The latest position of the US government, the UIGEA and latest efforts to repeal the Act.
This entry was posted on Tuesday, August 12th, 2008
Oggs.com, a leading online casino reviews website, summarises the latest position of the US government, the UIGEA and latest efforts to repeal the Act.
In late 2006, the US introduced the Unlawful Internet Gaming Enforcement Act (“UIGEA” – HR4411), a watered-down Act based on its predecessor HR4777 designed originally to prohibit online gambling in the USA. The passage of the UIGEA has been well documented, but just how much of an effect has the Act had on online gambling in the USA since its introduction?
As soon as the UIGEA was passed into law, it caused ructions in the online gambling industry. While stopping short of prohibiting online gambling outright, it attempted to pass a responsibility onto banks and online payment processors to ensure that US account holders were prevented from depositing to and receiving funds from online gambling operators. Online casinos, poker rooms, sportsbooks and bingo sites were faced with a decision to make: did they continue to deal with US punters, or withdraw from the US and play the game?
The Act was shrouded in controversy, even before it was pushed through. Its supporters were championing “family values”, whilst its detractors were keen to point out that the Act excluded State run lotteries and horse racing and was clearly money related. Either way, the law was passed and a timescale was set for the banks to comply by mid 2007. At around the same time, the DOJ
and the FBI started a targeted campaign of arrests in the online gambling industry, albeit that these were all sportsbook related, a form of gambling that is covered under a 1961 law entitled the Wire Act. The cleverly orchestrated campaign led to a flurry of reaction in the industry, with many operators, software providers and payment processors pulling out of the USA.So as we sit here in mid-2008, what effect has the UIGEA had? A scout around the popular gambling forums would quickly suggest two things: firstly, there are still a lot of US poker players and punters out there, and secondly these have had a lot of difficulty finding places to play. The latter is not only due to a reduction in gambling sites taking US players, but also largely down to a lack of efficient deposit and cashout processing options. On the face of it, this will clearly please the supporters of anti-gambling legislation, especially considering that the deadline for banks to meet the terms of the UIGEA has long passed and no visible headway has been made. It would appear from recent discussions in Congress that the lack of clarity in the Act coupled with the sheer size of the resources required for banks to monitor every customer transaction has prevented implementation at this point.
Scratching below the surface of player reactions on the forums does reveal a rather more worrying trend as it appears that a lot of US gamblers are turning to less scrupulous operators who have taken advantage of the situation to solidify a position in the US market. In the 21st Century, left largely to its own devices, the online gambling industry had slowly but surely started to push the illegal, poorly run or fraudulent gambling operators out of the picture. By 2006, the online gambling industry was a much safer place for punters with big brand names dominating the market. Following the UIGEA, perhaps unsurprisingly, the more established operators, those with shareholders and accountable business practices were the first to pull out of the US to avoid confronting US law. Almost overnight, many of the big names disappeared in the US, and with the benefit of hindsight, the path was left clear for some of those casinos, poker rooms and sportsbooks who were previously pushed out to return.
A number of the higher profile payment processors have left the market – e-wallets like Neteller exiting amid major pressure from the DOJ. Of all the areas affected by the UIGEA, the payment processing market in the past 18 months has been the most turbulent. We’ve seen processors step into the US, then out again, a huge increase in the use of prepaid cards, followed by new payment processors being created specifically for the purpose of online gambling. For US punters, finding one you feel you can trust has been a fraught affair. There seems to be signs that it is settling down, but there is no doubt that the choices are severely limited, and more importantly that those choices now mean US punters often have to put up with long delays when receiving their money, and often when the payments do arrive, they are from anonymous benefactors making tracking a tedious and confusing task.
So what next for online gambling in the US? Clearly, the situation at present has to change. Even the most fervent supporter of banning online gambling would admit that US punters need clarity and a situation that avoids putting gamblers at risk. Prohibition would not be a popular solution, but it is an option and to stand a chance of working, it would have to avoid the exclusions built into the UIGEA. But then, does the USA really want to be a democratic nation that bans its citizens from playing poker? Probably not. Regulation is another option. This is being widely adopted in European countries where perhaps society is more open and trusting, not forgetting of course that anti-Monopoly laws and the WTO exert a large influence. In the USA, Senators Barnet Frank and Ron Paul have put together HR 5767 garnering support to effectively repeal the UIGEA by ceasing the Treasury from implementing rules on banks to prevent gambling transactions.