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UK

GAMBLING ACT 2005 INFORMATION PAGES


Introduction

In these pages you will find information about the Gambling Act, which came into force on 1
September 2007. They have been specially written for residents and providers of gambling
facilities in the Arun district. If you do not fit this description you should contact the relevant
licensing authority for your area or visit their web site. A "relevant licensing authority" in
England and Wales is usually your district council or unitary authority.

PLEASE NOTE THAT THESE PAGES ONLY SUPPLY A SUMMARY OF THE


LEGISLATION AND AS SUCH ARUN DISTRICT COUNCIL CANNOT BE HELD
RESPONSIBLE FOR ANY ERRORS OR OMMISIONS.
What is the Gambling Act 2005?

The Gambling Act 2005 replaces almost all existing gambling and gaming legislation. The
exceptions relate to the National Lottery (regulated by the Lottery Commission) and spread
betting (regulated by the Financial Services Authority). It is probable that if you are considering
continuing with a gambling activity or are contemplating starting a new gambling activity, the
new legislation will apply to you.

The Contents of these pages

In the following pages you will find:

[You can link directly to any of the topics in the list below by clicking on them]

An introduction and overview

Lotteries

Gaming machines

Prize gaming

Rights of residents and others

Transitional arrangements (Renewals, transfers, and new operators)

Circumstances where no permissions are required

Children and young persons and the new Act

A table of proposed fees to be charged for premises licences

Guidance notes for licensees of pubs

Introduction and overview

The Gambling Act 2005 has three objectives:

keeping gambling crime free

making sure that gambling is fair and open

protecting children and vulnerable adults

The Gambling Act 2005 created a new body called the Gambling Commission. In addition to
having a overall responsibility for gambling, the Gambling Commission is be responsible for
issuing certain types of licences.
The Gambling Commission issue operator's licences for operators of:

bingo premises

betting premises, such as betting shops

adult gaming centres

family entertainment centres with machines from Cat. C. (For an explanation of machine
categories go to Arcades in our Gaming Machine section).

casinos

tracks, including horse racing and dog tracks

They also licence large lotteries. See our section on small lotteries for more information.
Where the Gambling Commission have granted an operators licence, some key staff may also
require personal licences. For full details of operators and personal licences and the exemptions
for small operators, visit the Gambling Commission web site.

Arun District Council issues premises licences or permits to allow gambling activity to take
place on certain premises. These are premises where the operators hold an operators licence
issued by the Gambling Commission (see the list above). Arun District Council will also
issue Permits for:

gaming machines in alcohol licensed premises, such as pubs

gaming machines for members clubs

other gaming activities in members clubs

category D machines (machines which can be used by children) in unlicensed family


entertainment centres. (For an explanation of machine categories go to Arcades in our
Gaming Machine section).

prize gaming

Lotteries
Arun District Council has dedicated pages for Lotteries. There are plans to consolidate the pages
and provide further information. Meanwhile, to view the information regarding small society
lotteries go to our pages for Charity Collections, Lotteries and Gaming Licences.

Gaming machines

The new law makes some radical changes to the regulation of gaming machines.
PUBS AND CLUBS
Premises licensed for the sale of alcohol will be entitled to make one or two gaming machines
available for the use of customers. The holder of the on-premises alcohol licence will only be
required to give written notice to Arun District Council. Such operators may also apply for a
permit for further machines to be available. It is the policy of Arun District Council to allow up
to four machines provided the relevant codes of practice are adhered to. (The Codes of Practice
are being drawn up by the Gambling Commission and are currently the subject of consultation).
Only machines from categories C and D will be permitted. A category D machine is one where
the maximum stakes are 10p (30p if the stake is non-monetary) and the maximum prize is 5 (or

8 if the prize is non-monetary). A category C machine is one where the maximum stake is 50p
and the maximum prize is 25. Persons under the age of 18 will not be permitted to play
category C machines.
TAKE-AWAY FOOD SHOPS, TAXI OFFICES, WAITING AREAS, ETC
As part of the Government's strategy to protect children and young persons from gambling, it
will no longer be permissible to have gaming machines in premises such as take-way food shops,
taxi offices, waiting areas and similar locations. Such locations will only be permitted to have
gaming machines until their existing permissions expire. Since 1 August 2006 no further permits
have been issued.

ARCADES
We have created a special page to assist prospective applicants for licences and permits for
gaming arcades. To go to this page click on the following link: "WHAT SORT OF LICENCE
OR PERMIT DO I REQUIRE FOR MY ARCADE?" This page also includes a section giving
the machine categories for machines in categories B3, B4, C and D.

Prize Gaming

"Prize Gaming" is gaming where the size of the prize or prizes is not determined by the number
of persons playing or the amount of money received. There is nothing in the legislation to
prevent the organiser of prize gaming from estimating the number of persons who may wish to
play or the amount of money that may be received when determining the prize or prizes.

Regulations are still to be made that will prescribe the participation fees and prizes. These will be
published on this site when they are known.

It is also a condition of prize gaming that the opportunity to participate in the gaming must be
acquired on the day and in the place where it is played. The game must be played entirely on that
day and the result must be made public at the place where the game is played and as soon as
reasonably practical (but not later than the same day).

Persons under 18 may only take part in prize gaming if it is equal chance prize gaming. "Equal
chance" gaming is a game which does not involve playing against a bank and the chances are
equally favourable to all players.

Subject to the above, permits for prize gaming are not required when the prize gaming takes
place in:

An adult gaming centre

A licensed family entertainment centre

A place which has a bingo premises licence is force

Or, the facilities do not amount to more than ancillary amusement at a fair.

In addition, an application may not be made if:

A premises licence has effect in respect of the premises

A club gaming permit has effect in respect of the premises

Regulations will be made that will prescribe the participation fees and prizes which will be
allowed. For the latest information on this, go to the Gambling Commission web site. [hyperlink
here]
Prize gaming permits will be available from Arun District Council from 2007 onwards.
(See Transitional arrangements for more information). Anyone who occupies or proposes to
occupy premises may apply for a permit, with the exception of those premises mentioned above
where an application may not be made.

Race nights

Race nights come in a variety of formats and for this reason it is not possible to give advice in
these pages about whether permissions are required. If you are proposing to organise a race night
that will take place after 31 August 2007* we would suggest that you seek advice from your
solicitor or contact the licensing team at Arun District Council. However, when seeking advice it
may be helpful if you can give consideration to the following:

Is your race night incidental to some other event?

In what manner are the races being shown?

Where are the proceeds going?

On what sort of premises is the event being held?

What sort of stakes and prizes are being contemplated?

Are the odds the same for every runner?

Please bear in mind that you may also require a licence under the Licensing Act 2003 if you are
supplying alcohol, food, or entertainment (including moving pictures).

*If you are intending to organise a race night before 31 August 2007 you may wish to visit
the web site of the Department of Culture, Media and Sport, where advice is available.

Rights of residents and others

When an application is made to Arun District Council for a premises licence, or when an
application to vary or renew such a licence is made, local residents and persons with businesses
in the area will have the right to make representations. Licence applicants will be required to
advertise their intention to apply for a licence by placing a notice or notices on (or close to) the
site itself. It is probable that they will also have to advertise in the local paper and other places.
The following will be able to make representations to Arun District Council in relation to
applications:

Persons who live sufficiently close to the premises to be affected by the proposed
activities.

Persons who have business interests that might be affected by the proposed activities.

Persons representing any of the above (such as solicitors).

Applications should be made in writing to the Licensing Team at Arun District Council. The
following should be taken into account when making any representations:

You need to show that you are an "interested party". An interested party is usually
someone who would be affected by the use of the premises, such as a neighbour.

Your views must be in relation to the specific application and should not relate to your
views on gambling in general.

Planning issues should be referred to your local authority planning officer.

Concerns about anti-social behaviour should be referred to the police.

Authorities who are responsible for the well being of children and vulnerable people, and other
public bodies (such as the police), may also make representations.

Transitional arrangements (Renewals, transfers, and new operators)

Regulatory functions for gambling are currently carried out by the magistrates' courts, the
Gaming Board, and local authorities. The magistrates' courts will no longer have responsibilities
for gambling after 31 August 2007 and the Gaming Board is being absorbed into the new
Gambling Commission. Many similar functions to those currently carried out by Arun District
Council will continue to be carried out by your Council.

There will be a transitional period during which the new legislation will take over from the old
and the following is a guide to help you through that transition period. At the time of preparing
these pages most gambling is still covered by existing legislation but there are some key dates
which may require an operator to take some action before the new act comes into force.

