Feds continue to scramble to create a national regulatory framework for online gambling, despite the fact that Nevada, New Jersey (and soon, several more states) are already in full throttle Internet gambling mode on their own. Even law enforcement seems to realize it’s a rather belated effort, as noted by Chuck Canterbury, who heads up the national Fraternal Order of Police.

Feds Playing Catch Up

“Law enforcement is always behind the eight ball on technology, especially state and local,” Canterbury said. “It will take us years to get to the place where we need to be technologically to fight any sort of money laundering at the state level, especially when it is cross-border money laundering.”  He still wants to try, however saying an amendment and clarification to the 1961 Wire Act and efforts to clarify and control national legal standards for online gaming “would help us immediately.”

The U.S. Department of Justice reinterpreted the Wire Act in December 2011, allowing for legal electronic betting of all kinds, except for sports betting. That eradicated the previous precedent, which assumed the 1961 bill would bar any sorts of wagering via the Internet and phone services.

Fears About Money Laundering, Trafficking

Despite the fact that Nevada – the first state to actually go online with poker – has had no major issues and is operating under an extremely strict regulatory framework, experts are warning Congress that if they don’t step in and create a national framework, Internet gambling will become like the Wild West of yore.

And Canterbury threw fuel on the fear fire with this: ““Local law enforcement won’t be able to attack money laundering and terrorist activity with fifty laws” for fifty states, he told the Senate panel of Commerce, Science and Transportation subcommittee meeting recently.

“What we have here is a free-for-all,” Sen. Kelly Ayotte (R-New Hampshire) said. “Shame on us if we don’t get something done on this. When I think about the issues of money laundering, terrorism [and] drug trafficking, … I hope this is something we move on very quickly.”

One Maryland attorney, Jack Blum, who has dealt with money laundering cases in the Caribbean in the past and consulted for the Feds on offshore illegal money transactions, believes that only a federal regulatory framework can combat organized crime on the Internet. “For the states to try to enforce rules on Internet gambling is really a stretch,” said Blum. “It has to be regulated at the federal level.”

Perhaps a slightly odd fright purveyor was newly inducted American Gaming Association President Geoff Freeman. Representing the interests of numerous major land-based casino operators – at least some of whom have or plan to have Internet presence in the near future – he sounded more like a fire-and-brimstone preacher warning of the evil wages of sin. Saying the federal government needs to swoop in yesterday, Freeman warned that the U.S. “may soon experience the largest expansion of gambling in its history, including online slots, blackjack and other traditional casino games of chance.”

Is that a bad thing?

Sen. Dean Heller, (R-Nevada), a high-ranking consumer protection subcommittee member, had these bitter words on the Wire Act turnaroud:  “The reason we are here today is on December 23, 2011, the [Obama] administration changed this so their friends in Illinois and New York could put their lottery tickets online. Unilaterally the White House made this decision two days before Christmas when all of us were out of town. And it concerns me.”