USA Law and Practice Contributed by: Chao Yu (Charles Yu) and Greg Pilarowski, Pillar Legal
3. Legislative Framework 3.1 Key Legislation
of play”, which constitutes a “thing of value” under Washington laws. Skill-based games are structured so that the outcome is determined primarily by the player’s skill, knowl- edge, or strategy, rather than by chance. While skill- based games are generally permissible, they are still subject to state-specific tests to assess whether the chance element exists (see further discussion in 3.2 Definition of Gambling ). Although online sweepstakes casinos remain in a legal grey area in most states, they are explicitly illegal in many others (see detailed discussion in 1.1 Current In the US, states act as the primary regulators of land- based gambling laws. The federal government mainly plays a supporting and complementary role, focusing primarily on prosecuting interstate gambling activities that violate state laws. Land-based commercial casinos are currently permit- ted in 27 states: Arkansas, Colorado, Delaware, Flor- ida, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Mis- souri, Nebraska, Nevada, New Jersey, New Mexico, New York, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Dakota, Virginia, and West Virginia. In addition, the Indian Gaming Regulatory Act of 1988 (IGRA) grants federally recognised Native American tribes the exclusive right to regulate gaming activity on Indian (Native American) lands if the gaming activ- ity is not specifically prohibited by federal law and is conducted within a state that does not, as a matter of criminal law and public policy, prohibit such gam- ing activity. Today, tribal casinos operate in 29 states across the United States. Lotteries are the most widespread form of legalised gambling in the US, offered in every state except Ala- bama, Alaska, Hawaii, Nevada, and Utah. State lot- teries are typically operated by state agencies and are not offered by commercial operators. Outlook and Recent Changes ). 2.2 Land-Based Gambling
State law serves as the primary regulatory authority with respect to gambling, while federal law mainly plays a supporting role. The most relevant federal laws that address gambling include the Interstate Wire Act of 1961 (18 USC, Section 1084) (the “Wire Act”), the Unlawful Internet Gambling Enforcement Act of 2006 (31 USC, Sections 5361–5367) (the UIGEA), the Inter- state and Foreign Travel or Transportation in Aid of Racketeering Act (18 USC, Section 1952) (the “Travel Act”), and the Illegal Gambling Business Act (18 USC, Section 1955). The Wire Act prohibits the use of wire communication channels across state lines or international borders for betting or wagering, with exceptions for transmitting news about sports events and for placing bets where legal in both locations. Initially, the US Department of Justice (the DOJ) interpreted the Wire Act to cover all forms of online gambling. In 2011, the DOJ clarified that it applied only to sports betting. In 2018, however, the DOJ reversed its 2011 opinion, stating that the Wire Act applies to all forms of online gambling, not just sports betting. This reversal created uncertainty and legal challenges, particularly for states that had already legalised various forms of online gambling based on the 2011 interpretation. The UIGEA prohibits banks and other financial insti- tutions from processing financial transactions with internet gambling sites. This law makes it illegal for gambling sites to accept payments or transfer mon- etary payments to a player based in the US. The UIG- EA made it a federal offence for any person engaged in the business of betting or wagering to knowingly receive funds from an individual involved in unlawful internet gambling. The law defines “unlawful internet gambling” as “to place, receive, or otherwise know- ingly transmit a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is unlawful under any applicable Federal or State law in the State or Tribal lands in which the bet or wager is initiated, received, or oth- erwise made.” Additionally, it defined “bet or wager” as “the staking or risking by any person of something of value upon the outcome of a contest of others, a
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