The internet is the new wild wild west. The lack of regulation enables every sort of vice available. With the ACLU still protecting NAMBLA, who use the internet to advance the idea that the age of consent should be lowered to eight, the idea of gambling online seems tame by comparison. It is a viable question though.
According to Professor I. Nelson Rose, one of the world’s leading authorities on gambling law: "no United States federal statute or regulation explicitly prohibits Internet gambling, either domestically or abroad." Still, the US government has taken the position that certain things are illegal, and more importantly, certain things are worthy of prosecution. The Wire Act is the statute most often cited as making on-line gambling a federal offense. The operative subsection reads: "Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both."
Rose goes on: "The first element of the Wire Act, says that the statute applies only to an individual involved in the 'business of betting or wagering' (not to a common player)."
It would appear to the naked eye the Wire Act is a back door to prosecution in places where the law does not explicitly say that online gambling is illegal. The Supreme Court left things in even murkier territory when it refused to review the conviction of Jay Cohen, who was arrested and convicted using the Wire Act. In the absence of a Supreme Court ruling other courts were left to lead us through this legal mine field.
Judge Stanwood Duval of the US District Court in New Orleans ruled in 2001 that it did not: "'in plain language' [the Wire Act] does not prohibit Internet gambling 'on a game of chance.'"
So we are at a stand still. The justice department seems to think the Wire Act covers online gambling, while the district court has ruled that it does not. For the moment that leaves this in legal limbo. Until there is a decisive action by Congress or the Supreme Court, online gambling is safe, perhaps not legal in the opinion of some…but safe.