During the 1990s, the first online gambling websites were launched. These sites offered a variety of games including virtual poker and casinos. These sites made money by charging a “rake” or tournament fee.
In 1996, about fifteen gambling websites were operating. However, by 2000, there were over 200 gambling websites. These sites offered online poker, casinos, horse racing betting markets, and lotteries. In 1998, a Frost & Sullivan report estimated that online gambling revenues reached $830 million.
In April 2007, Barney Frank introduced the Internet Gambling Regulation, Consumer Protection, and Enforcement Act, or HR 2046. This bill would require internet gambling facilities to be licensed by the director of the Financial Crimes Enforcement Network. The Act would also modify the UIGEA.
The United States Department of Justice recently announced that the Wire Act, which prohibits wire transfers, applies to all forms of Internet gambling. The Justice Department’s move has drawn criticism. Critics say it has no legal basis. But the government’s move has raised questions about the scope of the Commerce Clause and the government’s power to regulate financial transactions.
The Commerce Clause has been used to attack the government’s power to regulate gambling, but the attacks have had limited success. The government has argued that the Commerce Clause authorizes the government to regulate all forms of gambling, but has raised questions about the scope of the First Amendment’s guarantee of free speech.
Section 1956 of the federal criminal code provides that “any person who engages in or solicits conduct prohibited by any law or regulation of any state or political subdivision of a state with the intent to promote, induce, or facilitate the commission of an illegal activity, evade the payment of any tax, or otherwise violate any law is guilty of a criminal offense.” This statute has raised constitutional questions about the scope of the Commerce Clause, which is designed to limit the government’s power to regulate interstate commerce.