The following is a guide to transitional arrangements under the new legislation. The areas
covered are:

BETTING LICENCES

BINGO LICENCES

ARCADES - ADULT GAMING CENTRES AND LICENSED FAMILY


ENTERTAINMENT CENTRES

ARCADES - UNLICENSED FAMILY ENTERTAINMENT CENTRES

EXTERNAL LOTTERY MANAGERS

CASINOS

SMALL SOCIETY LOTTERIES

GAMING MACHINE SUPPLIERS AND REPAIRERS

PUBS AND CLUBS

PRIZE GAMING PERMITS

SUPPLY AND MAINTENANCE OF SINGLE MACHINES

MACHINES IN TAKE-AWAYS, FISH AND CHIP SHOPS, ETC.

FAST TRACK ARRANGEMENTS FOR PREMISES LICENCES

TRANSFERS / AMENDMENTS

REMOTE OPERATING LICENCES

BETTING LICENCES:
Existing operators:
Holders of permissions that expired before 1 September 2006 should have applied for renewal
under the existing legislation. Successful applications will have been renewed until 31 August
2007. A permission that expires between 1 September 2006 and 31 August 2007 should be
renewed automatically without the need for an application or fee. Operators who wish to
continue operating after 1 September 2007 should make advance application to the Gambling
Commission for the appropriate betting operating licence between 1 January 2007 and 27 April
2007. Operators will also have to make an advance application to Arun District Council for a
premises licence between 30 April and 31 July 2007.

New operators:
Operators wishing to start a new operation before 1 September 2007 should apply under the
existing legislation but no later than 27 April 2007. Permissions will expire on 31 August 2007.
Operators wishing to start operations after 1 September 2007 should apply to the Gambling
Commission as from January 2007. An application will have to be made to Arun District Council
for a premises licence, but generally the Council can only accept applications from operators
who have been granted an operator's licence by the Gambling Commission.

BINGO LICENCES:

Renewals:
Holders of permissions which expire before 1 September 2006 should apply for renewal under
the existing legislation. Successful applicants will have their permissions renewed until 31
August 2007. Permissions which expire between 1 September 2006 and 30 August 2007 will be
renewed automatically without the need to make an application or pay a fee. Operators who wish
to continue operating from 1 September 2007 should make advance application to the Gambling

Commission for a bingo operating licence between 30 April 2007 and 31 July 2007. Likewise,
such operators should apply to Arun District Council for a premises licence between 30 April
2007 and 31 July 2007.
New Operators:
New operators wishing to start operations before 1 September 2007 should apply for permissions
under the existing legislation but no later than 27 April 2007. The permissions will expire on 31
August 2007. New operators wishing to start operations after 31 August 2007 should apply for
an operators licence from the Gambling Commission and a premises licence from Arun District
Council from 30 April 2007.

ARCADES - ADULT GAMING CENTRES AND LICENSED FAMILY ENTERTAINMENT


CENTRES:

Please note that the provisions for unlicensed family entertainment centres (centres which are
restricted to the lowest category machines) are different to those for licensed family
entertainment centres. Further information is shown at the end of this section.

Renewals:
Holders of permissions that expire before 1 September 2006 should apply for renewal under the
existing legislation. Successful applications will be renewed until 31 August 2007. Permissions
which expire between 1 September 2006 and 30 August 2007 will be renewed automatically
until 31 August 2007 without the need for an application fee. Existing operators who wish to
operate an Adult Gaming Centre or licensed Family Entertainment Centre from 1 September
2007 should make advance application to the Gambling Commission for an operating licence
between 30 April 2007 and 31 July 2007. Operators who wish to continue operating as an Adult
Gaming Centre or a licensed Family Entertainment Centre, should apply to Arun District Council
for a premises licence between 30 April 2007 and 31 July 2007. (For more details about the
different types of arcade, see our general section on Arcades).
New Operators:
New Operators wishing to start operating before 1 September 2007, should apply under the
existing legislation no later than 27 April 2007. The permissions will expire on 31 August 2007.

New operators wishing to start operations after 31 August 2007 should apply for an operators
licence from the Gambling Commission and a premises licence from Arun District Council from
30 April 2007.

ARCADES - UNLICENSED FAMILY ENTERTAINMENT CENTRES:

These are centres restricted to the lowest category machines. See section above for transitional
arrangements for Licensed Family Entertainment Centres.

Renewals:
Holders of permissions that expire before 1 September 2006 should apply for renewal under the
existing legislation. Successful applications will be renewed until 31 August 2007. Permissions
which expire between 1 September 2006 and 30 August 2007 will be renewed automatically
until 31 August 2007 without the need for an application fee.

New Operators:
Operators wishing to begin operating before 1 September 2007 should apply under the existing
legislation no later than 27 April 2007. Permissions granted will expire on 31 August 2007.
Operators wishing to commence operations after 31 August 2007 should apply to Arun District
Council for a permit, from January 2007 onwards.

EXTERNAL LOTTERY MANAGERS:


Renewals:
Holders of permissions that expired before 1 September 2006 should have applied for renewal
under the existing legislation. Successful applications will be renewed until 31 August 2007.
Permissions that expire between 1 September 2006 and 31 August 2007 will be renewed
automatically up to 31 August 2007 without the need for an application or fee. Existing operators
who wish to continue to operate after 1 September 2007 should make advance application to
the Gambling Commission for the appropriate lottery operating licence between 1 January 2007
and 27 April 2007 in order to qualify for continuation rights.

New Operators:
New operators wishing to begin operating before 1 September 2007 should apply under the
existing legislation no later than 27 April 2007. The permissions will expire on 31 August 2007.
New operators who wish to begin operating from 1 September 2007 should apply for the
appropriate licences under the Gambling Act 2005.

CASINOS:

Renewals:
Holders of permissions that expired before 1 September 2006 should have applied for renewal
under the existing legislation. Successful applications will be renewed until 31 August 2007.
Existing permissions that expire between 1 September 2006 and 30 August 2007 will be
automatically renewed until 31 August 2007 without the need for an application or fee.
Operators who wish to continue operating from 1 September 2007 should make an advance
application to the Gambling Commission for the appropriate casino operating licence between 1
January 2007 and 27 April 2007.
New Operators:
New operators who wish to begin operating before 1 September 2007 should apply under the
existing legislation but no later than 27 April 2007. Permissions will expire on 31 August 2007.
Operators wishing to start operations after 1 September 2007 should apply for the appropriate
licence from January 2007.
SMALL SOCIETY LOTTERIES:

Renewals:
Holders of registrations that expire before 31 August 2007 should renew their registrations under
the existing legislation. From 1 September 2007 existing registrations will be automatically
converted into the appropriate lottery operating licences, which will expire when the next
renewal fee is due. Holders of registrations should apply to the Gambling Commission for a new
lottery operating licence at least two months before expiry.
New Operators:
New operators wishing to start operating before 1 September 2007 should register under the

existing legislation. From 1 September 2007 the registration will be automatically converted into
the appropriate lottery operating licences, which will expire on the date the renewal fee would be
due. New operators wishing to start operations after 1 September 2007 should apply to
theGambling Commission for the appropriate lottery operating licences.
GAMING MACHINE SUPPLIERS AND REPAIRERS:

Renewals:
Holders of certificates that expire before 1 September 2007 should apply for renewal under the
existing legislation. From 1 September 2007 existing certificates will be subject to new
conditions and codes of practice issued by the Gambling Commission. From 1 September 2007
holders of certificates should apply to the Gambling Commission for a new gambling machine
technical operating licence at least two months before expiry of their certificates.
New Operators:
Operators wishing to start operations before 1 September 2007 should apply for certificates
under the existing legislation. From 1 September 2007 existing certificates will be subject to new
conditions and codes of practice issued by the Gambling Commission. Holders of certificates
should apply to the for a new gambling machine technical operating licence at least two months
before expiry. New operators wishing to start operations from 1 September 2007 should apply to
the Gambling Commission for a gaming machine technical operating licence under the Gambling
Act 2005.
PUBS AND CLUBS:

Renewals:
Holders of permissions that expire before 1 September 2007 should renew their permissions
under the existing legislation. From 1 September 2007 existing permissions will automatically be
converted into the appropriate permits under the Gambling Act 2005, which will expire on the
same date as the existing permission.
New Operators:
Operators wishing to start operations before 1 September 2007, should apply for permission
under the existing legislation. From 1 September 2007 the permissions will automatically be
converted into the appropriate permits under the Gambling Act 2005. Holders of permissions

should apply to Arun District Council for a new permit at least two months before expiry. New
operators wishing to begin operations from 1 September 2007 should apply to Arun District
Council for a new appropriate permit under the Gambling Act 2005.

