The Unlawful Internet Gambling Enforcement Act, or UIGEA, was actually an amendment, and a largely ignored one at that, which was signed into law as part of the SAFE Port Act (which was concerned with national security) on October 13, 2006. It was done in such hurried fashion, added and pushed through just minutes before the Senate adjourned for the 2006 elections, that the final language was unread by the most of the members who voted on it.
The UIGEA is designed to put a halt to transactions going from financial institutions to gaming-related sites on the internet and vice versa. Its intended effect is to cut off a supply of funds to online casinos and gaming operations. The bill is supposed to affect banks, credit card companies, Western Union and other third-party entities where fund transfers can be initiated.
Carve-outs for the lottery and horse racing exist (but not other pari-mutuels like dog racing, which suggest certain lobbying influences at work), but there are allowances for "fantasy sports" games as well as free gambling-type games to be offered – even
free roulette as long as there are exchanges of funds between any financial institutions.
Scores of online gaming operators have effectively disqualified participation from U.S.-based customers. Companies who are traded on public exchanges overseas stopped dealing with American customers almost immediately. There is no question that the reverberation has been felt throughout the industry.
The law requires compliance from banks, and the idea is to identify gaming enterprises by a certain merchant code. Banks and others involved in money transfers are ordered not to send money to businesses with that merchant code. Interestingly enough, they would be protected from litigation in the event they inadvertently blocked a customer transaction that was legal and legitimate, and that doesn't necessarily promote restraint.
Some logistical problems arise, naturally. One of them is that online gaming businesses could somehow wind up with a different merchant code as a work-around; on the other end, banks don't really want to be in a position where they have to monitor many more customer transactions than might even be necessary to comply, and they certainly wouldn't be looking forward to devoting the manpower required to track down the recipients of paper checks.
The fact is that while the UIGEA has unquestionably taken a toll on the online gaming industry, specifically as it concerns U.S. merchants, affiliates and customers, there are a number of ways an affected party could conceivably circumvent the law, and this bill can't cover all of them. There is the legitimate question as to how far the United States government really wants to reach, and how effective the enforcement of the UIGEA can ultimately be if they can't cross jurisdictional lines. After all, how could you compel foreign governments, some of whom derive revenue from the industry, to cooperate? How could businesses that fall completely outside the jurisdiction of the U.S. possibly be sanctioned for activities that, within their own respective jurisdictions, are legal?
These questions, as well as others, have contributed to the bill not taking full effect as of yet. When originally passed, it was specified that the federal government would have 270 days from the time of the UIGEA's signing to settle on and implement regulations to identify and block transactions to gambling sites. That deadline has passed. Ultimately it was to go into effect in December of 2009, but the industry was given something of a reprieve, due in no small measure to the efforts of Rep. Barney Frank of Massachusetts, who has fought the bill and has introduced alternative legislation to supersede the UIGEA and institute regulation of
online casinos and poker rooms.
As of the moment, the full provisions of the bill would be in effect starting June 1, and it has become a battleground of sorts between moral conservatives and pro-freedom interests. In that tug of war, the pro-gaming forces have made some strides, so it remains to be seen to what extent online gaming and our ability to in the US to
play roulette online for real money will be affected further.
