In a nutshell, U.S. legislation surrounding online gambling has been―and continues to be― somewhat unclear.

The main point to remember is that no federal law exists that prevents U.S. citizens from engaging in online gambling or any related activity. And, even after the passing of the UIGEA in 2006, this essentially remains the case.

Online gambling expert, Professor I. Nelson Rose, explicitly states that online gambling should be regarded as perfectly legal as “no United States federal statute or regulation explicitly prohibits online gambling, either domestically or abroad.”

How UIGEA Affects Gambling in the U.S.

Reinforcing that argument, estimates show that 70 per cent of all online wagers are U.S. based, Americans account for over 80 per cent of online poker players and they participate in more than 55 per cent of all online gambling activities.

That being said, individual state laws regarding online gambling can affect citizens who play online, and there have been attempts - most notably the Unlawful Internet Gambling Enforcement Act of 2006 (H.R. 4411) - to prohibit the transfer of money to gambling sites at the federal level.

The logic for this is that online sites are not necessarily physically based in the U.S. so there's no way for state (and federal) governments to tax them. This was certainly the case recently, when the state of Kentucky seized 141 gambling-site URLs and demanded that their owners block Kentucky residents from using them.

Both the UIGEA and the Kentucky suit make much of the supposed social ramifications of gambling. But at the heart of the matter is the government trying to draw on a lucrative and taxable industry.

In the case of Kentucky, even Gov. Steve Beshear admitted this was so, not to mention that Beshear supports legalizing land-based casinos in the state and would necessarily want to protect them and Kentucky's horseracing industry from online competition.

State actions like Kentucky's are primarily based on the UIGEA's open-ended definition of what constitutes illegal online gambling. However significant loopholes can be identified within the law that allow local operators to take bets online while still complying with state law.

As U.S. nationals generally play at legal online casinos, it seems highly improbable state or federal governments would ever be able to produce a comprehensive legal framework to prohibit online gambling or prosecute the operators themselves.

As for the legal basis for UIGEA, it is centered on the Federal Wire Act of 1961, which explicitly prohibits citizens from different states from betting against each other using phone lines.

However, the act only prohibits "sports betting" and does not cover other forms of gambling. It was also originally aimed at combating organized crime and is not particularly up to date.

Following the high-profile arrests of several online gambling executives traveling in the U.S., in September 2006 (right before the mid-term U.S. elections), the UIGEA bill was floored by Republican congressmen who cited moral reasoning for its necessity.

It was successfully passed in the Senate attached to completely unrelated legislation (the Safe Port Act) in a last-ditch effort to get the bill through before Congress's recess.

On October 14 of that year, President Bush signed the legislation into law. Now, as a result of the act (which makes exceptions for gambling on horse racing, state-run lotteries, and fantasy sports), it is illegal for American financial institutions to process transactions originating from or directed toward any online gambling operator.

Most headlines have described the law as "outlawing internet gambling," but it still hasn't gone so far as to explicitly outlaw online wagering in each and every aspect.

Big, publicly-traded operators like Partygaming and took major hits following the legislation and have closed their sites to U.S. players and, despite the efforts of powerful groups like the Poker Players' Alliance, many Americans undoubtedly have turned away from the activity.

However, aside from the serious financial implications for companies heavily invested in the U.S. market, the effect of the new law is still hard to determine.

The Future of US Online Gambling

Several major online casinos and online operators have continued to accept American players and international financial intermediaries have continued to process their transactions. Furthermore, larger financial institutions have complained to regulatory officials about the difficulty - and even impossibility - of enforcing the new laws.

For the moment it appears that the legislation's reach is limited and the ability of U.S. citizens to place bets at online casinos and online poker rooms has only been changed slightly. Again, in keeping with its tradition, the issue falls into another gray area despite the national reach of the Internet Gambling Enforcement Act.

Rep. Barney Frank (D-Mass.) has led the charge in proposing two Payment System Protection Acts, one in 2007 and one in 2008, to amend the UIGEA and relieve the logistical strain on U.S. financial institutions by forcing the Treasury Department to name what it considers "illegal Internet gambling."

Others have also jumped on the bandwagon, including Sen. Robert Menendez (D-N.J.) who has proposed a bill that delineates online poker as a legal "game of skill." If such a bill were passed it would ensure that online poker sites receive a pass from the Department of Justice because they would be providing access to games that required skill, not luck, to play.

These casinos still accept US players

Disclaimer: is not a legal authority. In no way should the information presented here be regarded as formal legal advice. All of the information given on these pages has been taken from several assorted news releases and articles and its accuracy is not guaranteed. For more accurate and formal information considering the legality of Gambling, please consult the specific laws of the area in which you reside or jurisdiction in which you are playing.