I’m not a lawyer. Do not rely on this article as legal advice.  I also can’t guarantee to have heard of every relevant case.

Short answer: Not illegal under federal law, possibly illegal under state law, but even there prosecution is rare.

There is no U.S. federal law against gambling online

There is no U.S. federal law against gambling online.  On the federal level, gambling online is perfectly legal, because of the lack of a law against it.  It’s possible to run afoul of state law (especially in extremely conservative states), but even there prosecution is extremely rare.  This article focuses mostly on federal law.

U.S. Attorney Catherine Hanaway admitted in a House hearing that just placing wagers online doesn’t violate federal law.  No American has ever been arrested, indicted, or prosecuted by the feds for gambling online, because there’s no law against it.  If online gambling were illegal I wouldn’t be running his website for fifteen years, as an American citizen, living in the U.S., using my real name.  And I occasionally gamble online, too, and I admit that publicly, like I’m doing right now.

This might be confusing because other outlets erroneously reported that Congress banned online gambling in 2006.  Those reports are simply wrong.  The 2006 law makes it illegal for banks to move gambling money when the bets are already illegal (like from a state law), but doesn’t make it illegal for players to make bets.  The law simply does not create or extend any ban on gambling itself.  In fact, the law says quite clearly, “No provision of this subchapter shall be construed as altering, limiting, or extending any Federal or State law or Tribal-State compact prohibiting, permitting, or regulating gambling within the United States.”  If you want to check for yourself, here’s the full text of the law.

Sports betting

It is against federal law for websites to take poker online sports bets over the Internet.  (It’s against federal law for a site to take the bets, not for you to place them.)  Federal law doesn’t specifically allow or prohibit sites from taking casino or poker bets, just sports bets.  For many years the Dept. of Justice interpreted the Wire Act to prohibit sites from taking casino/poker bets too, but most legal observers disagreed, and in Dec. 2011 the DoJ finally agreed that the Wire Act doesn’t prohibit sites from taking casino/poker bets. (Forbes)

Advertising

Publishing advertisements for online gambling isn’t specifically illegal, and it would be quite a stretch to make a case under a different statute (like racketeering or conspiracy).  Small publishers (like me) have never faced fed action running ads for online gambling.  The only publishers to face penalties were some huge publishers (Google, Yahoo, and Microsoft, in 2007), and a mid-size publisher in 2006 (The Sporting News).  I wish they had contested the charges, since legal observers say they weren’t breaking any law, but each simply paid a fine to end the matter quickly.  None ever faced any criminal charges. The Sporting News’ fine was equal to the money they’d collected from gambling ads. Google’s penalty was less than half a single day’s profit for them. (Point-Spreads.com)  Other publishers who took ads (like Esquire, who ran Bodog’s poker ads) were warned by the DoJ not to take them any more, stopped doing so, and faced no penalties.

State laws

Some states might have laws against online gambling, but even there prosecution against players is rare.  I know of only two cases a player ran afoul of state laws (in extremely conservative states), both of whom were charged under their state’s general anti-gambling laws, not any specific anti-online-gambling law.  The first was Jeffrey Trauman of North Dakota, who in 2003 paid a $500 fine on what was probably over $100,000 in online sports bet winnings. (Gambling & the Law)  The other was online sports bettor Roland Benavides of Oklahoma, who was charged in 2011 and in 2012 received a deferred sentence (which means that if he doesn’t violate the terms of his probation, he will likely face no jail time). (News OK)  Some states have gone the other way and legalized online gambling in at least some form.  (See the bottom of this page.)

Risk

Rather than just considering the law, it’s more useful to look at the potential risk of each activity.  That is, which activities are more likely to result in a fine or maybe even jail time?  Below is my take on how things stack up, from most risky to least risky. But first, some important caveats:

I’ll consider only federal law, not individual state laws.

The law and the enforcement are constantly changing, and what’s true today could be different tomorrow.

I don’t guarantee to have heard of every relevant case.

I’m a layperson, not a lawyer, and god help you if you rely on this article instead of seeking appropriate legal counsel for your situation.