PRIZE GAMING PERMITS:

Renewals:
Holders of permissions that expire before 1 September 2006 should apply for renewal under the
existing legislation. Successful applications will be renewed up until 31 August 2007. Existing
permission that expire between 1 September 2006 and 30 August 2007 will be renewed until 31
August 2007 without the need for an application or fee. Existing operators who wish to continue
operating from 1 September 2007 should make an application to Arun District Council between
30 April 2007 and 31 July 2007 in order to qualify for continuation rights.
New Operators:
Operators who wish to begin operating before 1 September 2007 should apply under the existing
legislation. Operators wishing to begin operating from 1 September 2007 should apply to Arun
District Council for a prize gaming permit.

SUPPLY AND MAINTENANCE OF SINGLE MACHINES:

Applications for permits required after 1 September 2007:


Operators requiring a permit before 1 September 2007 should apply under the existing
legislation. The permit will be valid for three months.

Applications for permits required after 1 September 2007:


Operators requiring a permit after 1 September 2007 should apply to the Gambling
Commission for a permit under the Gambling Act 2007.

MACHINES IN TAKE-AWAYS, FISH AND CHIP SHOPS, ETC:

It will not be possible to renew permissions after 1 August 2006, nor will it be possible to

acquire new permissions.

TRANSFERS / AMENDMENTS:

Existing operators wishing to transfer or amend their permissions before 27 April 2007 should do
under the existing legislation. After 27 April 2007 they must do so under the Gambling Act
2005, although they will not have effect until 1 September 2007.
FAST TRACK ARRANGEMENTS FOR PREMISES LICENCES:

It may be possible to "Fast Track" an application for a premises licence under the Gambling Act
2005 where the operator is continuing an existing authorised business. The Gambling
Commission will soon be publishing mandatory and default licensing conditions. If an applicant
is prepared to accept these conditions, the Council will process these applications without any
consultation process. Where an applicant wishes to vary a default condition, they will not be able
to make a fast track application. It will not be possible to vary the mandatory conditions.
REMOTE OPERATING LICENCES:

Existing remote operators wishing to operate from 1 September 2007 should make advance
application to the Gambling Commission for the appropriate remote operating licence between 1
January 2007 and 27 April 2007 to qualify for continuation rights.
Circumstances where no permissions are required

Generally the Act is intended to legislate for commercial activities. There are certain activities
which are either not considered gambling or for which the legislation makes a specific exclusion.

The following is a list of the more common exclusions. However, if you have any doubt whether
these apply to your activity you should seek the advice of your solicitor or contact the licensing
team at Arun District Council. Please remember that the Act does not come into force until 1
September 2007 and there may be some exclusions under the present legislation which do not
currently apply.

Activities which are entirely based on the skill, knowledge, or judgement of the
participants. It should be noted that this should be genuine skill and any element of chance
introduced into the competition will make it gambling. It should also be noted that the level
of skill required needs to be suitably challenging for the participants. Simply guessing
whether something is true or false is not regarded as a skill based activity.

Equal chance gaming on alcohol licensed premises. This will be subject to conditions,
namely; the facilities are limited to equal chance gaming, stakes and prizes must not exceed
a specified limit (yet to be announced), no deductions may be made from money staked or
won, no participation fees may be charged (including membership fees), there may not be
any linking between premises, and children and young persons must be excluded.

A small lottery incidental to a bazaar, sale of work, fete, dinner, dance, sporting or
athletic event or other entertainment of a similar nature. The proceeds must be used for
other than private gain, the tickets may only be sold on the premises and during the event, no
more than 250 may be spent on prizes, and no money prizes can be offered. Please note
that if you offer liquor prizes you may need a licence for the supply of alcohol.

Private bets between friends.

Private lotteries. These are lotteries where the sale of tickets is confined to a) members of
one society not established or conducted for the purposes of gambling, gaming, or lotteries,
or to persons on the society's premises, or b) persons who work or reside on the same
premises. There are quite strict rules for running such a lottery and these include; the
promoter must be a member of the society authorised in writing by the society's governing
body, the only permitted deductions allowed are for printing and stationary, the money
raised can be used totally for prizes or divided between prizes and the society's funds, no
advertisement of the lottery may be exhibited except on the society premises, or where the
members work or reside, the price of every ticket must be the same and they may not be sent
through the post.

Private gaming. Gaming is private when it takes place in a private dwelling and on a
domestic occasion.

Travelling fairs. Travelling fairs may offer prize gaming and make available one or more
gaming machines in the lowest category, provided that it is no more than an ancillary
amusement to the fair. A travelling fair is defined in the Gambling Act 2005, but in brief it is

the provision of amusements by persons who travel from place to place for the purpose of
providing fairs and at a place for no more than 27 days in that calendar year.

Football Pools. Holders of a pool betting operating licence can authorise persons to
distribute and collect coupons and pay winnings. Such persons can operate from ordinary
retail premises (such as newsagents) without the need for a premises licence.

Children and young persons and the new Act

One of the aims of the Gambling Act is to protect children and young persons. A person ceases
to fit this description when they achieve the age of 18.

In broad terms, a person under 18 years is not permitted to gamble. There are some exceptions.
These are:

Participation in private or non-commercial betting or gaming.

Using the lowest category of gaming machines (category D).

In addition to the above, a person aged 16 or over may participate in lotteries or pool betting on
association football.

Subject to the exceptions above it is an offence for a person aged 16 or 17 to take part in
gambling activities. It is also an offence to invite a person under 18 years to take part in
gambling and this includes advertising or other actions which bring the facilities to their
attention.

A person under the age of 18 is not permitted to enter whilst gambling facilities are being
provided:

A casino*

A betting shop

An adult gaming centre

Parts of a family entertainment centre or track (horse or dog racing) where Category C
gaming machines are available.

It is an offence for a person under 18 years to enter these premises or for a person to invite a
child or young person into the premises.
*Children and young persons may enter the non-gambling area of a regional casino
TABLE OF FEES FOR PREMISES LICENCES

KEY TO TABLES

A: Conversion fee for non-fast track application.


B: Non-conversion application fee in respect of provisional statement premises.
C: Non-conversion application fee in respect of other premises.
D: Annual fee.
E: Application to vary licence.
F: Application to transfer.
G: Application to reinstate licence.
H: Application for provisional statement.
I: Fast track conversion.
J: Copy of licence.
K: Notification of change.

US

Gambling is legally restricted in the United States, but its availability and participation is increasing.
In 2007, gambling activities generated gross revenues (the difference between the total amounts
wagered minus the funds or "winnings" returned to the players) of $92.27 billion in the United
States.[1] Commercial casinos provided 354,000 jobs,[2] and state and local tax revenues of $5.2
billion as of 2006.[3] Critics of gambling[who?] claim it leads to increased political corruption, compulsive
gambling and higher crime rates. Others claim that gambling is a type of regressive tax on the
individuals in local economies where gambling venues are located.
Contents
[hide]

o
o
o
o

1 Gambling revenues
2 History
2.1 Gold Rush era
2.2 Reconstruction era
2.3 Prohibition era
2.4 1931present
3 Authorized types
4 Legal issues
5 Commercial casinos
6 American Indian gaming
7 Lotteries
7.1 Scratchcard games
8 Recriminalization
9 References
10 External links

Gambling revenues[edit]
According to the American Gaming Association, legal gambling revenues for 2007 were as follows:[1]

Card Rooms - $1.18 billion

Commercial Casinos - $34.41 billion

Charitable Games and Bingo - $2.22 billion

Indian Casinos - $26.02 billion

Legal Bookmaking - $168.8 million

Lotteries - $24.78 billion

Pari-mutuel Wagering - $3.50 billion

Grand Total - $92.27 billion

History[edit]
Games of chance first came to the British American colonies with the first settlers.[4] Attitudes on
gambling varied greatly from community to community, but there were no large-scale restrictions on
the practice. Early on, the British colonies used lotteries from time to time to help raise revenue. For
example, lotteries were used to establish or improve dozens of universities and hundreds of
secondary schools during the 18th and 19th centuries.[5] A 1769 restriction on lotteries by the British
crown became one of many issues which fueled tensions between the Colonies and Britain prior to
the American Revolution.[6]
Lotteries continued to be used at the state and federal level in the early United States. Gambling
businesses slowly developed in various communities. The lower Mississippi River valley became a
hotbed of gambling activity with New Orleans emerging as the nation's leading gambling center. A
wave of hostility against gambling in the mid 19th century pushed gambling activity onto boats in
the Mississippi River and toward younger territories in the West. Anti-gambling forces in the
northeast put an end to lotteries in those locations and this trend spread to some other parts of the
country. The rise of railroads caused passenger travel on the Mississippi to decline, heavily
damaging the riverboat casinos' revenue. The increasing legal pressures on gambling gradually
created opportunities for illegal operations.[4]

