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Although gambling regulation is generally left to the states, the federal government has the authority, under the Commerce Clause of the Constitution, to regulate gambling activity that affects interstate commerce. Internet gambling falls into this category, as bets are generally placed at a personal computer in one state or country and received at a server in another state or country. Of the three federal statutes that appear to have direct applicability to on-line gambling—the Wire Act, the Travel Act, and the Illegal Gambling Business Act—to date only the Wire Act has been applied in the federal prosecution of activity relating to Internet gambling. The other two federal gambling statutes have been used in the closely analogous situation of telephone wagering, including telephone calls made to place wagers with offshore bookmakers.

The Wire Act prohibits gambling businesses from knowingly receiving or sending certain types of bets or information that assists in placing bets over interstate and international wires. Thus, if an Internet gaming Web site operating in any country (including the United States) receives a bet transmitted by an individual located in the United States, the operator has violated the Wire Act. For this reason, foreign entities offering gambling to U.S. citizens through the Internet would be subject to the Wire Act. Although some Internet gambling businesses, including foreign entities, have been successfully prosecuted under the Wire Act, courts do not agree on the applicability of certain sections of the statute.