The U.S. Department of Justice has recently prosecuted Internet gambling operators in a criminal case. In it, they have been accused of violating the UIGEA, 18 U.S.C. 1955, and money laundering laws. A criminal case is not the only reason to avoid online gambling. Federal prosecutors have warned PayPal of the possible consequences of its actions.
While federal law does not directly address Internet gambling, it largely reinforces state gambling laws. However, states have expressed concerns that the internet could be used to bring illegal gambling activities into their jurisdictions. Thus, state gambling laws may not apply in every instance. This is an ongoing debate in the U.S. Supreme Court, and we may soon see more guidance on the subject.