Gold Rush era[edit]


With the advent of the California Gold Rush, San Francisco became a populous town flush with
aspiring prospectors. By the 1850s, the new city had overtaken New Orleans as the gambling capital
of the United States. As California gradually strengthened its laws and policing of gambling, the
practice similarly went underground.[4]

Reconstruction era[edit]
Lotteries and other forms of gambling would be revived temporarily in
the South during Reconstruction, and in other areas, but by the early 20th century gambling was
almost uniformly outlawed throughout the U.S. Gambling became a largely illegal activity helping to
spur the growth of the mafia and other organized crime.[4]
Gambling was extremely popular everywhere during the settlement of the west and nearly everyone
participated in games of chance. Towns like Deadwood, Dodge City, Denver, and Kansas City were
all famous for their many lavish gambling houses. Citizens of the west viewed gamblers as
respected members of society working at an honest trade. Around the start of the 20th century,
nearly all the western states' governments outlawed gambling and ended it as a way of life.

Prohibition era[edit]

During the Prohibition era, illegal liquor provided an additional revenue stream for mob figures, and
organized crime blossomed. Towns which had already had lax attitudes about vice such as Miami,
Florida; Galveston, Texas; and Hot Springs, Arkansas became major gambling centers attracting
tourism from around the nation.[7] The Great Depressionsaw the legalization of some forms of
gambling such as bingo in some cities to allow churches and other groups to raise revenue, but most
gambling remained illegal. Major gangsters became wealthy from casinos and speakeasies. As legal
pressures began to rise in many states, gangsters in New York and other states looked
toward Texas,California, and other more tolerant locales to prosper.[4]

1931present[edit]
The stock market crash of 1929 and the Hoover Dam project led to the legalization of gambling in
Nevada. In 1931, Nevada legalized most forms of gambling when Assembly Bill 98 was signed into
law, providing a source of revenue for the state.[8] Interest in development in the state was slow at
first as the state itself had a limited population. After World War II, enforcement of gambling laws
became more strict in most places and the desert town of Las Vegas became an attractive target for
investment by crime figures such as New York's Bugsy Siegel. The town rapidly developed during
the 1950s dooming some illegal gambling empires such as Galveston. Nevada, and Las Vegas in
particular, became the center of gambling in the U.S. In the 1960s Howard Hughes and other
legitimate investors purchased many of the most important hotels and casinos in the city gradually
reducing the city's connections to organized crime.[4]
Southern Maryland became popular for its slot machines which operated legally there between 1949
(1943 in some places) and 1968. In 1977, New Jersey legalized gambling inAtlantic City. The city
rapidly grew into a significant tourist destination, briefly revitalizing what was previously largely a rundown slum community. In 1979, the Seminole tribe opened the first reservation-based commercial
gambling beginning a trend that would be followed by other reservations.[9] Gradually, lotteries and
some types of parimutuel betting were legalized in other areas of the country.
In the 1990s, riverboat casinos were legalized in Louisiana, Illinois, and other states.[10] In
1996, Michigan legalized gambling in the city of Detroit creating an economic center for potential
casino growth. As the Internet grew in the late 20th and early 21st centuries, Internet
gambling exploded in popularity.

Authorized types[edit]
Many levels of government have authorized multiple forms of gambling in an effort to raise money
for needed services without raising taxes. These include everything from bingo games in church
basements, to multi-million dollar poker tournaments. Sometimes states advertise revenues from
certain games to be devoted to particular needs, such as education.

When New Hampshire authorized a state lottery in 1963, it represented a major shift in social policy.
No state governments had previously directly run gambling operations to raise money. Other states
followed suit, and now the majority of the states run some type of lottery to raise funds for state
operations. This has brought about morally questionable issues, such as states' using marketing
firms to increase their market share, or to develop new programs when old forms of gambling do not
raise as much money.
The American Gaming Association breaks gambling down into the following categories:[1]

Card Rooms, both public and private

Commercial Casinos

Charitable games and Bingo

Indian casinos

Legal bookmaking

Lotteries

Parimutuel wagering

Advanced Deposit Wagering

Legal issues[edit]
Gambling is legal under US federal law, although there are significant restrictions pertaining to
interstate and online gambling. Each state is free to regulate or prohibit the practice within its
borders. If state-run lotteries are included, almost every state can be said to allow some form of
gambling. However, casino-style gambling is much less widespread. Federal law provides leeway for
Native American Trust Land to be used for games of chance if an agreement is put in place between
the State and the Tribal Government (e.g. A 'Compact' or 'Agreement') under the Indian Gaming
Regulatory Act of 1988.
Nevada and Louisiana are the only two states where casino-style gambling is legal statewide. Both
state and local governments impose licensing and zoning restrictions. All other states that allow
casino-style gambling restrict it to small geographic areas (e.g., Atlantic City, New Jersey or Tunica,
Mississippi), or to American Indian reservations, some of which are located in or near large cities. As
domestic dependent nations, American Indian tribes have used legal protection to open casinos,
which has been a contentious political issue in California and other states. In some states, casinos
are restricted to "riverboats", large multi-story barges that are, more often than not, permanently
moored in a body of water.
Online gambling has been more strictly regulated. The Federal Wire Act of 1961 outlawed interstate
wagering on sports but did not address other forms of gambling. It has been the subject of court
cases. The Unlawful Internet Gambling Enforcement Act of 2006 (UIEGA) did not specifically prohibit

online gambling; instead, it outlawed financial transactions involving online gambling service
providers. Some offshore gambling providers reacted by shutting down their services for US
customers. Other operators however have continued to circumvent UIGEA and have continued to
service US customers. For this reason UIEGA has received criticism from notable figures within the
gambling industry.[11]

Type of Legal Gambling in States (Commercial, Indian, Racetrack casinos)

STATE

Charitable

Parimutuel

Lotteries

Commercial

Tribal

Racetrack

Alabama

Yes

Yes

No

No

Yes

No

Alaska

Yes

No

No

No

Yes

No

American Samoa

Yes

No

No

No

No

No

Arizona

Yes

Yes

Yes

No

Yes

No

Arkansas

Yes

Yes

Yes

No

No

Yes

California

Yes

Yes

Yes

No

Yes

Yes

Colorado

Yes

Yes

Yes

Yes

Yes

Yes

Connecticut

Yes

No

Yes

No

Yes

No

Delaware

Yes

Yes

Yes

Yes

No

Yes

Type of Legal Gambling in States (Commercial, Indian, Racetrack casinos)

STATE

District of

Charitable

Parimutuel

Lotteries

Commercial

Tribal

Racetrack

Yes

No

Yes

No

No

No

Florida

Yes

Yes

Yes

No

Yes

Yes

Georgia

Yes

No

Yes

No

No

No

Guam

Yes

No

Yes

No

No

No

Hawaii

No

No

No

No

No

No

Idaho

Yes

Yes

Yes

No

Yes

No

Illinois

Yes

Yes

Yes

Yes

No

Yes

Indiana

Yes

Yes

Yes

Yes

No

Yes

Iowa

Yes

Yes

Yes

Yes

Yes

Yes

Kansas

Yes

Yes

Yes

No

Yes

No

Columbia

Type of Legal Gambling in States (Commercial, Indian, Racetrack casinos)

STATE

Charitable

Parimutuel

Lotteries

Commercial

Tribal

Racetrack

Kentucky

Yes

Yes

Yes

No

No

Yes

Louisiana

Yes

Yes

Yes

Yes

Yes

Yes

Maine

Yes

Yes

Yes

No

No

Yes

Maryland

Yes

Yes

Yes

Yes

No

Yes

Massachusetts

Yes

Yes

Yes

Yes

Yes

Yes

Michigan

Yes

Yes

Yes

Yes

Yes

Yes

Minnesota

Yes

Yes

Yes

No

Yes

Yes

Mississippi

Yes

No

No

Yes

Yes

No

Missouri

Yes

No

Yes

Yes

Yes

No

Montana

Yes

Yes

Yes

No

Yes

No

Type of Legal Gambling in States (Commercial, Indian, Racetrack casinos)

