In October 2006 the Unlawful Internet Gambling Enforcement Act (UIGEA) was enacted in the US, thus rendering internet gambling illegal, with the exception of online horse racing. Many operators left the US market, but some remained despite the new legislation. On 15 April 2011, also known as Black Friday, the US Department of Justice indicted the executives of the largest internet poker sites that were still accepting US players. The following month, authorities seized bank accounts and blocked offshore web domains, which offered poker and sports betting to US customers.
But these events did not reduce the appetite of US gamblers. Many US players opted for offshore operators based in Central American and Caribbean jurisdictions such as Costa Rica and Antigua. Regulated online sites in New Jersey, Delaware and Nevada blame offshore operators for their poor performance. In its latest efforts to combat illegal websites, New Jersey’s Division of Gaming Enforcement announced a grace period of 150 days, starting 4 June 2015, for affiliates to stop promoting offshore sites.
There are also dozens of online casinos that still accept punters from the US. To name just a few – Slotland Casino, a Comoros licensee, Vegas Casino Online that operates out of Panama, as well as BetOnline. Manhattan Slots, Club World Casinos and All Star Slots are all licensed by the Kahnawake Gaming Commission, while Slots.lv is licensed in Antigua. Many of the mentioned casinos offer sports and horse race betting, alongside the usual casino offering.
But some operators have been prosecuted by the US authorities for their internet gambling activities. Perhaps the most interesting trial against 34 people and 23 corporate entities took place in Oklahoma, where 26 US citizens took part in the operation of several online betting sites licensed in Panama. The remaining seven defendants were Panamanians, while one was Canadian. According to court files, the defendants raked in over US$1bn in illegal gambling proceeds between 2003 and 2013. The US defendants took money from punters in Florida, Texas and Oklahoma, and transferred it to Panama via checks made out to shell companies, in order to launder the money.
In a separate trial, in a Californian court, 18 people plead guilty to charges of running an illegal sports betting website, also licensed in Panama. The group operated in the same manner as the aforementioned operation – California punters would wager on an offshore website, but funds were transferred in person, and then the money was laundered in Panama.
Two cases of operating an illegal sports betting website licensed in Costa Rica followed in US courts, when a Louisiana man plead guilty to charges of transmission of wagering information and money laundering. The other case was a trial in a Colorado court, where the defendant plead guilty to charges of taking sports bets from US players by allocating punters a credit limit and accepting bets on the telephone, in person or via a website licensed in Costa Rica.
Despite online gaming being illegal under UIEGA for almost a decade, as well as several highly publicised court proceedings taking place, many unlicensed operators continue to target the lucrative US market and punters continue to wager on those sites. There are a few reasons for this.
First, US players can legally participate in online gaming in only three (modestly populated) states. Major markets like California, Pennsylvania or New York are only just considering legalising online gambling. This leaves 95% of the US population unable to access US-licensed gambling sites. Second, US authorities are practically powerless to stop illegal sites from operating, since they are regulated and licensed in other jurisdictions and operate legally there. Thirdly, the US has high internet penetration rates, US citizens are avid gamblers and have high disposable income. Therefore, US punters represent valuable customers for offshore operators, who may be reluctant to give them up.