26 Sep

Online Sports Betting Is Complicated, But Legitimate

Finding a clear answer on the legal status of sports betting can be tough. Thankfully, we’ve done the research and read the fine print for you, so we can offer you this guide to all things relating to the legal status of online sportsbooks.

Here, we’ll simply provide you with the condensed version of whether using a licensed, online sportsbook is legal in the United States, and provide you with the most important facts. For a more detailed history on all of the legislation surrounding sports betting, read our three-part series, encompassing the Origins of Sports Betting, the Vegas Era, and the Online Era.

While we offer advice on where to bet, we are not qualified, legal professionals. If you have any specific questions about the law as it pertains to sports betting in your region, we recommend speaking to an attorney in your country of residence. We’re confident, however, in asserting that – based on our own investigation of the relevant facts and legislation –bettors should face no legal repercussions for betting on sports online.

What Laws Should Sports Bettors Know About?

Currently, sports betting resides in a legal gray area. However, we’re confident in asserting that bettors are safe from being criminally charged or fined for betting on sports online. No individual has ever been federally prosecuted, arrested, or indicted in the United States for placing bets at an online sportsbook.

The Unlawful Internet Gambling Enforcement Act (2006)

Currently, there is no federal law against bettors online, as is often incorrectly reported by those who cite the Unlawful Internet Gambling Enforcement Act of 2006.

The law doesn’t say anything about betting online on sports, but merely stipulates that it is illegal for banks to transfer money gained from illegal betting. The express purpose of the law was to target those who own and operate online sportsbook on US soil, not the bettors who partake in online betting.

The critical legal distinction to draw here is that the UIGEA didn’t move to criminalize the act of betting itself. It moved to criminalize sending money to a sportsbook within US borders. Ergo, as long as you could find a legal loophole to get your money to a sportsbook, you were free and clear.

As proof of this fact, The UIGEA explicitly states that it has no authority to determine whether online betting is legal or not.

To decode that complicated legal jargon, we’ll rely on the words of US lawyer Nelson Rose: There is no federal law against being merely a player…you have a better chance of winning the World Poker Tour than of being arrested.”

We’ll take those odds any day!

Confirmation Comes In The Form of a 2007 Congressional Hearing

On November 14th, 2017, the U.S. House Judiciary convened to discuss the legal status of online betting.

It was a lengthy, complex exchange full of contradictions and conflicting facts, but it did clarify one thing: no one can conclusively say if online sports betting is legal or illegal, meaning that (for all intents and purposes) online sports betting is legal.

We believe that, if a congressional committee can’t reach a conclusion on something, law enforcement authorities aren’t going to make any decisions without specific guidance from lawmakers.

Republican Congressman Bob Goodlatte affirmed that Congress successfully passed legislation that prohibited the transfer of funds related to online sports betting, but that there are no laws that conclusively speak to what is legal and illegal for online betting.

By our estimation, that’s all the info you need to bet on sports with supreme confidence.

The US Government has a lot more pressing problems than cracking down on sports bettors who are harmless and complying with local and federal tax laws.

If you’re curious to read a more comprehensive breakdown of the hearing, Michael Bluejay’s analysis is both detailed and sound.

Do I Have To Worry About State Laws About Sports Betting?

Well, not really. However, there are two cases that are worth a peek.

The first was the 2003 case of Jeffrey Trauman, who was forced to pay a $500 fine on over $100,000 of online betting winnings. There were no criminal charges levied in this case, and he was slapped with a penalty that totaled 0.5% of his total earnings. He was charged under North Dakota’s extremely conservative anti-gambling laws, which make no specific allusions to anything relating to online gambling.

The second case was highly unusual, involving former police officer Ronald Benavides. He received a deferred sentence in 2012, which means that he wouldn’t face jail time unless he violated the conditions of this parole. This case was atypical because of Benavides’ history as a member of law enforcement, and his complicity (and financial involvement) in the illegally organized sportsbook he was placing his bets with.

