The US Federal government exhausted efforts to create a legislative law that is applicable against Internet gambling through the Wire Act. The Wire Act penalizes all organizations and individuals directly engaged in wagering business through the use of a wire communication in foreign commerce. The Act covers all online casino business in its statutory scope but does not include on its coverage the Internet service providers and the online gambler who are not engaged in the gambling business.
To extend the scope of the Wire Act is the introduction of the Internet Act which includes within its legislative coverage online gamblers and Internet service providers who can now be subjected to the imposed penalties stipulated within the Internet Act. It also encompasses activities that offer prizes in lieu of money as a form of wagering and betting online. However there are three factors that come as negative results of the Internet Act. First is that the legislation is more likely to drive online gambling operators and participating gamblers underground.
This will further complicate the difficulty of tracking down the business operations of online gambling sites. Operation for online gambling venue on the Internet is less expensive yet highly sophisticated. This feature of online gambling operation renders a difficult means of detection. The use of electronic money and encryptions to financial transactions done on the Internet can effectively thwart law enforcement from detection and tracing the violations done within the transaction over the Internet. An online gambler may easily disguise their identity which adds to the difficulty of tracing an online gambler to an Internet site. The lack of substantial human enforcers despite of the technologies used in tracing Internet gambling activities makes arrest impossible due to the vast geographical coverage of the Internet.
The second problem is driving the online gambling operators offshore which is virtually impossible for the US to enforce its legislative law against online gambling. With the underground operations of online gambling operators, it is more likely that incidence of fraud may be increased. It makes the monitoring of fairness and honesty of the gambling operators virtually impossible. The last issue raised on the flawed Internet Act is the jurisdiction and sovereignty concerns. The problems lie within defining where the prohibited activity took place. The dilemma would be whether it took place on the location of the Internet casino or on the place where the betting was placed.
In addition to this is the U.S. cannot impose its own legislations in countries where online gambling is generally legal. Destabilization involving commercial and legal relations might happen once the U.S. interferes with foreign laws. There is a need to draft a stronger law to cover issues not addressed by the Internet Act or the above mentioned critique can be used as basis for making an alternative method of legalizing online gambling for an effective regulations applied to its operations.