GAO Releases Interim Report on I-Gaming

23 September 2002

The U.S. General Accounting Office said today that ambiguities contained in the Wire Act may hamper the act's applicability to Internet gambling.

The statement was part of a report the agency is preparing at the request of a handful of members of the U.S. House of Representatives, including Rep. Michael Oxley, R-Ohio; Rep. John LaFalce, D-N.Y.; and Rep. Spencer Bachus, R-Ala. The report was commissioned because the Financial Services Committee wanted more information about Internet gambling and how it relates to payment systems.

The GAO released an interim report on the subject today. The full report will be finished in November. Oxley, LaFalce, Bachus and Rep. Sue Kelly, R-N.Y., asked the GAO for the interim report in a letter dated Sept. 10.

The report includes information on both state and federal law as it applies to Internet gambling. As part of its research, the GAO examined five states that represent the spectrum of gambling law, as well as the Interstate Wire Act and a few other relevant federal laws. In addition, the agency interviewed representatives of the banking industry, law enforcement, credit card organizations, third-party payment processors, gaming industry experts and Internet gambling experts.

In its interim report, the GAO does not come to as firm a conclusion about the legality of Internet gambling as the Department of Justice did a few weeks ago when it declared I-gaming illegal according to the Wire Act.

"Although the Wire Act has been successfully used to prosecute gambling businesses through the Internet, the statute contains certain ambiguities that may limit its applicability--for example, uncertainty about whether its provisions apply to all types of betting or are limited to sporting events and contests. The DOJ generally takes the view that the Wire Act is not limited to sports-related gambling activities, but case law on this issue is conflicting," the GAO writes.

The GAO, which is often thought of as the investigative arm of Congress, is an independent agency that studies how the government spends money and how the government can be made more effective and responsive.

To read the interim report, click here.