The regulation of gambling in the United States.

• Author: Anderson, Paul
• Position: ARTICLES - Report

1. Introduction

   Gambling, and in particular sports gambling, is big business. In 1996, due to the rise in legalized gambling at the state and local level, the growth of Internet gambling, and questions regarding the social and economic impacts of gambling, the United States Congress enacted the National Gambling Impact Study Commission Act (Pub. L. 104-169, 110 Stat. 1482, 1996). This legislation established the National Gambling Impact Study Commission. The Commission's role was to conduct a comprehensive legal and factual study of the social and economic impacts of gambling in the United States. In its 1999 report, the Commission estimated that Americans illegally wager between $80-380 billion annually on sporting events (Nat'l Gambling Impact Study Comm'n, 1999, pp. 2-14). Although this is the last national study of sports betting within the United States, this number has surely increased in the past decade.

   Betting or gambling in sports is typically perceived as a threat to the integrity of sport itself as money spent on gambling may influence the outcome of the contest outside of the normal field of play. In the United States, virtually all forms of sports gambling are illegal because they have long been associated with organized crime or other criminal influences. With the expansion of sports gambling to the internet, concern about the corrupting influence of gambling has also increased. This contribution will focus on the extensive legislative regulation of gambling within the United States. This contribution will focus on the legislative regulation of sports gambling in the United States. The main focus will be on a chronological review of the many federal laws that have been created in an attempt to regulate gambling, often with a specific focus on curbing sports gambling. In addition, the contribution will include a short analysis of the regulation of gambling at the state level.

2. Federal Regulations

   The starting point for an understanding of the regulation of sports betting in the United States is an analysis of the many federal laws that have been put in place to enforce this regulation. This section will provide a brief overview of the following laws:

   * The Wire Communications Act of 1961 ("The Wire Act")

   * The Transportation in Aid of Racketeering Enterprises Act of 1961 ("The Travel Act")

   * The Illegal Gambling Business Act of 1970

   * The Racketeer Influenced and Corrupt Organizations Act of 1970

   * The Professional and Amateur Sports Protection Act of 1992

   In addition to the basic federal regulatory structure put forth through these laws, there are other federal statutes that regulate gambling activities and impact sports. However, these laws will only be discussed within an ending subsection as they do not impact the sports landscape extensively. In addition, regulation of gambling on the internet, and the recent federal Unlawful Internet Gambling Enforcement Act of 2006, will not be discussed within this article as the next one is devoted to an analysis of the Regulation of Gambling on the Internet.

   At the outset, it is important to recognize that virtually all federal laws that regulate gambling within the United State's are based on Congress' authority under the Commerce Clause, Article 1, Section 8, Clause 3 of the United States Constitution, which provides that Congress has the authority "to regulate commerce with foreign nations, and among the several states, and with the Indian tribes." as a result, these laws regulate activities that take place as part of interstate commerce, or the regulation of commercial activity between different states. In this way, states are left to create their own independent regulations of many activities within the individual state itself, but the federal government has enacted many federal laws that regulate commerce among the states overall.

   2.1. The Wire Act

   The first federal regulation of gambling was passed in 1961. The Wire Act essentially prohibits people from using a "telephone facility" to receive bets or send gambling information while engaged in interstate commerce (18 U.S.C. [section]1084, 2008). Many legal commentators believe that the law was passed because there were concerns that people outside of Nevada (the state that has historically allowed legalized forms of gambling) were making illegal sports bets over the phone. as the United States Court of Appeals for the Fifth Circuit explained, the purpose of the Wire Act

   is to assist the various States, territories, and possessions of the United States and the District of Columbia in the enforcement of their laws pertaining to gambling, bookmaking, and like offenses and to aid in the suppression of organized gambling activities by prohibiting the use of or the leasing, furnishing, or maintaining of wire communication facilities which are or will be used for the transmission of certain gambling information in interstate and foreign commerce (Martin v. United States, 1968, 895 n. 6). The first part of the Act criminalizes certain types of gambling behavior as it provides that a Whoever being engaged in the business of betting or wagering

   knowingly uses a wire communication facility 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, or 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, shall be fined under this title or imprisoned not more than two years, or both (18. U.S.C. [section]1084(a), 2008). Under this section, it is illegal in the United States to transmit bets or wagers, use information assisting betting or wagering on a sports event or contest, or to engage in any communication that entitles the recipient to receive money or credit resulting from betting or wagering. In order to be found liable, the individual must engage in this conduct using a "wire communication facility," which is defined as

   any and all instrumentalities, personnel, and services (among other things, the receipt, forwarding, or delivery of communications) used or useful in the transmission of writings, signs, pictures, and sounds of all kinds by aid of wire, cable, or other like connection between the points of origin and reception of such transmission (18 U.S.C. [section]1081, 2008). This definition encompasses virtually all forms of communication, from telephones and cell phones, to email and text messages.

   The second section of the Act contains a safe harbor provision providing that

   b 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. [section]1084(b), 2008). This section includes an exemption from liability for news reporting of information from sporting events, and an exemption when the information used or the bet placed is transmitted from a state or country where gambling is legal to another jurisdiction where gambling is also legal.

   In the United States, most federal regulations are best understood by analyzing how the courts have interpreted them. The following case explains how the Wire Act specifically applies to sports betting.

   Barbara McLeod was involved in a football parlay card business that operated out of Indianapolis, Indiana (United States v. McLeod, 1974). Although the business operated out of Indianapolis, McLeod was working in Las Vegas and called in the lines of games over the phone. This information was crucial to running a successful football parlay card business because bookmakers need to print the most accurate point spreads on their cards. The information was available through other sources in Indiana, but it was not as up to date and accurate as the information in Las Vegas. Therefore, McLeod was stationed in Las Vegas and called in the lines to Indianapolis on a regular basis.

   While McLeod was making the phone calls from a public telephone in Las Vegas, a government official stood about four feet from her and heard her give out the football line information. Phone records were then checked and it was determined McLeod made phone calls to various phone numbers in Indiana. McLeod was arrested for violating the Wire Act. Before the court, she made several challenges to the charges against her.

   McLeod claimed that the evidence obtained against her when the agent listened to her phone calls was a violation of her constitutional rights to be free from unreasonable searches because the government agent did not obtain the proper authorization to intercept her communication. In response, the court found that...