Online gambling is a form of wagering that takes place over the Internet. It includes games of skill and chance. Some states permit online casinos and sports betting, while others have banned these activities altogether. While the legality of online gambling is primarily a matter of state law, federal law has the power to prohibit or regulate online gambling sites.

Many of the laws governing online gambling include the Wire Act, which prohibits the use of the Internet for illegal gambling on sporting events and contests. In addition, the Federal Communications Commission (FCC) has jurisdiction over common carriers. If an online casino is found to be operating without permission, the FCC may prohibit the casino from providing its facilities.

The United States is also home to the Unlawful Internet Gambling Enforcement Act (UIGEA). This act, which was passed in 2010, is designed to prevent individuals from betting on the Internet. Although UIGEA does not make gambling illegal, it does prohibit the acceptance of financial instruments for Internet bets. Several federal criminal statutes, including the Wire Act, the Illegal Gambling Business Act, and the Racketeer Influenced and Corrupt Organizations Act (RICO), are implicated in the practice of illegal internet gambling.

The FBI has confirmed that there is a substantial increase in the risk of fraud and money laundering related to illegal internet gambling. In addition, cyberattackers are likely to target customer accounts in an attempt to steal money. To combat this risk, online gambling organizations need to maintain strong anti-money laundering (AML) and know your customer (KYC) compliance procedures.

According to a report issued by Frost & Sullivan, revenue from online gambling reached $830 million in 1998. In addition to gambling, the Internet provides access to horse racing betting markets. These markets are used to make a substantial percentage of online gambling bets. There are currently over 200 websites that offer these services.

Many companies operating online casinos and sports books have taken steps to avoid money laundering or other illegal activities. In one case, an Internet financial service company provided assistance to several offshore gambling operations. That company paid $10 million in a civil settlement to resolve charges that it helped facilitate illegal offshore gambling transactions.

While a large number of states have passed laws allowing for the legal use of online gambling, there are still a few that have hesitancy about approving online gambling. However, more and more states will be introducing legislation that supports the development of an online gambling market. Thus, expectations of federal regulatory policies will be complicated by the emergence of additional states that support online gambling.

Although the federal government has the power to prosecute illegal Internet gamblers, there are several constitutional objections to the enforcement of these laws. One argument is the Commerce Clause, which entitles Congress to prohibit illegal conduct in the name of the public good. Another is the Due Process Clause, which guarantees free speech. But attacks based on the Commerce Clause have proven to be largely ineffective.