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Gambling on online casinos

A recent article on online casinos and the rapidly growing yet controversial online casinos industry had many answers about online casinos.

The article stated about online casinos that despite the recent high-profile indictments of the founder and CEO of one of the top online casinos in the world, it does not appear that online gamblers in most U.S. states have any reason to fear prosecution for playing at online casinos— at least not by the federal government.

The exception is Washington State, where gamblers could be charged with a felony under recently passed legislation for playing at online casinos.

The state's gambling commission has promised not to start an active campaign against regular players at online casinos. However, if any online casinos records are seized, players whose names appear in the online casinos records likely will be sent a warning letter.

But when it comes to federal criminal charges, individual users of online casinos have not been targeted for several reasons, including questions over whether or not they are even breaking the law, according to Gary Kashar, a partner in the New York office of the law firm White & Case who has clients in the gambling industry.

"The Wire Act — the primary U.S. law used in the prosecution of Internet gambling — refers to engaging in the 'business' of betting or wagering itself, and it's not clear that this applies to individual gamblers," he said. "There are also practical and political reasons to go after large companies as opposed to individual citizens."

Instead, the government has tried to put up some roadblocks to stop people from gambling at online casinos.

Financial institutions agreed to stop allowing the use of credit cards at online casinos a few years ago as part of settlements with New York Attorney General Eliot Spitzer. So these days, online gamblers in the U.S. typically use offshore payment systems like Neteller or Firepay and gamble with impunity.

Experts also point out that you are still on the hook for federal income tax on your winnings at online casinos. And U.S. gamblers need to be aware that since every Internet gambling site is based in another country, they do not have the same legal rights as they do when dealing with a company incorporated in the United States.

"If you're going to bet, you have to be aware that you may not have all of the enforcement remedies that you have when you go to a land-based casino. But that's a reason, obviously, to only gamble with a site that you have trusted and that has a record of making its payments to users," said attorney Ken Dreifach, the former chief of Spitzer's Internet Bureau and now a partner at Sonnenschein Nath & Rosenthal LLP in New York.

"The further the U.S. government pushes this underground, the more chance you have of getting organized crime involved in some of this stuff," said Radley Balko, a policy analyst with the Cato Institute in Washington, D.C.



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