Using the Internet to engage in illegal online gambling is not only a violation of federal law, it is also a violation of state law. Aside from the obvious illegal online gambling, this form of gambling involves the use of financial instruments in a transaction in which the recipient is not the party making the transaction.
This act, aka the Wire Act, prohibits illegal gambling on sporting events and contests. It also provides that certain activities and transactions are deceptively and misleadingly similar to those permitted under state law. In the case of online gambling, this act applies to the use of the Internet to transmit information from a New York State jurisdiction to an Internet domain in another state. In addition to prohibiting the use of financial instruments in these transactions, it prohibits the use of Internet domains for which the recipient is not legally entitled to use.
Considering the myriad federal and state criminal statutes that are implicated, it is no surprise that state officials have expressed apprehension as to whether the Internet will be used to illegally transport gambling to their jurisdictions. This may frustrate state enforcement policies. However, the commercial nature of this form of gambling may be a mitigating factor.
The most common objections to this form of gambling are that it is illegal to place bets on sporting events and contests, that it is impossible to monitor a gambling operation, that Internet gambling is unregulated and that it violates the privacy rights of participants. The legality of these objections are best addressed through a combination of state and federal law. In addition to the aforementioned statutes, the Federal Communications Commission (FCC) has jurisdiction over common carriers. The FCC has the authority to stop the leasing and/or furnishing of facilities and may impose penalties on operators who violate the law.