On December 23, 2011, the Justice Department – with no public input or Congressional involvement – issued a legal opinion reversing its long-held position that the Wire Act (18 U.S.C. § 1084) bars Internet gambling, opening the door for states to authorize non-sports wagering over the Internet.
New Jersey, Delaware and Nevada have since passed legislation authorizing Internet gambling. California and other large states will likely consider the issue next year.
Congress should step in now and restore the policy banning Internet gambling to give Congress and the public time to fully examine and consider such issues as the potential for money laundering, terrorism financing, fraud and other criminal activity, participation by minors, exploitation of individuals with a gaming addiction and the impact on jobs and economic activity.
Threats to the Public Interest: States have established rigorous licensing and regulatory regimes for land-based casinos, which in turn have implemented and carried out effective policies to promote responsible gambling, bar participation by minors, and assure full compliance with all laws ranging from gambling controls to money laundering to tax payments. Such protections of the public interest are not fully available with Internet gambling.
Underage Gambling: It will be nearly impossible to prevent minors from gambling online. State regulatory agencies will be unable to prevent adults from allowing minors to play on their accounts. States will have little incentive to bar participation by minors living in other states, and could allow college students to gamble online by setting the minimum age at 18 years old.
Criminal Enterprises: Gambling has been a prime target for criminal syndicates to launder money and use for other nefarious purposes. The unregulated Internet environment will attract national and international crime syndicates seeking to increase cash flows and hide capital.
International Terrorism: International terrorist organizations are constantly seeking the means to move and hide money to facilitate their ultimate goal of purchasing and transferring chemical and other weapons of mass destruction. A Defense Department study concluded that Internet warfare will be an enormous threat to national security in coming years. Internet gaming will be a perfect conduit for terrorists to move funds for wide scale illegal and hostile purposes.
Destroys Jobs: More than 330,000 Americans work in the casino industry. Hundreds of thousands more work in industries which supported by licensed casinos. Internet gambling, especially if it includes a full assortment of casino style games, will reduce participation at brick and mortar casinos, with a commensurate impact on jobs in lodging, restaurant, entertainment and retail industries which rely on brick-and-mortar casinos.