STATE

Charitable

Parimutuel

Lotteries

Commercial

Tribal

Racetrack

Nebraska

Yes

Yes

Yes

No

Yes

No

Nevada

Yes

Yes

No

Yes

Yes

No

New Hampshire

Yes

Yes

Yes

No

No

No

New Jersey

Yes

Yes

Yes

Yes

No

Yes

New Mexico

Yes

Yes

Yes

No

Yes

Yes

New York

Yes

Yes

Yes

No

Yes

Yes

North Carolina

Yes

No

Yes

No

Yes

No

North Dakota

Yes

Yes

Yes

No

Yes

Yes

Yes

No

Yes

Yes

No

No

Yes

Yes

Yes

Yes

No

Yes

Northern
Marianas Islands

Ohio

Type of Legal Gambling in States (Commercial, Indian, Racetrack casinos)

STATE

Charitable

Parimutuel

Lotteries

Commercial

Tribal

Racetrack

Oklahoma

Yes

Yes

Yes

No

Yes

Yes

Oregon

Yes

Yes

Yes

No

Yes

No

Pennsylvania

Yes

Yes

Yes

Yes

No

Yes

Puerto Rico

Yes

Yes

Yes

Yes

No

Yes

Rhode Island

Yes

Yes

Yes

No

No

Yes

South Carolina

No

No

Yes

No

No

No

South Dakota

Yes

Yes

Yes

Yes

Yes

No

Tennessee

No

No

Yes

No

No

No

Texas

Yes

Yes

Yes

No

Yes

No

Utah

No

No

No

No

No

No

Type of Legal Gambling in States (Commercial, Indian, Racetrack casinos)

STATE

Charitable

Parimutuel

Lotteries

Commercial

Tribal

Racetrack

Vermont

Yes

No

Yes

No

No

No

Virginia

Yes

Yes

Yes

No

No

Yes

Virgin Islands

Yes

Yes

Yes

Yes

No

Yes

Washington

Yes

Yes

Yes

Yes

Yes

No

West Virginia

Yes

Yes

Yes

Yes

No

Yes

Wisconsin

Yes

Yes

Yes

No

Yes

No

Wyoming

Yes

Yes

Yes

No

Yes

Yes

Commercial casinos[edit]
Commercial casinos are founded and run by private companies on non-Indian land. There are 20
states (and two US Territories) that allow commercial casinos in some form: Colorado, Delaware,
Illinois, Indiana, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Nevada,
New Jersey, North Carolina, Ohio, Oklahoma, Pennsylvania, Puerto Rico, South Dakota, U.S. Virgin
Islands, Washington, and West Virginia.
The approximately 450 commercial casinos in total produced a gross gambling revenue of $34.11
billion in 2006.[12]

American Indian gaming[edit]


Main article: Native American gaming
The history of reservation-based commercial gambling began in 1979, when the Seminoles began
running bingo games.[9] Prior to this, the Indians had no previous experience with large-scale
commercial gambling. American Indians were familiar with the concept of small-scale gambling,
such as placing bets on sporting contests. For example, the Iroquois, Ojibways, and Menominees
would place bets on games of snow snake.[9] Within six years after commercial gambling among
Indians developed, seventy-five to eighty of the three hundred federally recognized tribes became
involved. By 2006, about three hundred American Indian groups hosted some sort of gaming.[9]
Some American Indian tribes operate casinos on tribal land to provide employment and revenue for
their government and their tribe members. Tribal gaming is regulated on the tribal, state, and federal
level. Indian tribes are required to use gambling revenue to provide for governmental operations,
economic development, and the welfare of their members. Federal regulation of Indian gaming was
established under the Indian Gaming Regulatory Act of 1988. Under the provisions of that law,
games are divided into three distinct categories:

Class I games are "traditional" games that involve little or no wagering.

Class II games include bingo, pull-tabs, and certain non-banked card games
(poker, cribbage, contract bridge, whist, etc.).

Class III games include all casino games (craps, roulette, blackjack, baccarat, slot machines,
and other games where the player bets against the house) and games that do not properly fall
into classes I or II.[13]

Of the 562 federally recognized tribes in 1988, 201 participated in class two or class III gaming by
2001.[9] Tribal gambling had revenues of $14.5 billion in 2002 from 354 casinos. Approximately forty
percent of the 562 federally recognized tribes operate gaming establishments.[13]
Like other Americans, many American Indians have dissension over the issue of casino gambling.
Some tribes are too isolated geographically to make a casino successful, while some do not want
non-Indians on their land. Though casino gambling is controversial, it has proven economically
successful for most tribes, and the impact of American Indian gambling has proven to be farreaching.
Gaming creates many jobs, not only for Indians, but also for non-Indians, and in this way can
positively affect relations with the non-Indian community. On some reservations, the number of nonIndian workers is larger than the number of Indian workers because of the scale of the casino
resorts.[14] Also, some tribes contribute a share of casino revenues to the state in which they are
located, or to charitable and non-profit causes. For example, the San Manuel Band of Mission
Indians of California gave 4 million dollars to theUCLA Law School to establish a center for American

Indian Studies. The same tribe also gave $1 million to the state for disaster relief when the area was
ravaged by wildfires in 2003.[14]
Although casinos have proven successful for both the tribes and the surrounding regions, state
residents may oppose construction of Indian casinos, especially if they have competing projects. For
example, in November 2003, the state of Maine voted against a $650 million casino project
proposed by the Penobscots and Passamaquoddies. The project's objective was to create jobs for
the tribes' young people. The same day the state voted against the Indian casino project, Maine
voters approved a plan to add slot machines to the state's harness racing tracks.[14]
The National Indian Gaming Commission oversees Indian gaming for the federal government. The
National Indian Gaming Commission (NIGC) was established under the Indian Gaming Regulatory
Act in 1988. Under the NIGC, Class I gaming is under the sole jurisdiction of the tribe. Class II
gaming is governed by the tribe, but it is also subject to NIGC regulation. Class III gaming is under
the jurisdiction of the states. For instance, in order for a tribe to build and operate a casino, the tribe
must work and negotiate with the state in which it is located. These Tribal-State compacts determine
how much revenue the states will obtain from the Indian casinos.[14]
The Indian Gaming Regulatory Act requires that gaming revenues be used only for governmental or
charitable purposes.[15] The tribal governments determine specifically how gaming revenues are
spent. Revenues have been used to build houses, schools, and roads; to fund health care and
education; and to support community and economic development initiatives. Indian gaming is the
first and essentially the only economic development tool available on Indian reservations. The
National Gaming Impact Study Commission has stated that "no...economic development other than
gaming has been found".[15] Tribal governments, though, use gaming revenues to develop other
economic enterprises such as museums, malls, and cultural centers.
There are currently 30 states that have American Indian gaming: Alabama, Alaska, Arizona,
California, Colorado, Connecticut, Florida, Idaho, Iowa, Kansas, Louisiana, Massachusetts,
Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, New York,
North Carolina, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Washington, Wisconsin,
and Wyoming.

Lotteries[edit]
Main article: Lotteries in the United States
The classic lottery is a drawing in which each contestant buys a combination of numbers. Each
combination of numbers, or "play", is usually priced at $1. Plays are usually non-exclusive, meaning
that two or more ticket holders may buy the same combination. The lottery organization then draws
the winning combination of 5-8 numbers, usually from 1 to 50, using a randomized, automatic ball
tumbler machine.

To win, contestants match their combinations of numbers with the drawn combination. The
combination may be in any order, except in some "mega ball" lotteries, where the "mega" number for
the combination must match the ball designated as the "mega ball" in the winning combination. If
there are multiple winners, they split the winnings, also known as the "Jackpot". Winnings are
currently subject to federal income taxes as ordinary income. Winnings can be awarded as a
yearly annuity or as a lump sum, depending on lottery rules.
Most states have state-sponsored and multi-state lotteries. There are only six states that do not sell
lottery tickets: Alabama, Alaska, Hawaii, Mississippi, Nevada, and Utah. In some states, revenues
from lotteries are designated for a specific budgetary purpose, such as education. Other states put
lottery revenue into the general fund.
Multi-jurisdictional lotteries generally have larger jackpots due to the greater number of tickets sold.
The Mega Millions and Powerball games are the biggest of such lotteries in terms of numbers of
participating states.

