Author’s note: None of this article should be considered legal advice; the content that follows is for informational purposes only.
Whether in Vermont or elsewhere in the United States, betting with offshore operators is fraught with legal questions.
At the end of January, this year the Vermont Free Press ran an article that suggested a person located within the Green Mountain State placing a bet offshore might not be doing so illegally.
This type of question has been circulating not just in Vermont, but states across the country. The answer, in short: sports betting offshore is not legal under US law.
Where exactly is that sportsbook?
If you have listened to sports talk radio or searched sports betting online in the past 20 years, you have probably have been exposed to an advertisement for an offshore sportsbook.
You might not have even realized it. Sometimes the ads will advertise a website ending in “.lv,” which you might think means Las Vegas.
Well, you would be wrong.
You may ask yourself, “If this company is advertising on a radio station I listen to in America; clearly, it wouldn’t advertise something illegal, would they?”
Well, it is a bit complicated.
Who says what is legal?
Gaming (both sports and other types) in the US has historically and remains primarily regulated by individual states.
There are some exceptions, however. For instance, the federal government in the 1960s became concerned with gambling being used to finance organized crime, so the feds went on something of an anti-organized crime legislation-spree.
The US government passed federal statutes, including the Wire Act, the Sports Bribery Act, the Travel Act and the Wagering Paraphernalia Act during the ’60s.
All this culminated in the passage of the Racketeer Influenced and Corrupt Organizations Act and the Illegal Gambling Business Act in 1970.
In your state and out of it
These statutes all required the acts to implicate interstate activity. These statutes formed the basis of the federal government’s criminal prohibition of interstate gambling operations up until the government shifted the focus of its priorities.
In 1992, Congress passed the Professional and Amateur Sports Protection Act (PASPA) —a noncriminal law — that targeted state-authorized sports betting.
The shift away from organized crime would continue into 2006 when Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA), which targeted payment processors and online gambling businesses.
The federal prohibition on interstate (and international) sports betting businesses at the national level is often associated with the Wire Act.
Still, several federal statutes could come into play when talking about the offshore wagering industry in the US.
What the Wire Act does
The Wire Act, which we have talked about ad nauseam with regards to its application to wagering activity beyond sports betting, does a few things.
Firstly, it prohibits those in the business of betting (think offshore sportsbooks) from using wire communication to transmit wagers or wagering information in interstate (between states) or foreign commerce (to another country).
Secondly, there is a safe harbor within the Wire Act, but that does not apply to the placing of bets or wagers; it only applies to the informational part of the law.
Three different Circuit Courts of Appeal have found this (sorry for those of you hoping for interstate sports betting compacts — not happening as long as the Wire Act exists).
What about UIGEA?
UIGEA is a federal statute that imposes both civil and criminal liability on violators.
UIGEA prohibits any person, including a business, engaged in the business of betting or wagering from knowingly accepting payments in connection with the participation of another person in unlawful internet gambling.
The statute applies to a variety of financing mechanisms impacting the online gambling industry offshore.
The UIGEA is riddled with exemptions as a result of the compromises to get the bill to pass. However, there isn’t an exemption that would allow for transactions to offshore sportsbooks, particularly given the Wire Act’s prohibitions.
A question of state law
While federal law concerns its limited resources primarily with gambling as a business, state law becomes a key factor in analyzing what type of activity by individuals is illegal.
When looking at state gambling laws, several states allow for social gambling. It does not appear as though Vermont is one of these states as the state seems to have a law that would impose a fine on both a winner and loser of a gambling proposition.
It is unlikely that many — if any — social gambling statutes would extend to offshore sportsbooks. Most social gaming defenses require a game to be at a private place. Several states allow only a low-level dollar amount to constitute social wager.
Fewer than 10 states have explicit prohibitions on online wagering.
But, sports betting is a game of skill?
That might well be true, and it might serve as a defense in some jurisdictions. However, several states specifically include wagering on a sporting event that would render the defense of “sports gambling is a game of skill so you can’t enforce your law,” pretty risky.
Many states (if not all) have laws that would seem to be relevant to citizens placing sports bets offshore. The majority of states treat penalties for simple gambling as a misdemeanor; however, several states impose harsh punishments on those convicted of things like promoting gambling.
What does this mean?
Contrary to what you may presume, given the omnipresence of offshore advertising in present-day America, wagering offshore is not legal. In fact, in most places, it is not legal at all.
But the sportsbook is ‘legal’ in Antigua?
If a sportsbook is accepting wagers from Americans, who are in America, those bets are illegal.
Contrary to some of pontificating about bets being placed where the book’s servers are located; if you are in America, your bet is still being placed in America. Even if the servers are offshore.
An individual might never be charged for placing a bet even if it’s against state law. That doesn’t mean the wager is legal.
Likewise, it is possible that people might have a good experience wagering at offshore sportsbooks. However, offshore sportsbooks servicing US customers are doing so in violation of the law.
So, when you hear these books calling themselves “legal,” know that they are not talking about under US law.