Yesterday, the Federal Reserve and the U.S. Treasury promulgated new rules that prohibit the processing of payments related to Internet gambling. By forbidding financial institutions from processing the payments, the government has essentially outlawed online gambling.
What constitutes “online gambling” is left up to state law. A few kinds of betting are still allowed, including government lotteries, horse racing and fantasy sport leagues. College and pro sports books, however, are no longer allowed. The same goes for online poker, roulette, craps, slots and other casino-type gaming.
Internet gambling is believed by many in law enforcement to be important to organized crime. It is a profitable source of revenue in its own right, and is difficult to police. “Street level” bookmakers are also believed to use online sports gambling to facilitate their activities, and to hedge or shift the risks of the street wagers they accept.
The new rule has been opposed by Democratic lawmakers and gambling businesses, as well as by financial institutions that would bear the burden of implementing the rule.