26 U.S.C. § 4404
Territorial extent
The tax imposed by this subchapter shall apply only to wagers
(1)
accepted in the United States, or
(2)
placed by a person who is in the United States
(A)
with a person who is a citizen or resident of the United States, or
(B)
in a wagering pool or lottery conducted by a person who is a citizen or resident of the United States.
( Aug. 16, 1954, ch. 736 , 68A Stat. 525 .)