There is a significant debate about whether federal law should regulate online gambling. In the 1990s, online gambling was a popular activity and a way to avoid government regulation. Operators established their business in offshore jurisdictions, making it possible for anyone with a computer and a credit card to place bets. This created a legal problem, and Congress and the Department of Justice started exploring how to regulate the industry.
Despite this, states have not been particularly active in enforcing state laws regarding Internet gambling. One reason is the dormant Commerce Clause doctrine, which states that state laws cannot regulate interstate commerce. Additionally, federal preemption has hindered state efforts to regulate gambling on Indian reservations within state borders. While the Indian Gaming Regulatory Act provides the legal framework for Indian gaming, it largely does not address the Internet gambling industry.
The Department of Justice has maintained that all Internet gambling is illegal. In fact, a recent hearing by the U.S. House of Representatives’ Judiciary Committee reveals that the Fifth Circuit disagrees. However, the courts have decided that the issue of online gambling is largely a matter of public policy and legalities.
In other cases, the law has been more expansive. In United States v. Nicolaou, for example, the case did not involve layoff bettors. It did, however, include bartenders and managers of establishments that feature video poker machines.