News

Wednesday, 09 June 2010 08:42

The Unlawful Internet Gambling Enforcement Act, or UIGEA, finally becomes law as of 1st June. What will it mean to those who gamble on the Internet?

Back in 2006 when the UIGEA was passed on the back of the Safe Harbor Act, United States Congress created a way of making the financial system act as the front line for enforcing the rules regarding online gambling. It meant that banks and financial institutions were held responsible for ensuring that all financial transactions involving online gambling payments were blocked. They were given until December 2009 to put the necessary systems in place to enable them to do this.

Rep. Barney Frank and his House Finance Committee came along and in the process of trying to get a bill passed that would effectively overturn the UIGEA, managed to get that date postponed until the 1st June 2010. The idea was to give them time to get their bill passed and stave off the problems that the UIGEA would cause. But time is up. So what does that mean for an ordinary gambler who wants to exercise his right to choose how, where and when he places his bets?

One of the main sticking points for the banks has been in identifying exactly what constitutes an illegal financial transaction to an online gambling operator. No one in government has ever actually defined what is meant by illegal online gambling. Thus the banks and other payment processors have no firm guidelines to help them identify which transactions they are supposed to block. The greatest fear amongst Frank's legislative associates was not just the ongoing cost to the financial institutions, but that any transactions that seemed suspicious in any way, including the legitimate ones, would simply be denied.

Since the introduction of the UIGEA, the movement of monies for purposes of gambling over the Internet, with the exception of US based horseracing websites and lotteries, is deemed illegal under the 2006 law. The reality is that the banks have already been exercising due diligence on any transactions they believed were suspicious. Many companies that have been processing money back to gamblers in the US have been closed down and suffered confiscation of funds. The effects of the UIGEA were already being felt long before the June deadline.

For the average US gambler who continues to gamble over the Internet, their payments and winnings may be blocked by the banks, credit card companies and other financial institutions. The law was not meant for prosecuting individual US players at Federal level, although at State level, there may be local laws that can be enforced. The stakes have been raised at least for the time being until Frank can get his Bill passed and the ill-fated UIGEA overturned.