Is The US About To Ban Online gambling?

Is The US About To Ban Online gambling? ( Click to Enlarge )

The war over the legality of online gambling in the United States has long been the preserve of individual states. States such as West Virginia have long pushed for a relaxation in the rules around online gambling in the belief that this would bring significant extra revenues into the states’ depleted coffers.

Wire Act

However, it now looks like the Federal Government is about to pull the rug out from under the states’ feet. A recent memo sent by the Department of Justice suggests that the Federal Government is planning to re-interpret the Wire Act to make online gambling completely illegal across all 50 states.

This would blow a massive hole in several states’ tax plans and make it much riskier for residents of the country to gamble.

Previously, the main protection against online gambling has come from credit card companies, which have refused to process online gambling related transactions for customers based in the US.

If the US government concludes that the existing Wire Act does make online gambling illegal, it is likely that more banks and payment processing firms will take pre-emptive action and make it impossible for customers based in the United States to gamble online using their cards.

Profits Versus Protection

The situation in the United States points to a divide that is showing across the world. Many countries are keen to get their hands on the large amounts of government revenue that gambling can generate.

However, they want to do this without exposing the majority of their population to the risks of online gambling. Some countries such as South Korea have attempted to get around these problems by allowing foreigners to gamble and keeping a significant slice of the revenue this generates.

The irony is that a large number of online gambling sites are developed in the United States but are not allowed to base themselves there for legal reasons.

The DoJ is yet to come to a firm conclusion about what it will do next, but the suggestion that it is moving in a stronger anti-gambling direction could mean a big shakeup is on the way for the sector.