Online gambling for real money - Regulations and Legislation

1 June 2018

Today, a fairly large number of gambling resources are available online: online casinos, poker rooms, lotteries, bingo, etc. And if this kind of activity for its owner is very profitable, then for the controlling bodies of the countries of the world, virtual gambling is a matter of troublesome management and regulation.

Considering the moment that the gambling business is, by default, a potential threat to the interests of consumers (players), governments of many countries take measures to tighten control over the operation of online casinos.

The attitude towards gambling in different world jurisdictions is absolutely polar. In most US states, for example, gambling over the Internet is prohibited. And in the EU countries such activities are allowed, but subject to strict state control.

Most of the problems in regulating the activities of companies offering gambling services arise when the owner registers his business abroad. In such cases, there is a need to develop clear tools to protect the rights of consumers who are citizens of a particular country. However, the principles of conduct of the country in which the company is registered may differ from the behavior of jurisdiction, whose residents are customers of gambling business.

Not only well-developed countries, but also worlds offshore companies are developing and adopting legislation regulating the work of online gambling resources. Traditionally, the offshore paradise for gambling over the Internet - Costa Rica, Antigua and Barbuda, and since 2001 gambling licenses also issued to Alderney and the Isle of Man.

At the same time, the authorities of some countries, including the United States, are taking measures to protect the rights of their citizens, who can become clients of foreign online casinos.

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USA

The legal experience of Americans is the most interesting for businesses, because US dictates "fashion" over the Internet. Only a few states (among them - Nevada) legally allowed the conduct of online gambling, while strictly controlling this area and receiving taxes from it. There are a number of important nuances. For example, it is forbidden to transmit information about bets or winnings through wire communication. Sanctions are expressed in fines, and in other cases - criminal liability (up to two years imprisonment).

The law was adopted a long time ago, but despite this, on its basis, sentences on e-commerce (gambling) were made in a number of cases. The most famous was the case of Jay Cohen.

In 1996, Jay Cohen, a securities specialist, registered the World Sports Exchange (WSE) bookmaker company in the island state of Antigua and Barbuda. Cohen's company hosted various sports events in the United States. The activity was legal, and therefore did not cause fear to the owner. The "golden bottom" dried up a year later, when Cohen was arrested in Seattle. The prosecution held the following position: a citizen of New York made bet on offshore server in his state, which means that the bet is considered accepted in New York, where online gambling is prohibited. And despite the fact that many New Yorkers which made bets set their location to Nevada during registration, Cohen received a 21-month prison sentence, without possibility to appeal.

Another example of harassment of owners of Internet gambling companies is the case of 2006 against BetonSports Plc. The president and several other employees of the firm were accused of violating the part of the law that prohibits the acceptance of bets using wire-line communications. In addition, BetonSports Plc was accused of non-payment of taxes to the treasury of the United States: in the form of bets from citizens of the country, the company received more than $ 3 billion without paying a cent under the excise tax. After the arrest of the company's executives, the company went bankrupt.

The US Congress repeatedly considered bills on the prohibition of the organization of online casinos. Nevertheless, none of them was adopted. One of the reasons could be the reluctance to go against the laws of individual states that permit gambling.

As a result, the decision was found: on the federal level, gambling companies which operate over the Internet were blocked by cash flows. Since 2006, gambling companies have been banned from accepting any financial instruments (checks, bank transfers, etc.) while conducting "illegal gambling" through the Internet. The term "illegal" implies inconsistency with state or federal law. Due to violation of the law, administrative and criminal liability may occur (up to five years in prison).

Under the above-mentioned law, financial intermediaries (banks, payment systems) should identify and block prohibited transactions. After high-profile arrests, many gambling companies registered abroad denied gambling to American clients.

Experience of other countries

The UK recognizes the legality of the gambling business, requiring companies to obtain an appropriate license. Online gambling games in UK are called "remote". And as a means of communication, telephone, television, the Internet, and radio are used. Foreign gambling companies in the United Kingdom are limited in the right to advertise.

When there are difficulties with bringing the owners of online casinos to the law, they bring to justice gamblers. For example, in Hong Kong, there is a ban (there are some exceptions) for accepting and making bets on the Internet. The responsibility is borne not only by operators of the gambling business, but also by its participants. Since 2002, all bets that are made from Hong Kong and are taken outside of it are banned.

Russian legislation prohibits activities related to the organization and conduct of gambling with the use of information and telecommunications networks, including the Internet, as well as communications, including mobile communications. But at the same time, there are no restrictions on the bets made on foreign gambling resources.

Situation differ depending on country, but internet users always has roundabout ways to violate the prohibition in one way or another.

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