Will the Federal Government Preempt State Online Gambling Laws?

online gambling

The online gambling scene has been growing rapidly. Before long, more and more Americans will be able to place bets on sports games and play casino games online. While a number of states are allowing online gambling, the federal government is attempting to regulate and tax the industry. It has been unclear if the federal government will preempt state action in this arena.

States have been expressing concerns that the internet may be used to bring illegal gambling into their jurisdictions. In addition, states have been concerned that the dormant Commerce Clause doctrine will impede their efforts to enact laws in this area. As a result, several House Representatives have introduced multiple bills to soften the federal Internet gambling law.

The Department of Justice has weighed in on the issue, as well. It has argued that all internet gambling is unlawful. It also cited Congressional findings on the impact of the Unlawful Internet Gambling Enforcement Act (UIGEA) on interstate commerce. Moreover, the DOJ has also alleged that the UIGEA violates the Federal Wire Act and will prosecute those operators who take financial instruments from illegal Internet bets.

However, the UIGEA does contain factors that can help weed out low level gambling cases. In addition, it provides a framework for enforcing the law. One way in which the UIGEA is intended to accomplish this is through a licensing program for internet gambling businesses. A license would prohibit them from taking bets from the United States, but it would not prevent them from accepting bets from elsewhere. This will provide some relief to the operators.

Several Native American tribes have agreements with companies such as FanDuel and DraftKings that allow them to offer online sportsbooks. The Mohegan Tribe, in particular, has an agreement with the company. Additionally, the Mashantucket Pequot Tribe has a licensing agreement with the company as well.

Some states have not been as active as others in enforcing their Internet gambling laws. This is primarily because of the dormant Commerce Clause doctrine. If the federal government takes action in this area, it can only reinforce state laws. Consequently, there has been little progress in the enforcement of the laws.

Those seeking to enforce the laws have also tried to argue the First Amendment. That argument has had little success. But the commercial nature of the gambling business has satisfied many of the doubts about the Commerce Clause. Moreover, the federal government has a history of regulating Indian reservations.

Congress has exercised its authority under the Commerce Clause to restrict the types of gambling and methods of betting that may be conducted. Despite this, some states have been able to establish legal sportsbooks. For example, Colorado launched online sportsbooks in 2020. Similarly, Indiana will allow betting on IN sports in the future. Illinois is preparing to begin offering online gambling in 2023. Meanwhile, Massachusetts has planned to start sports betting in early 2023. Although the legislation has been delayed, more and more Americans are able to participate in online gaming.