While he was technically prosecuted for violating Oklahoma’s anti-gambling laws (which, again, make no reference to online betting) it was likely that prosecutors strongly believed Benavides to be guilty of more serious charges. They lacked the evidence to convict him on those, and exploited an antiquated – and rarely used – piece of legislation as a means of legal recourse to convict him.

The bottom line is this: Since the establishment of Intertops in 1996, only two Americans have drawn the ire of authorities for betting on sports, and both cases were at the state level.  This list has the best online options for betting in the United States which are still at offshore sportsbooks. This is due to their location out of the country and ability to service US based customers.

Both defendants resided in two of the most conservative, anti-gambling states in the entire country, and the surrounding circumstances extended beyond mere casual betting.

What’s Illegal in American Sports Betting?

As we mentioned above, The Unlawful Internet Gambling Enforcement Act of 2006 effectively outlawed all financial transactions involving an online sportsbook, if the sportsbook was based in – or catered to bettors within – the United States.

What is expressly illegal is for a website with servers on American soil to take sports bets over the web. This means that, if you decide to start an online sportsbook, we can’t guarantee that the authorities won’t come looking for you.

Billionaire founder of Bodog Calvin Ayre was charged with misdemeanor gambling charges for his role in orchestrating and operating online sportsbook websites in 2012. The charges have since been dropped. The chairman of Sportingbet was similarly arrested in Louisiana in 2006.

An Exception to North American Regulations – The Kahnawake

There is an exception to this: Kahnawake, a licensed online gambling region. This is technically sovereign land belonging to Canada’s First Nations tribe.

Because this region is not technically part of either the United States or Canada, it is subject to its own rules and regulations, which include housing legal sports betting operations.

The Mohawk people, who reside on the Kahnawake reservation, actually own and operate Sports Interaction, a successful sports betting site.

How Sportsbooks Get Around These Laws and Regulations

Sportsbooks who offer their services to bettors within the United States obviously can’t set up their base of operations within the US without risking criminal charges. As such, they have to take steps to remain legally compliant with US law.

This is why every sportsbook we review sets up their base of operations offshore, either in the Kahnawake territory, the Caribbean, or Europe.

By using internationally-based banks and receiving bettors’ deposits under the purview of international code, sportsbooks manage to avoid US prosecutors. The United States has legal jurisdiction for illicit activities that occur within its own territory, but it can’t exercise any legal authority over foreign countries (except in extraordinary/extreme circumstances referred to as extraterritorial jurisdiction).

Rest assured, a bit of harmless sports betting is highly unlikely to ever constitute extraordinary circumstances or qualify for extraterritorial jurisdiction. For more information on the United States’ official rules in regards to extraterritorial jurisdiction, read on.

Has Your Credit Card Company Restricted a Transaction?

There have been numerous recorded incidents of credit card companies placing restrictions on deposits and/or transactions to sportsbooks. This is not unusual in any sense, and can be fixed with a quick call to your credit card provider.

The only reason these transactions are often scrutinized by credit card companies is because they involve a company that isn’t readily recognized. Many sportsbooks often fall into this category, and your credit card company is forced to investigate further. This is to ensure that they’re compliant with both KYC (Know Your Customer) and AML (Anti Money Laundering) regulations.

This doesn’t mean that you’re restricted from making deposits to sportsbooks, or that this process is illegal. A private credit card company blocking a transaction to a source they’re not familiar with (or mildly suspicious of) is not tantamount to breaking the law.

Many credit card companies tend to err on the side of caution, as a failure to comply with KYC and AML laws can quickly land them in legal hot water. While it may be annoying to have to deal with credit card companies and their seemingly endless lists of rules and regulations, these inconvenient parts of the process are ingrained. If you’re looking at ridding yourself of some of the credit card company hassle, think about using Bitcoin for your sports bets.

Bet With Confidence!

Ever had any questions about the legal nuances of sports betting? Not to worry! We’ve created a comprehensive guide where we cover everything from how to pay your taxes on your sports betting winnings to the different licensing regions that sportsbooks house their operations in.

Meet the authors

Matt McEwan
Dave F.
Sports Writer
William Hill
Bet Online
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