In 2006 when the Unlawful Internet Gambling Enforcement Act (UIGEA) was passed by Congress, it came as a complete surprise for the online gambling industry in the country. Although the US government has been making efforts to come up with anti-gambling legislation since the 90s, no one predicted the passing of UIGEA. The act shook everyone in the industry from the US casino sites and payment processors to players.
However, despite all the setbacks, there are still many safe US casino sites that you can play at. Most of these sites have implemented measures to ensure the safety of players’ money and they are licensed by reputed commissions from outside the US.
Let’s have a look at how the online gambling situation in the US has evolved.
UIGEA and its Impact on Online Gambling in the US
Since 1998 Congress has been trying to push the anti-internet gambling legislation, but these efforts were unsuccessful because of the immense complexities involved in the law making process. Every time the bill came up, it was held up by different interest group lobbyists. The bill could not be passed in any legislative sessions because of the lack of time. In 2006 an ‘American Values Agenda’ was created by a Republican controlled Congress. This agenda included a ban on internet gambling.
The movement was lead by Jim Leach and Bib Goodlatte. They linked online gambling with the increased risk of fraud, identity theft, money laundering and national security, and said that it was draining the US economy of billions of dollars. The results of a public poll on the subject indicated that most people believed that internet gambling should be a personal choice.
With the Democrats gaining control of both the houses, the defeat of Republicans in November 2006 did not come as a surprise. However, before handing over power to the opposition, the UIGEA was slipped in as a part of a Homeland Security bill by the Republicans.
In 2006 the conditions were favorable for the passage of anti-online gambling act. Although the legislation was passed, it was rather vague. The House of Representatives introduced two separate bills. The Lynch Bill prohibited some internet gambling ETFs (electronic financial transactions) and encouraged foreign government cooperation. Both the Leach Bill and the Goodlatte Bill were similar to some extent, but the latter also aimed to extend the scope of the Wire Act to cover poker rooms and casinos. This was to be achieved by changing ‘the business of wagering and betting’ definition.
The Goodlatte Bill faced many controversies. Because of this, a joint bill that included points from both the Leach Bill and the Goodlatte Bill was passed. The legislation was forwarded for the senate’s consideration in July 2006. Most experts thought that the bill would not be passed because of the lack of time, but in the final hour it was included in the SAFE Port Act. The proposition of Wire Act expansion was dropped to ensure the passage of bill without resistance. But without the Wire Act provisions, the legal consequences for online gambling remained almost unchanged.
Presently, financial institutions and banks are prohibited by the UIGEA from processing financial transactions from and to internet gambling sites. This is the reason why the US players are finding it difficult to make deposits through checks or credit cards. While major US casino sites are being tracked down by the DOJ, no American citizen has faced prosecution for internet gambling. To further complicate the matters, each state has a different stand on whether or not to allow their residents to gamble online.
Online Gambling Industry’s Reaction to the Act
A number of casino and poker sites withdrew from the American market soon after the UIGEA was passed. The publicly traded organizations were to first to go. In order to protect their firms, several payment processors also withdrew from the market. These steps were taken by many US casino sites and payment processors without even waiting for the exact interpretation of the UIGEA.
The biggest problem with the Act is that it does not define unlawful online gambling. The Act has been challenged by multiple lobbyists and groups. The act requires financial institutions to prevent illegal gambling, which is an additional burden for the banking industry. The lack of clarity and contradiction between the state and federal laws further complicate the matters. Another factor aggravating the US casino sites, particularly poker sites, is that games of chance like state lotteries, fantasy sports and horse racing have been exempted by the act.
Many groups including Poker Player’s Alliance (PPA) are lobbying for the UIGEA repeal. The vagueness of the act has prompted several organizations to file cases against the government, which claim that the UIGEA is unconstitutional. iMEGA (Interactive Media Entertainment and Gaming Association) is one of them. RGA (Remote Gambling Association) has also filed a lawsuit against the US with the European Commission based on the violation of WTO (World Trade organization) commitments. A decision is yet to be reached. But many experts believe that the act may be reconsidered.
