Regulation of Online Intrastate Gambling

Earlier this week Congressman Tom Feeney (R-Fla), in written materials supplementing previous floor remarks, addressed the 2006 Unlawful Internet Gambling Enforcement Act and what he views as a threat to that law:

[L]ast year, I cosponsored legislation with Congressman Bob Goodlatte to help stop the widespread growth of gambling over the internet. Though Federal law already prohibits gambling over telephone wires, the passage of this legislation was necessary to maintain the original intent of the law while also bringing it up to speed with the explosion of current and future technology. However, this update of the law made clear that it would only affect interstate commerce, respecting the rights of states by leaving to them the decision whether and how to regulate gambling within their own borders. New legislation before the Financial Services Committee attempts to undo all of this previous work, instead granting the federal government the expansive and exclusive right to regulate all online gambling. This new legislation would represent the first time in history that the Federal Government would be given power to issue gambling licenses, and it marks a significant shift away from allowing states to determine for themselves what type of policy is best. Proponents of this legislation state that the bill offers states the right to “opt out” of this regulation, but the truth is that the states already have the right to determine their own policy towards gambling without any broader federal regulation that threatens to undermine their control over licensing standards and enforcement actions.

I haven’t seen the bill the Congressman is referring to, and I’m not expressing any opinion here about gambling, or whether it should be legal. But I am scratching my head about the concept of online intrastate gambling.

Is it technologically feasible for a wagering site based in Illinois to only allow persons physically located in Illinois to place bets? I suppose it could be tried, but something tells me that lots of determined people would find ways around such a restriction, which would presumably invite federal attention.

Perhaps the bill’s opponents are instead worried about states losing out on tax revenues that could one day be extracted from online gambling sites purportedly operating exclusively within a single state?

If anyone is familiar with the proposed legislation, I’d be interested in your opinion.

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