Scratchcard games[edit]
Some state lotteries run games other than the lotteries. Usually, these are in the scratchcard format,
although some states use pull-tab games. In either format, cards are sold that have opaque areas. In
some games, all of the opaque material is removed to see if the contestant has won, and how much.
In other scratchcard games, a contestant must pick which parts of a card to scratch, to match
amounts or play another form of game. These games are prone to forgeries both from card dealers
(Which can sell fake cards) and players (Which can fake winning cards at home).[16]

Recriminalization[edit]
On July 1, 2000 a new law took effect in the State of South Carolina where the ownership,
possession and operation of a video poker machine for either commercial or personal use became
illegal. Violators are subject to prosecution and hefty fines. Currently the only type of legalized
gambling in the state is the South Carolina Education Lottery.[17]

References[edit]
1.
2.
3.
4.
5.

^ Jump up to:a b c "Industry Information: Fact Sheets: Statistics: Gaming revenues for 2007".
American Gaming Association. Retrieved 2007-05-19.
Jump up^ "Industry Information: Fact Sheets: General Info: Casino Employment". American
Gaming Association. Retrieved 2007-05-19.
Jump up^ "Industry Information: Fact Sheet: Statistics: Tax Payments - Commercial
Casinos". American Gaming Association. Retrieved 2007-05-18.
^ Jump up to:a b c d e f "History of Gambling in the United States". Gambling in California.
California State Library. March 1997.
Jump up^ Dasgupta, Anisha S. (August 1, 2005). "PUBLIC FINANCE AND THE FORTUNES
OF THE EARLY AMERICAN LOTTERY". Student Scholarship Papers (Yale Law School) 9.

6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.

Jump up^ Daniels, Bruce Colin (1995). Puritans at play: leisure and recreation in colonial
New England. Palgrave Macmillan. p. 182. ISBN 978-0-312-12500-4.
Jump up^ Dombrink, John; Thompson, William Norman (1990). The last resort: success and
failure in campaigns for casinos. University of Nevada Press. p. 176.
Jump up^ "Gambling History, from the beginning.". Gambling Info. Retrieved 23 June 2011.
^ Jump up to:a b c d e Johansen, Bruce. The Praeger Handbook on Contemporary Issues in
Native America, Westport, CT: Praeger Publishers, 2007.
Jump up^ Zimmerman, Joseph Francis (2004). Interstate economic relations. p. 164.
Jump up^ ThePOGG (1 November 2012). "ThePOGG Interviews Michael Shackleford
The Wizard of Odds".
Jump up^ "Casino State Statistics" (pdf). American Gaming Association. 2004.
Retrieved2007-05-18.
^ Jump up to:a b Indian Gaming Facts
^ Jump up to:a b c d Welch, Deborah. Contemporary Native American Issues: Political Issues.
Chelsea House Publishers, 2006.
^ Jump up to:a b Darian-Smith, Eve. New Capitalists: Law, Politics, and Identity Surrounding
Casino Gaming on Native American Land, Wadsworth/Thomson Learning, 2004
Jump up^ http://www.dailytimes.com.pk/default.asp?page=2006\02\04\story_4-22006_pg7_27.

The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) is United States legislation
regulating online gambling. It was added as Title VIII to the SAFE Port Act (found at 31
U.S.C. 53615367) which otherwise regulated port security. It "prohibits gambling businesses
from knowingly accepting payments in connection with the participation of another person in a bet or
wager that involves the use of the Internet and that is unlawful under any federal or state law."[1] The
act specifically excludes fantasy sports, that meet certain requirements, and legal intrastate and
inter-tribal gaming. It does not expressly mention state lotteries; nor does it clarify whether inter-state
wagering onhorse racing is legal.
Contents
[hide]

o
o
o
o
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1 Background on online gambling


2 Legislative history
3 Act details
3.1 Section 5361, Findings and Purpose
3.2 Section 5362, Definitions
3.3 Section 5363, Money Transfers
3.4 Section 5364, Regulations
3.5 Section 5365, Civil Suits
3.6 Other pertinent provisions
4 Criticisms
5 Responses from online gambling sites
6 WTO dispute
7 Challenge to UIGEA
8 Enforcement
9 See also
10 References
11 External links

Background on online gambling[edit]


Main article: Online gambling United States
The United States Court of Appeals for the Fifth Circuit ruled in November 2002[2] that the Federal
Wire Act prohibits electronic transmission of information for sports betting across
telecommunications lines but affirmed a lower court ruling that the Wire Act "'in plain language' does
not prohibit Internet gambling on a game of chance." While some states have specific laws
prohibiting online gambling, many do not. Additionally, in order for an online gaming company to
start, a license from the state is required. The only state to ever issue a license was Nevada, in
March 2013.[3]

Legislative history[edit]

The Act was passed on the last day before Congress adjourned for the 2006 elections. According to
Sen. Frank Lautenberg (D-N.J.), no one on the Senate-House Conference Committee had seen the
final language of the bill before it was passed.[4][5] The Economist has written that these provisions
were "hastily tacked onto the end of unrelated legislation".[6]
Though a bill with the gambling wording was previously debated and passed by the House of
Representatives,[7][8][9] the SAFE Port Act (H.R. 4954) as passed by the House on May 4 and
the United States Senate on September 14,[10] bore no traces of the Unlawful Internet Gambling and
Enforcement Act that was included in the SAFE Port Act signed into law byGeorge W. Bush on
October 13, 2006.[11] The UIGEA was added in Conference Report 109-711 (submitted at 9:29pm on
September 29, 2006), which was passed by the House of Representatives by a vote of 409-2 and by
the Senate by unanimous consent on September 30, 2006. Due toH.RES.1064, the reading of this
conference report was waived.
Among the Congressional supporters of the Act were Rep. Jim Leach [R-IA], a former chairman of
the House Banking Committee and Rep. Robert Goodlatte [R-VA], who co-authored H.R. 4411 (the
Internet Gambling Prohibition and Enforcement Act). Bill Frist [R-TN], former majority leader of the
Senate, and Jon Kyl [R-AZ] are both credited with expediting the UIGEA's passage through the
Senate. Though the SAFE Port Act's provisions related to Internet gambling were drawn exclusively
from H.R. 4411, significant portions were removed, including text relating to the Federal Wire Act.[12]
The Internet Gambling Prohibition Act, a prior version of the gambling part of the bill passed the
House in 1999 but failed in the Senate in part due to the influence of lobbyist Jack Abramoff.[13]
UIGEA 5364 required that regulations be issued by the Federal Reserve and the Department of
the Treasury within 270 days of the passage of the Act. In October, 2007, these agencies issued a
"Notice of Proposed Rulemaking",[14] which effectively tabled draft UIGEA regulations for public
comment. In response to the NPRM, four hundred and ten (410) responses were received from
depository institutions, depository institution associations, public policy advocacy groups,
consumers, gambling-related entities, payment system operators, federal agencies, and members
of Congress.[citation needed]
The Bush administration had previously adopted the position that it would not finalize any rule
subsequent to November 1, 2008.[citation needed] This last-minute rulemaking that binds the hands of an
incoming administration is commonly termed the midnight drop.
The final regulations (termed the "Final Rule") were finalized and released November 12, 2008, and
came into effect on January 19, 2009, the day before the Obama administration took
office.[15] Compliance was not required until December 1, 2009, in order to give the "non-exempt
participants" an opportunity to implement the necessary safeguards and procedures.

Act details[edit]

According to the overview posted on the FDIC website, the act prohibits gambling businesses from
"restricted transactions". Restricted transactions involve gambling businesses when they knowingly
accept payments from another person in a bet or wager on the internet. It also requires that the
Treasury and Federal Reserve Board with consultation of the Attorney General to promulgate
regulations requiring certain participants in payment systems that could be used for unlawful Internet
gambling to have policies and procedures reasonably designed to identify and block or otherwise
prevent or prohibit the processing of restricted transactions. These regulations are independent of
any other regulatory framework, such as the Bank Secrecy Act or consumer protection regulations.[16]

Section 5361, Findings and Purpose[edit]


The Act begins with Congresss findings and purpose. Findings include a recommendation from
the National Gambling Impact Study Commission. One of the controversial findings asserted in the
opening of the bill is the assertion that Internet gambling is a growing problem for banks and credit
card companies.[4] The opening section of the act also states that new mechanisms for enforcing
gambling laws on the Internet are necessary, especially for cross-border betting. The Act contains a
clause that ensures no change be made any other law or Indian compact.[16] This clause makes
known that the Act cannot be used as a defense to another crime, or to expand existing gambling.

