During the late 1990s, online gambling gained popularity. By the end of 1998, Frost & Sullivan reported that revenues from online gambling had topped $830 million.
In response, the United States Department of Justice announced that the Wire Act applied to all forms of Internet gambling. This included online casinos, sports books, and gambling contests. However, critics say the move lacks a legal basis.
The earliest evidence of gambling comes from ancient China. Tiles dating back to around 2,300 B.C. were used in rudimentary games of chance. These games included pool-selling, lotteries, and bookmaking.
Today, gambling is primarily regulated at the state level. State officials have expressed concern that the Internet could facilitate the spread of illegal gambling into their jurisdictions.
The federal government has also raised constitutional questions about its power to enforce gambling laws. In particular, Section 1956, a section of the Unlawful Internet Gambling Enforcement Act, has raised questions about the constitutionality of prosecuting illegal Internet gambling.
Section 1956 creates several distinct crimes. The crimes include: laundering to conceal, disguise, or evade taxes; laundering for international purposes; and laundering with the intent to promote illicit activity. These crimes are designed to prevent players from using interstate facilities for unlawful activities. The penalties for violations range from a maximum of six months in prison to a $25,000 fine.
In 2007, Representative Barney Frank introduced a bill to modify UIGEA. It would require the director of the Financial Crimes Enforcement Network to license internet gambling facilities. Other similar bills have been introduced in the House.