Gaming Law

Gaming law deals with the legal rules and regulations of casinos and gambling. Because Indian tribes today operate so many casinos, many gaming law issues are also Indian and Native American law matters.

What Is Indian Gaming Law?

Indian gaming law reflects a compromise between the rights of Indian tribes to engage in gaming activities free of state intervention and the interests of states in regulating activities that occur within their boundaries. The Indian Gaming Regulatory Act (IGRA) represents this balance of power.

What Is the Indian Gaming Regulatory Act (IGRA)?

The Indian Gaming Regulatory Act (IGRA), which is administered by the National Indian Gaming Commission, provides the entire statutory framework for Indian gaming. The act applies to all “Indian lands,” which are defined as all lands within the limits of any Indian reservation. Under IGRA, Indian gaming is divided into three categories:

Class I gaming – includes social and traditional games and is within the exclusive jurisdiction of Indian tribes.
Class II gaming – includes bingo and games similar to bingo that can be operated by a tribe if it is located in a state that permits that type of gaming and if it is authorized by tribal resolution or ordinance.
Class III gaming – includes all types of gaming that is neither class I or class II gaming and is by far the most important type of gaming for tribal enterprises. Class III gaming typically involves the Indian Casinos. This type of gaming must occur in a state that permits gaming for any purpose, by any person, or entity and must also be authorized by tribal resolution or ordinance. In addition, there must be a contract negotiated between the tribe and state, which defines how the class III gaming will be conducted.

How Are Indian Gaming Revenues Used?

The revenues derived from gaming by Indian tribes can be used only for specified purposes such as:

To fund tribal government operations or programs
To provide for the general welfare of the tribe and its members
To promote tribal economic development
To donate to charitable organizations
To help fund operations of local government agencies

What Are Games of Skill and Games of Chance?

Whether a game is a game of chance or a game of skill can determine whether or not it is legal in many states. Many states allow people to pay money to participate in games of skill, but forbid them from paying to enter games of chance. Games of skill and games of chance are often not all that noticeably different. Oftentimes, a game will have elements of both chance and skill. Whether it is a game of chance or a game of skill will often depend on which element is the dominant factor in determining the outcome of the game. Skill can include any of the following:

A learned or developed ability
Strategy, or tactic
Physical coordination or strength
Technical expertise
Knowledge of the means of accomplishing a task

What Are Some Common Games of Skill?

There are several games of skill on which it is legal to bet. Some of the most common types include:

Certain card games such as gin rummy or mah jong
Pool
Darts
Fantasy sports leagues

Does Every State Allow People to Gamble on Games of Skill?

No. Whether or not people can gamble on games of skill varies from state to state. Furthermore, the importance of the element of skill in determining the legality of a game varies by state. Some states require that skill be the deciding factor in the outcome of the game. Other states only require only that there be some small amount of skill involved in the game. Still other states do not take skill or chance into consideration at all.

Who Regulates Gambling?

In most states, gambling is regulated by both state and federal laws. While state laws vary from state to state, federal laws apply in every state.

What Aspects of Gambling Does Federal Law Regulate?

Federal law reaches into nearly every type of gambling and has some influence on nearly every aspect. Federal law attempts to cover the gaps in gambling law that cannot be covered by state law. Some of the common areas regulated by federal law include:

The transportation and possession of gambling devices and paraphernalia across state lines
Sports betting in states different than the state in which the game is held
How and where bets can be made
Internet gambling (to some degree)

What Are Some of the Federal Laws That Relate Gambling?

Gambling laws have been shaped according to acts passed over the years by Congress. These Acts regulate certain aspects of gambling. Some of the most important Federal Acts pertaining to gambling are:

Wire Act of 1961 – deals with people using wire communications (phones, faxes, etc.) to place bets in interstate or foreign commerce
Travel Act of 1961 – deals with people involved in interstate travel for the purpose of committing illegal activities (including illegal gambling)
Interstate Transportation of Gambling Paraphernalia Act of 1961 – makes it illegal to transport various items used for illegal gambling such as betting tickets or sports books
Illegal Gambling Business Act of 1970 – imposes heavy penalties for large scale illegal gambling organizations
Racketeer Influenced and Corrupt Organizations Act of 1970 – imposes heavy fines and jail sentences for people who participate in racketeering
Professional and Amateur Sports Protection Act of 1992 – makes it illegal to place certain kinds of sports bets
Interstate Wagering Amendment of 1994 – regulates the state laws on lotteries and prevents out of state people from participating in state run lotteries

What Are the Penalties for Violating Federal Gambling Laws?

Depending on your activities, the penalties for violating federal gambling laws can be severe. If you violate federal gambling laws, you run the risk of:

Heavy fines
Forfeiture of winnings
Jail time
Conviction of a felony

What Qualifies as Online Gambling?

Online gambling describes a broad category of games, usually games of chance, where users make bets with the hopes of a higher payout than they put in. The most common forms of online gambling include:

Online lotteries
Online casinos
Online sports betting
"Fantasy sports"

Are Users of Online Gambling Websites at Risk for Prosecution?

In the U.S., the legality of online gambling is dictated by both the federal and state laws that regulate gambling. Although federal law is rather straightforward, state law tends to ultimately control the matter. State gambling laws vary from complete abolition to almost a complete tolerance of gambling.

How Can One Tell If an Online Gambling Site Is Legal?