Section 5362, Definitions[edit]


This section outlines definitions of gambling terms to be used throughout the act. The Act defines a
bet or wager to include risking something of value on the outcome of a contest, sports event, "or a
game subject to chance." The "game subject to chance" restriction is designed to include Internet
poker in the act.[17] The Act then confuses the issue of skill by stating that betting includes purchasing
an "opportunity" to win a lottery, which must be predominantly subject to chance. The Act expressly
prohibits lotteries based on sports events. Some activities such as securities and commodities,
including futures, that are traded on U.S. exchanges are, by statute, declared not to be
gambling.[17]"Designated payment system" covers any system used by anyone involved in money
transfers, that the federal government determines could be used by illegal gambling. "Financial
transaction provider" is a very broad definition covering everyone who participates in transferring
money for illegal Internet gambling. This expressly includes an "operator of a terminal at which an
electronic fund transfer may be initiated" and international payment networks. "Interactive computer
service" includes Internet service providers. "Restricted transaction" means any transmittal of money
involved with unlawful Internet gambling. "Unlawful Internet gambling" is defined as betting,
receiving, or transmitting a bet that is illegal under federal, state, or tribal law. The Act says to ignore
the intermediary computers and look to the place where the bet is made or received.[17]To force
casinos to report large cash transactions, federal law was changed to define "financial institution" as
including large gambling businesses. All other definitions are standard.

Section 5363, Money Transfers[edit]

This section covers money transfers. The bill states "[n]o person engaged in the business of betting
or wagering may knowingly accept" any money transfers in any way from a person participating in
unlawful Internet gambling. This includes credit cards, electronic fund transfers, and even paper
checks. But the restriction on transfers is limited to Internet gambling businesses, not mere players.
It also would not cover payment processors or ISPs, even under a theory of aiding and abetting. The
Act clearly does not make it a crime to knowingly transmit funds for illegal gambling. Neither the
player nor the intermediary can be charged with this crime. The language of the Act even eliminates
the possibility of charging financial institutions and computer hosts under a theory of aiding and
abetting, since it explicitly states, in the definitions section, that being in the business of gambling
does not include a "financial transaction provider," or an ISP.[17]

Section 5364, Regulations[edit]


Under section 5364, Federal regulators have 270 days from the date this bill is signed into law to
come up with regulations to identify and block money transactions to gambling sites. The regulations
will require everyone connected with a "designated payment system" to i.d. and block all restricted
transactions. The Act allows the federal regulators to exempt transactions where it would be
impractical to require identifying and blocking. This obviously applies to paper checks. Banks have
no way now of reading who the payee is on paper checks and cannot be expected to go into that
business.[17]

Section 5365, Civil Suits[edit]


Since there is no way to regulate overseas payment processors, section 5365 of the Act allows the
United States and state attorneys general to bring civil actions in federal court. The courts have the
power to issue temporary restraining orders and preliminary and permanent injunctions to prevent
restricted transactions. The only problem with this enormous power is that it is, again, practically
useless against payment processors who are entirely overseas. The Act provides for limited civil
remedies against "interactive computer services." An Internet service provider can be ordered to
remove sites and block hyperlinks to sites that are transmitting money to unlawful gambling sites.
ISPs are under no obligation to monitor whether its patrons are sending funds to payment
processors or even directly to gambling sites. But once it receives notice from a U.S. Attorney or a
state attorney general, the ISP can be forced to appear at a hearing to be ordered to sever its
links.[17]

Other pertinent provisions[edit]


Criminal penalties under section 5366 include up to five years in prison, a fine, and being barred
from involvement in gambling. Under section 5367, the Act makes ISPs and financial institutions
liable if they actually operate illegal gambling sites themselves. Lastly, the Act requests, but does not
require, the executive branch to try and get other countries to help enforce this new law and

"encourage cooperation by foreign governments" in identifying whether Internet gambling is being


used for crime.

Criticisms[edit]
Opponents of the UIGEA such as Michael D Schmitt has criticized the act and believes that it will not
work comparing it to prohibition of alcohol. He also criticizes the government for "forcing" this
controversial bill to be passed with the non-controversial attached SAFE Port Act. Some senators
and congressmen have even stated that they were not even allowed to see the final version of the
gambling portion before putting in their votes.[18]
Gaming consultant Michael Shackleford has also been critical of the UIGEA stating that the act has
"undoubtedly depressed play" but has failed in its primary objective as "there are ways of funding
accounts without using US banks, and millions of players know that".[19]
Many have argued that the act has failed to address the dangers of online gambling. They state that
the act and the Department of Justice successfully forces easily regulated large publicly traded
companies out the market and introduces small unscrupulous private companies into the market.
Doing so could result in amplifying risks of consumer abuse, underage gambling, problem gambling
and money laundering. Critics believe that regulation of online gambling is a better alternative.[20]

Responses from online gambling sites[edit]


All online gambling sites listed on the London Stock Exchange or similar markets have stopped
taking United States players due to the passage of the Act, while most non-public companies have
announced an intention to continue taking US customers.[21][22]
PartyGaming, which runs PartyPoker.com, had its publicly traded stock drop almost 60% in 24 hours
as a result of the bill's passage. The company was moved from the FTSE 100 Index to the FTSE
250 Index on October 11, 2006.[23]

WTO dispute[edit]
Antigua and the United States have been involved in a long-running World Trade
Organization dispute over U.S. restrictions on online gambling. The WTO ruled on January 25, 2007,
that the U.S. is in violation of its treaty obligations by not granting full market access to online
gambling companies based in the island nation.[24] On March 30, 2007, the WTO confirmed the U.S.
loss in the case.[25]
On June 19, Antigua filed a claim for USD $3.4 billion in trade sanctions against the United States,
along with a request for authorization to ignore U.S. patent and copyright laws. This claim was filed a
day after similar demands for compensation were made by the European Union.[26]

The United States settled the dispute by granting concessions in other sectors. The administration
of President George W. Bush refused to disclose the details of those concessions, however. In April
2008 Congressmen Barney Frank and Ron Paul called for the agreements to be made public. They
stated that the concessions "could cost the United States many billions of dollars in compensation"
and that the administration's invocation of "national security" as a reason to block disclosure under
the Freedom of Information Act (FOIA) was "a misuse of the FOIA process."[27] When the
administration continued to keep the information secret, Public Citizen brought suit on behalf of Ed
Brayton, a journalist whose FOIA request had been denied.[28]

Challenge to UIGEA[edit]
In May 2009, Congressman Barney Frank introduced a bill to overturn the gambling aspects of the
Act, "The Internet Gambling Regulation, Consumer Protection, and Enforcement Act", which seeks
to repeal the major online gaming obstacles of the UIGEA and go further in protecting Americans
from fraud, while safeguarding against underage and problem gamblers.[29]
Frank also introduced a bill to delay the implementations of the UIGEA for one year, until December
1, 2010.[30] The bill was put into effect, however, the regulations were only extended until June 1,
2010.

Enforcement[edit]
Main article: United States v. Scheinberg
In April 2011, the founders of PokerStars, Full Tilt Poker, and Absolute Poker, the three largest
Internet poker companies that then accepted U.S. players, were among those indicted for in charges
that including violations of the UIGEA. According to the United States Attorney in New York, the
companies allegedly tried to circumvent UIGEA rules with the help of others who acted as "payment
processors" by helped disguise gambling revenue as payments for non-existent goods such as
jewelry or golf balls.[31]

See also[edit]

Baxter v. United States

Commonwealth of Pennsylvania vs Walter Walkins

Southern District of New York Action Against Online Poker Players

Poker Players Alliance

References[edit]
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Jump up^ "Unlawful Internet Gambling Enforcement Act". Examination Handbook Section
770. U.S. Treasury Department. Retrieved 2011-01-07.

