The American Banker has uncovered a recent scandal regarding illegal online gambling. The newspaper agreed to pay a $4.2 million fine and launch a $3 million public service campaign to combat the problem. The case also raised important issues relating to the Commerce Clause, Free speech, and job creation. Here are some points to consider when evaluating legality of online gambling.
Commerce Clause
The Commerce Clause protects the federal government’s power to regulate interstate commerce. Although there is no federal law specifically addressing Internet gambling, states have the power to regulate Internet gambling activity. In fact, in one case, a state supreme court upheld its authority to ban online gambling and the federal government rejected a challenge under the Commerce Clause.
The Commerce Clause protects Internet gambling if the activities do not violate state laws. Although the Internet and offline gambling are similar, they are quite different from each other. This duality of gambling suggests a significant normative distinction between the two types.
Due Process Clause
In the United States, there are federal laws that regulate online gambling. These laws are often challenged on constitutional grounds based on the First Amendment, the Commerce Clause, and the Due Process Clause. The First Amendment guarantees the right to free speech and the Commerce Clause gives Congress the power to regulate commerce. But there are also concerns that gambling is an activity that falls under the scope of the Due Process Clause because it involves financial transactions within the United States.
Moreover, the United States Supreme Court has upheld the Due Process Clause as an essential principle for the development of Internet gambling laws. Under this provision, a person who engages in a gambling activity can be investigated and sanctioned based on their behavior and intent.
Free speech
While most nations consider online gambling to be illegal, the United States makes a distinction between speech and conduct. Commercial speech advertising is protected by the First Amendment, and any government regulation must pass constitutional muster. The federal courts are particularly sensitive to First Amendment claims. Nonetheless, it is still possible for the government to restrict gambling advertisements on the Internet.
The internet is considered a global medium and therefore poses a challenge to traditional conceptions of government regulation. Establishing a single, centralized governmental body to regulate gambling online would undermine the sovereignty of each nation. Additionally, if a nation is forced to accept gambling sites hosted in another country, its traditional areas of physical control would be undermined.
Job creation
There are a variety of reasons that online gambling creates jobs. The booming industry has helped the local economy and created jobs for people who are interested in the activity. New legislation governing gambling sites may eliminate the opportunity to create new jobs in an industry that is already expanding. It may also lead to an increase in black market activity.
In the United Kingdom, online gambling is creating jobs despite the threat of overzealous government crackdowns. It is estimated that over the next five years, the online gaming industry will create 15,000 new jobs. The industry already supports over 30,000 jobs and has created more than 10,000 tech jobs. Experts predict that this trend will continue to grow and expand beyond London.