Illegal Gambling Business

Extracted from: Internet Gambling in Nevada: Overview of Federal Law Affecting Assembly Bill 466,
pp. 8-13.  Courtesy of Liebert Publishing, Gambling Law Review

In 1970, as part of the Organized Crime Control Act, Congress passed the Illegal Gambling Business Act. The statute was aimed at syndicated gambling. [120]  Congress determined that large-scale, illegal gambling operations, like casino-type activities, including games such as black jack,  financed organized crime, which, in turn, has a significant impact on interstate commerce. [121]  As such, section 1955 is a direct exercise of Congressional power to regulate interstate commerce [122] and, specifically, the activities that substantially affect interstate commerce.[123]

In order to prove a prima facie case under this statute, [124] the government must establish that there is a gambling operation which (1) is in violation of state or local law where it is conducted, (2) involves five or more persons that conduct, finance, manage, supervise, direct or own all or part of the business and (3) remains in substantially continuous operation for more than thirty days or has a gross revenue of $2,000 in any given day. [125]

The first element requires a predicate state or local law violation. The second and third elements have been the subject of much discussion in our judicial system. As for the requirement of "five or more persons," it was Congress' intent to include all individuals who participate in the operation of an illegal gambling business, "regardless of how minor their roles, and whether they be labeled agents, runners, independent contractors or the like." [126]  However, Congress did not intend for mere bettors to fall within the prosecutorial arm of the statute. [127]  The term "conduct" means "any degree of participation in an illegal gambling business, except participation as a mere bettor." [128]  The term "participation" is limited to the performance of acts that assist in the gambling business. [129]  Therefore, the government need only show that the defendant was involved  in the illegal gambling business to be counted and not that the defendant knew the activity involved five or more persons. [130] "The jurisdictional five persons may include unindicted and unnamed persons." [131]  Moreover, the government need not prove that the same five individuals were involved for the statutory 30-day period.[132]

As for the third element, "Congress did not purport to require absolute or total continuity in the gambling operations." [133]  The term "substantially continuous" has been interpreted to mean an operation conducted with some degree of regularity. [134]

Given the minimal proof required to demonstrate a violation of the Illegal Gambling Business Act, some have argued that computer operators and maintenance crews, accountants and owners may all be included within the ambit of the statute even though their participation may not relate to Internet gaming. [135]

End notes:

[120]    See United States v. Sacco, 491 F.2d 995, 998 (9th Cir. 1974).

[121]    See id. at 998-1001; see also United States v. Lee, 173 F.3d 809, 810-811 (11th Cir.1999) ("if Congress, or a committee thereof, makes legislative findings that a statute regulates activities with a substantial effect on commerce, a court may not override those findings unless they lack a rational basis")

[122]    See U.S. Const. art. I, § 8, cl. 7 (Commerce Clause).

[123]    See United States v. Zizzo, 120 F.3d 1338, 1350 (7th Cir. 1997), cert. denied, 522 U.S. 998 (1997).

[124]    See 18 U.S.C. § 1955.

[125]    See Sacco, 491 U.S. at 998.

[126]    United States v. Schullo, 363 F. Supp. 246, 249-250 (D. C. Minn. 1973), aff'd, 508 F.2d 1200 (1975), cert. denied, 421 U.S. 947 (1975).

[127]    See id.

[128]    Sanabria v. United States, 437 U.S. 54, 70-71, n. 26 (1978); cf. King, 834 F.2d at 113-114 (one isolated incident of laying off a bet with the illegal gambling business is insufficient in light of the Congressional intent to attack the revenue sources of organized crime and the policy of strict construction of criminal statues).

[129]    See United States v. DiMuro, 540 F.2d 503, 508 (1st Cir. 1976), cert. denied, 429 U.S 1038 (1977)

[130]    See United States v. Trupiano, 11 F.3d 769, 772-773 (8th Cir. 1993).

[131]    Id., at 772.

[132]    See United States v. Murray, 928 F.2d 1242, 1246 (1st Cir. 1991).

[133]    Trupiano, 11 F.3d at 773.

[134]    See id. at 773-774.

[135]    See Seth Gorman and Anthony Loo, Blackjack or Bust: Can U.S. Law Stop Internet Gambling?, supra, n. 93, at 676.  [16 Loy. L.A. Ent. L.J. 667, 671 (1996)]