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Growth Requires Regulations
Internet gambling operated by offshore, unregulated companies has seen explosive
growth since the introduction of the World Wide Web in 1995, a fact that
has led Congress to take up the issue and consider legislation to ban such
gambling in order to protect the right of each state to regulate gambling
within its borders.
According to information from the report of the National Gambling Impact
Study Commission (NGISC):
In May 1998, there were approximately 90 on-line casinos, 39 lotteries,
8 bingo games and 53 sports books. A year later, there were more than
250 on-line casinos, 64 lotteries, 20 bingo games and 139 sports books.
A gaming industry analysis by Christiansen/Cummings Associates estimated
Internet gambling revenues at $651 million for 1998, more than double
the estimated $300 million from the previous year.
Some studies estimate that revenues for Internet gambling doubled within
one year.
Finally, the federal government already requires casinos to report cash
transactions of more than $10,000. Currency Transaction Report by Casinos
(CTRC) filings also have been used to report suspicious transactions.
The Issue
The U.S. commercial casino industry is one of the most heavily regulated
industries in the nation. Not only must U.S. commercial casinos comply with
state restrictions, licensing requirements and regulations, they also are
subject to numerous federal laws. For example, U.S. commercial casinos are
subject to federal corporate taxation, publicly traded companies comply
with Securities and Exchange Commission rules, casinos file information
reports on larger winnings with the IRS and withhold federal taxes on certain
winnings, and casinos adhere to anti-money laundering statutes and regulations
administered by the U.S. Treasury Department.
In contrast, those offshore operators engaged in
the business of taking Internet wagers from the United States are not subject
to these important federal and state legal requirements.
Legislation is moving forward in Congress that would prohibit gambling businesses—wherever
they are located (in the United States or not)—from using the Internet
or any other interactive computer service to take bets or wagers from individuals
in the United States. This legislation would update the Wire Communications
Act of 1961, which already prohibits the use of the telephone or other wired
devices to circumvent state prohibitions or regulations affecting gaming.
Conclusion
Though there are particular states that have passed legislation to prohibit
online gambling, it is almost impossible for them enforce it. As far as
we know, there has been no one in the United States or Canada, who has gotten
into legal trouble for wagering online.
Having said that, it is fact that most physical locations for the web
servers that house online casinos, reside in countries such as the Caribbean
Islands or Antigua. In these countries and in a number of others, gambling
is legal.
One thing to keep in mind if you are gambling online is to make sure
you claim any wins (and losses) to your government body that oversees
personal taxes. You need to keep records outlining the money you have
spent gambling online so you can offset your losses against your winnings.
Why pay more taxes than you have to?
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