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Jump up^ "No. 01-30389. - IN RE: MASTERCARD INTERNATIONAL INC. Internet Gambling
Litigation. - US 5th Circuit". Caselaw.lp.findlaw.com. 2002-11-20. Retrieved2011-05-06.
Jump up^ "First online casino to get a US gambling license turns out to be notorious UK
spammer". theverge.com.
^ Jump up to:a b Rose, I. Nelson (2006). "Viewpoint: The Unlawful Internet Gambling
Enforcement Act of 2006 Analyzed". Gaming Law Review 10 (6): 537
541.doi:10.1089/glr.2006.10.537.
Jump up^ "Library of Congress Congressional record for the SAFE Port Act". THOMAS.
March 14, 2006. Retrieved 2011-04-16.
Jump up^ Poker face off, The Economist, April 23, 2011, p. 68
Jump up^ "Transcript of the April 5th hearing". Commdocs.house.gov. Retrieved 2011-05-06.
Jump up^ "Transcript of July 11th floor speeches on H.R. 4411 - the Internet Gambling
Prohibition and Enforcement Act". GovTrack.us (Civic Impulse, LLC). 2005-11-18. Retrieved2011-0506.
Jump up^ "H.R. 4411 vote record". GovTrack.us (Civic Impulse, LLC). Retrieved 2011-05-06.
Jump up^ "H.R. 4954 vote record". GovTrack.us (Civic Impulse, LLC). Retrieved 2011-05-06.
Jump up^ "I. Nelson Rose: The Unlawful Internet Gambling Enforcement Act of 2006
Analyzed". Gamblingandthelaw.com. Retrieved 2011-05-06.
Jump up^ "CRS Report for Congress" (PDF). 10-2-06. Retrieved 2011-05-06. Check date
values in: |date= (help)
Jump up^ Schmidt, Susan; Grimaldi, James V. (October 16, 2005). "How a Lobbyist Stacked
the Deck". Washington Post. Retrieved 2011-05-06.
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Jump up^ "[UIGEA] Treasury, Fed Issue Final Rule on Unlawful Internet Gambling".
Scribd.com. 11/12/08. Retrieved 2011-05-06. Check date values in: |date= (help)
^ Jump up to:a b "Unlawful Internet Gambling Enforcement Overview" (PDF). FDIC.
^ Jump up to:a b c d e f Humphrey, Chuck. "Internet Gambling Funding Ban". gambling-lawus.com. Retrieved 2011-05-06.
Jump up^ "17 Southern California Interdisciplinary Law Journal 2007-2008 Prohibition
Reincarnated - The Uncertain Future of Online Gambling following the Unlawful Internet Gambling
Enforcement Act of 2006 Symposium Issue: Association of American Law Schools Section on Law
&(and) Humanities - Law & Order: SUV - Sexuality, Videos and You - Note". Heinonline.org.
Retrieved 2011-05-06.
Jump up^ ThePOGG (1 November 2012). ["http://thepogg.com/thepogg-interviews-michaelshackleford-the-wizard-of-odds/ "ThePOGG Interviews - Michael Shackleford - The Wizard of
Odds"].[dead link]
Jump up^ "The U.S. On Tilt: Why The Unlawful Internet Gambling Enforcement Act Is A Bad
Bet". Law.duke.edu. Retrieved 2011-05-06.
Jump up^ Players walk away as US law wipes out 90% of PartyGaming's poker
revenue from The Guardian
Jump up^ Fiona Walsh, business editor (2006-10-13). "The Guardian: Last chance saloon for
online gaming firms". London: Business.guardian.co.uk. Retrieved 2011-05-06.
Jump up^ Fiona Walsh (2006-10-09). "The Guardian: PartyGaming drops out of FTSE 100.
Retrieved 9 October 2006". London: Business.guardian.co.uk. Retrieved 2011-05-06.
Jump up^ WTO rules against US in online gambling case
Jump up^ "Reuters: WTO confirms U.S. loss in Internet gambling case". Uk.reuters.com.
2007-03-30. Retrieved 2011-05-06.
Jump up^ "Antigua demands trade sanctions". BBC. 2007-06-20. Retrieved 2011-05-06.
Jump up^ Polson, Sarah (April 2, 2008). "Congressmen request trade settlement details".
PokerListings.com. Retrieved 2008-05-27.
Jump up^ Polson, Sarah (May 21, 2008). "Group sues government for settlement info".
PokerListings.com. Retrieved 2008-05-27.
Jump up^ Murphy, Stephen A. (2009-09-17). "Frank's Bill to Regulate Online Poker Unlikely
To Be Heard This Month". CardPlayer.com. Retrieved 2011-05-06.
Jump up^ Murphy, Stephen A. (2009-05-06). "Barney Frank Introduces Two Poker-Related
Bills". CardPlayer.com. Retrieved 2011-05-06.

31.

Jump up^ "Internet Poker Sites Seized For Fraud". InformationWeek. April 15, 2011.
Retrieved2011-04-16. The 2006 Unlawful Internet Gambling Enforcement Act made it a crime for
gambling businesses to knowingly accept most forms of payment for illegal Internet gambling. The
defendants allegedly tried to circumvent these rules with the help of individual payment processors,
also named as defendants, who helped disguise their player payments with phony merchants selling
non-existent goods such as jewelry or golf balls.

US Gambling Laws and Online Regulation


The legality of gambling in the United States isnt really a straightforward subject. Mostly because, although
gambling is legal under federal law, each state is free to regulate or restrict within their own borders. There are
some states where gambling in all its forms is illegal, and also states where its all legal. In the majority of
states, some forms are legal while other forms are not.
Things get even more complicated when it comes to gambling over the internet. Certain states have passed
state level legislation to legalize and regulate online gambling, and several more are taking steps to do the
same, but for many years the legality of online betting and gaming has been a gray area. Theres still confusion
in most states about exactly whats legal and whats not.
This confusion is mostly due to legislation that was introduced in 2006 (the Unlawful Internet Gambling
Enforcement Act). Although this didnt specifically make the act of gambling online illegal, it did prohibit the
processing of internet transactions relating to gambling. As a result, many sites decided to cease accepting
customers from the United States.
On this page we explain about the Unlawful Internet Gambling Enforcement Act in more detail and identify
the effect it has had. We also look at what online gambling laws actually mean for those wishing to gamble
online. Additionally we provide information on which states have legalized gambling and updates on those that
are exploring the possibility.

About the Unlawful Internet Gambling Enforcement Act


The Unlawful Internet Gambling Enforcement Act (UIGEA) was passed in 2006 as part of the SAFE Port Act
which regulated port security. The key aspect of the UIGEA was that it prohibits gambling businesses from
knowingly accepting payments in connection with the participation of another person in a bet or wager that
involves the use of the internet and thats unlawful under any federal state or law.
What the passing of this act meant, in practical terms, is that its illegal for gambling sites to accept deposits
from customers in the US. It also became illegal for banks and other financial institutions to process such
transactions. The act didnt actually make it illegal for US residents to gamble online, but many people did
become nervous about engaging in the activity.
The single biggest effect of the UIGEA was that many of the well-known gambling operators stopped
servicing the US market.
Prior to the UIGEA there had been plenty of sites that provided real money betting and gaming services to US
residents, without breaching any laws. However, following its introduction all relevant companies that were
publicly listed on stock exchanges, such as PartyGaming for example, ceased American operations almost
immediately. Other non-public companies also followed suit.

Many other operators continued to accept customers from the US, because there was a strong argument that
companies running sites from physical locations where online gambling was legal werent subject to US laws.

Criticisms of the UGIEA


The UIGEA attracted a lot of criticism. Many of those against online gambling felt that the act didnt go far
enough and didnt truly address the potential dangers. It was still possible to bet and play online after all; it
was now harder to make deposits and withdrawals, and customers had more limited options in terms of the
number of sites they could use.
Those in favor of online gambling were generally against the act being passed at all. It was also highlighted
that the UIGEA had simply forced out many of the more reputable operators, which could have easily been
regulated, and made it more likely that US residents would potentially gamble with less trustworthy operators.
Despite the widespread criticism and moves to overturn it, the act still remains in place today. However, some
states have introduced their own legislation relating to online gambling and several more are considering doing
so. We cover this in more detail later.

How US Gambling Laws Affect You


The UIGEA isnt really about targeting those US residents that wish to gamble online; its about targeting
those that provide their services to them. Therefore, in our view, if you live in the United States and wish to
place wagers or play casino or poker games for real money online, then you are free to do so. You just need to
find a site where youll be welcome.
If you live in one of the states where online gambling is legalized and regulated, then you have a choice of
licensed sites to select from. If you live in a state where its not regulated youll need to use a site thats
licensed in an online gambling jurisdiction outside of the United States. You have plenty to choose from, but
you do need to make sure you use a site thats reputable and trustworthy.
Check out our list of recommended US gambling sites.

Gambling Regulation and Legislation at State Level


Since the introduction of the UIGEA a number of states have passed their own laws for online gambling and
introduced regulation. This has resulted in the creation of several legal and regulated gambling sites that are
specifically for residents of those states. Many other states are also considering doing the same.
At GamblingSites.com we keep you completely up to date with state level legislative and regulatory changes
that affect online gambling in the United States. We provide information on those states where its already

legalized and regulated and also updates on those states where the introduction of legislation is being
considered or debated.
Currently, legalized and regulated online gambling is happening in the following states:

Nevada

New Jersey

Delaware

We have updates on the progress of regulated online gambling in the following states:

California

Pennsylvania

**Please note that while we make every effort to fully understand current US gambling legislation and stay up
to date with any changes to relevant laws, we are not lawyers. Nothing we have stated should be considered as
legal advice and only reflects our interpretations and opinions.**