July 9, 2022

Online Gambling Laws: Why Is Gambling Illegal?

Ethan Lim
Written byEthan LimWriter

Playing casino games is a screen tap away, thanks to mobile and internet technologies. But even though online gambling is legal in most states, some countries still take a hardline stance on this activity. So, why is gambling illegal in this day and era? Are there valid reasons to criminalize this activity?

Online Gambling Laws: Why Is Gambling Illegal?

Where Is Gambling Illegal?

The hard reality is that gambling is illegal in many countries, although most are making meaningful progress in this area. And even in legal gambling areas, the rules can be so stringent that they can scare away some operators. In the UK, for example, gambling via credit cards and VIP gambling is illegal according to the new laws by the UKGC.

Moving across to the US, betting remains a dividing topic in most states. In 2018, the country’s Supreme Court ruled against PASPA (Professional and Amateur Sports Protection Act), which had criminalized gambling in 1992. But even with that landmark ruling, individual states are dragging their feet on legalizing gambling. Currently, gambling is legal in 18 states, with most laws covering sports betting only.

In Canada, punters can stake on sporting events on any bookie with a government-issued license. The Kahnawake Gaming Commission regulates the betting market. But like their US counterparts, Canadian gaming sites don’t offer online casino games. So overall, it depends on your local gambling laws

Why Is Gambling Illegal in Some Countries?

The thing is that different countries have different reasons to criminalize gambling within their borders. It mostly boils down to their social and cultural view of the activity. Below are some of the reasons:

Underage Gambling: 

Underage gambling is a problem bedeviling the gambling industry. While most casinos do their part to prevent this vice, some governments are often quick to ban the activity. 

Money Laundering: 

Casinos, especially land-based ones, are hot money-laundering destinations. Some players use dirty money only to cash out as a check or Bitcoin and claim that the money is clean. 

Religious and Social Beliefs: 

Religious opinions about online gambling vary, although there’s a common agreement about betting. Gambling is currently illegal in almost all Islamic countries, with heavy punishment for anyone going against the law. Qatar, Brunei, and United Arab Emirates are good examples. 

Gambling Addiction: 

Without proper regulation, gambling addiction can be a real problem in most countries. For example, Cambodian lawmakers passed the Suppression of Gambling Act in 1996 to criminalize the activity and limit problem gambling. 

Can You Gamble Online in Countries Where Gambling Is Illegal?

Interestingly, no one has been prosecuted so far for illegal online gambling. This means players can gamble online and get away with it. For example, the law leaves a loophole for bettors to gamble on online gambling sites in Japan, India, and Cambodia. So, to put it simply, most countries still lag when it comes to laws covering online gambling. Operators use this mistake to accept players, even from the US.

But if you insist on gambling on an offshore site, ensure a legit body licenses it. Some reliable names include the UK Gambling Commission, Kahnawake Gaming Commission, Swedish Gaming Authority, Curacao e-Gaming, and Malta Gaming Authority (MGA). Online casinos with these licenses are legit and reliable. 

Why the Rush to Legalize Gambling?

Keen followers of gambling news know that many countries are legalizing this practice. In Europe, some countries like Germany, the Netherlands, and Ukraine have relaunched their gambling markets after reviewing the laws. As for the US, states like Oklahoma, Maine, South Carolina, and Kentucky are discussing gambling laws. 

So, why are they suddenly embracing gambling? Simple, revenue! With the high cost of living globally, governments face the tricky balancing act of increasing tax revenues without pushing their citizens to the limit. As such, most of them pass pro-gambling laws to regulate operators in the market. This becomes a win-win situation for the government, players, and operators.

Are Gambling Winnings Taxable?

Depending on the gambling jurisdiction, winnings can be taxable or non-taxable. In the UK, the taxman doesn’t collect any revenue from players, even if you win a $100 million jackpot. Instead, the casino pays a 15% duty on their total gambling revenue. The basic thinking is simple; bettors lose more than they win. And by the way, the house always wins!

But in the US, gambling winnings are taxable. Players report their gambling winnings on horse racing, sports betting, casinos, and lotteries to the IRS. The casino automatically deducts 24% of your win and remits it to the taxman. Even worse, the IRS won’t follow you around to find out what you won. 

The Future is Bright!

The current developments in the online gambling industry prove that the industry will only get bigger and better. Governments regulate this industry to make it safer and generate much-needed revenues. 

But if there’s no movement in your area, don’t hesitate to play in a licensed offshore casino. Avoid using VPN, as the casino will still catch up with you sooner or later. Some will even suspend your casino account with any winnings in it.

About the author
Ethan Lim
Ethan Lim

Ethan Lim, a native of the Lion City, is Singapore’s rising star in the domain of online casino guide localization. He masterfully blends his intimate knowledge of local culture with international gaming standards to produce content that resonates deeply with Singaporeans.

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