) be in accord with

various federal gambling laws.130

The intratribal exception is comparable, but a little different. Compliance with the various federal

gambling laws remains a condition.131 And there are comparable security as well as age and

location verification demands.132 The intratribal gambling, however, may involve transmissions

between the lands of two or more tribes and need not be within the same state.133

125

31 U.S.C. 5362(10)(A)(“The term ‘unlawful Internet gambling’ means to place, receive, or otherwise knowingly

transmit a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is

unlawful under any applicable Federal or State law in the State or Tribal lands in which the bet or wager is initiated,

received, or otherwise made”).

126

31 U.S.C. 5362(10)(D)(“(i) In general.—The term ‘unlawful Internet gambling’ shall not include any activity that is

allowed under the Interstate Horseracing Act of 1978 (15 U.S.C. 3001 et seq.). (ii) Rule of construction regarding

preemption.—Nothing in this subchapter may be construed to preempt any State law prohibiting gambling. (iii) Sense

of Congress.—It is the sense of Congress that this subchapter shall not change which activities related to horse racing

may or may not be allowed under Federal law. This subparagraph is intended to address concerns that this subchapter

could have the effect of changing the existing relationship between the Interstate Horseracing Act and other Federal

statutes in effect on the date of the enactment of this subchapter. This subchapter is not intended to change that

relationship. This subchapter is not intended to resolve any existing disagreements over how to interpret the

relationship between the Interstate Horseracing Act and other Federal statutes”).

127

31 U.S.C. 5362(10)(B), (C).

128

31 U.S.C. 5362(10)(B)(i)(“The term ‘unlawful Internet gambling’ does not include placing, receiving, or otherwise

transmitting a bet or wager where—(i) the bet or wager is initiated and received or otherwise made exclusively within a

single State”). See also, 31 U.S.C. 5362(10)(E)(“The intermediate routing of electronic data shall not determine the

location or locations in which a bet or wager is initiated, received, or otherwise made”).

129

31 U.S.C. 5362(10)(B)(ii)(“The term “unlawful Internet gambling” does not include placing, receiving, or otherwise

transmitting a bet or wager where ... (ii) the bet or wager and the method by which the bet or wager is initiated and

received or otherwise made is expressly authorized by and placed in accordance with the laws of such State, and the

State law or regulations include—(I) age and location verification requirements reasonably designed to block access to

minors and persons located out of such State; and (II) appropriate data security standards to prevent unauthorized

access by any person whose age and current location has not been verified in accordance with such State’s law or

regulations”).

130

31 U.S.C. 5362(10)(B)(iii)(“The term “unlawful Internet gambling” does not include placing, receiving, or

otherwise transmitting a bet or wager where ... (iii) the bet or wager does not violate any provision of—(I) the Interstate

Horseracing Act of 1978 (15 U.S.C. 3001 et seq.); (II) chapter 178 of title 28 (commonly known as the “Professional

and Amateur Sports Protection Act”); (III) the Gambling Devices Transportation Act (15 U.S.C. 1171 et seq.); or (IV)

the Indian Gaming Regulatory Act (25 U.S.C. 2701 et seq.)”). The Gambling Devices Transportation Act, also known

as the Johnson Act, among other things prohibits the interstate transportation of gambling devices under some

circumstances. The Indian Gaming Regulatory Act, as the name suggests, regulates gambling on Indian lands.

131

31 U.S.C. 5362(C)(iv).

132

31 U.S.C. 5362((10)(B)(iii)(“The term ‘unlawful Internet gambling’ does not include placing, receiving, or

otherwise transmitting a bet or wager where ... (iii) the applicable tribal ordinance or resolution or Tribal-State compact

includes—(I) age and location verification requirements reasonably designed to block access to minors and persons

located out of the applicable Tribal lands; and (II) appropriate data security standards to prevent unauthorized access by

(continued...)

Congressional Research Service

Internet Gambling: Overview of Federal Criminal Law

Definitions aside, UIGEA’s prohibitions can only be breached by one who acts “knowingly.” As a

general rule, “the word ‘knowingly’ means that the defendant realized what she was doing and

was aware of the nature of her conduct and did not act through ignorance, mistake or accident.”134

However, “the term ‘knowingly’ does not necessarily have any reference to a culpable state of

mind or to knowledge of the law.”135

There is nothing to shield UIGEA defendants from the same general accomplice and conspirator

liability provisions that apply in the case of any other federal felony. Those who aid or abet a

violation, that is, those who knowingly embrace the criminal activity and assist in its commission

with an eye to its success, are liable to the same extent as those who commit the offense

directly.136 Conspirators are liable for conspiracy, for any completed crime that is the object of the

plot, and for any additional, foreseeable offense committed by a confederate in furtherance of the

common scheme.137

Section 5362(2) excludes the activities of financial institutions, as well as communications and

Internet service providers, from the definition of “business of betting or wagering.” Section 5367

(...continued)

any person whose age and current location has not been verified in accordance with the applicable tribal ordinance or

resolution or Tribal-State Compact”).

133

31 U.S.C. 5362(10)(B)(i)(ii)(“The term “unlawful Internet gambling” does not include placing, receiving, or

otherwise transmitting a bet or wager where—(i) the bet or wager is initiated and received or otherwise made

exclusively—(I) within the Indian lands of a single Indian tribe (as such terms are defined under the Indian Gaming

Regulatory Act); or (II) between the Indian lands of 2 or more Indian tribes to the extent that intertribal gaming is

authorized by the Indian Gaming Regulatory Act; (ii) the bet or wager and the method by which the bet or wager is

initiated and received or otherwise made is expressly authorized by and complies with the requirements of—(I) the

applicable tribal ordinance or resolution approved by the Chairman of the National Indian Gaming Commission; and

(II) with respect to class III gaming, the applicable Tribal-State Compact”). Class I gaming refers to social games

played for stakes of minimal value; class II gaming means bingo and cards games that are legal under applicable state

law (not including blackjack, baccarat and other banking games); class III gaming describes any other form of

gambling that is not class I or class II gaming and includes things like casino gambling, 25 U.S.C. 2703.

134

United States v. Dominguez, 661 F.3d 1051, 1068 (11th Cir. 2011); United States v. Voice, 622 F.3d 870, 876 (8th

Cir. 2010); United States v. Alston-Graves, 435 F.3d 331, 337 (D.C. Cir. 2006)(citing cases from the First, Seventh, and

Eighth Circuits).

135

Bryan v. United States, 524 U.S. 184, 192 (1998)(“[T]he knowledge requisite to knowing violation of a statute is

factual knowledge as distinguished from knowledge of the law”); United States v. Dominguez, 661 F.3d 1051, 1068

(11th Cir. 2011); United States v. Blair, 54 F.3d 639, 642 (10th Cir. 1995)(in the context of the Wire Act “knowingly”

does not mean that the defendant must be shown to have known his conduct violated the Wire Act); cf., United States v.

Cohen, 260 F.3d 68, 71-3 (2d Cir. 2001)(conviction for conspiracy to engage in conduct in violation the Wire Act does

not require proof that the defendant knew that the conduct was unlawful); contra, Cohen v. United States, 378 F.2d

751, 756-57 (9th Cir. 1967).

136

18 U.S.C. 2; Nye & Nissen v. United States, 336 U.S. 613, 619 (1949); see also United States v. George, 658 F.3d

706, 708 (7th Cir. 2011); United States v. Devries, 630 F.3d 1130, 1133 (8th Cir. 2011); United States v. Petersen, 622

F.3d 196, 208 (3d Cir. 2010); United States v. Hungerford, 465 F.2d 1113, 1117 (9th Cir. 2006).

137