State Gambling Laws – The legality of a particular site will likely be largely dictated by the forms of gambling that are allowed in a specific state. In states where all forms of gambling are illegal, an internet gambling site headquartered in that state is also illegal. On the other hand, in a state that has legalized certain forms of gambling, an internet site that provides only acceptable forms of gambling are legal.
Federal Gambling Laws – Federal legislation serves as the only applicable guide on this issue. For internet gambling sites the most widely used federal gambling regulations are the Unlawful Internet Gambling Enforcement Act of 2006 and The Wire Wager Act.
- The Unlawful Internet Gambling Enforcement Act of 2006 – This act prohibits gambling companies from knowingly accepting bets or wagers that would be unlawful under any federal or state law over the Internet. This act has a specific carve out for "fantasy sports," provided the fantasy sport betting focuses on skill, rather than chance, and the pay-out is not based on single, real-world performances.
- The Wire Wager Act – The Wire Wager Act prohibits the use of a wire transmission facility to foster gambling. In order to prove a prima facie case, the government must show all of the following:
  - The person was engaged in the business of betting or wagering
  - The person transmitted any of the following in interstate or foreign commerce
    - Bets or wagers
    - Information assisting in the placement of bets or wagers
    - Communications that entitled the recipient to receive money or credit as a result of a wager or bet

Who Does the Wire Wager Act Apply To?

The Wire Wager Act is typically applied to those engaged in the business of betting and wagering, not the gamblers themselves. Because a key distinction at the federal level seeks to separate those that merely bet from those that benefit from the betting, the application of federal law mostly focuses on those affiliated with the business of facilitating these various games.

What Is Social Gambling?

Social gambling is gambling that is not conducted as a business and that involves players who all compete on equal terms.

Is it Illegal to Have a Poker Game with My Friends?

It depends. State laws vary on the issue of whether social gambling is legal or not. In general, as long as your game puts everyone on equal footing and no one person has an unfair advantage, your game will be legal.

What Factors Will Determine Whether My Form of Gambling Is Illegal or Not?

The important factors differ from state to state. However, the following factors typically relate to whether your game is legal or illegal:

Where are you playing? Playing a game in your own private home is more likely to be legal than playing a game at a public park, or at a bar or restaurant.
Does any player have an advantage? Games in which there are house odds or house income are more likely to be illegal because one player is at an advantage over the others.
How high are the stakes? Some states only allow penny ante games where players gamble for mere pennies. Generally, if the stakes are lower, your game is more likely to be legal.
What are you betting on? Gambling on a game you are currently playing is often more likely to be legal than placing bets on a future event like a race or a sports game.
Are all your players above the age of majority? All players must be above the age of majority in order for your game to be legal. The age of majority is either 18 or 21 depending on your state's laws.
Are you hosting the game or are you a visitor? If social gambling is illegal in your state, the punishments are often more severe for the owner of the house where the game is being held.

What Is Charitable Gambling?

Charitable gambling is a form of gambling run by charitable and non-profit organizations. Proceeds from the gambling are used to support the organization.

Is Charitable Gambling Legal?

Most states do allow some form of charitable gambling. However, there are a few states that forbid it entirely, and several states that only allow certain forms of charitable gambling.

What Are Some Common Forms of Charitable Gambling?

There are several different forms of charitable gambling. Some of the most common forms are:

Raffles – Contests in which people buy tickets for a chance at a prize that is determined by a random drawing at a time, date, and place that is listed on the ticket
Bazaars – Fair like events in which participants pay money for the chance to win certain cash or merchandise awards from games of chance. Some of the types of games that are often present at bazaars include dime pitches, "knock a block", and sometimes spinning wheel games
"Casino Nights" – fundraisers where participants pay money for the chance to win something of value in typical casino games such as blackjack, poker, or roulette
Bingo

What Kinds of Organizations Can Have Charitable Gambling?

In most states, an organization that allocates the proceeds from games of chance or skill to educational, public, civic, patriotic, or religious purposes are permitted to run some type of charitable gambling. Some common examples of such organizations are:

Schools
Churches
Youth Groups
Civic or Service Clubs

What Are Some Factors that Determine if My Form of Charitable Gambling Is Legal or Not?

Although the laws regarding charitable gambling vary from state to state, most states consider the following factors in deciding whether the event is legal or not:

The prizes – Not every state allows organizations to offer cash as an award. The states that do permit cash awards often limit the possible amount.
Games of chance or skill – Games of skill are often given more leeway than games of chance. So, a state might forbid wheel spinning games, but allow participants to pay money to compete in a pool tournament.
Frequency of fundraisers – Some states limit the number of times an organization can have a charitable gambling event.
Use of proceeds -Most states that permit charitable gambling insist that most, if not all, of the proceeds go towards charitable or beneficial purposes. Organizations are usually permitted to use some of the proceeds to pay for the costs of the charitable gambling event.
Age of participants – Most of the time, participants must be 18 or older. Some states require that the people running and promoting the charitable gambling event also be over 18.

Do I Need an Attorney Experienced in Gaming Law?

If you have a dispute or question involving Indian gaming law, you should consult with a business attorney who is knowledgeable in both gaming and Indian law. Indian tribes operate under a unique set of rules that reflect the delicate balance between tribal sovereign immunity and U.S. sovereignty. Speaking with a lawyer experienced in gaming law will help you understand your rights.

Call our office today at 212-994-7777 or complete the convenient online contact form to set up a consultation.

What Is Gaming Law?