What is the UIGEA?
Online casinos and internet gambling have grown into a billion-dollar industry in only the last few years. Despite their near unprecedented level of success, there is almost complete ambiguity and confusion in America about the legality of online gambling. This ambiguity can be traced back to five simple words: Unlawful Internet Gambling Enforcement Act.
According to the website RepealTheUIGEA.org, "The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) is an American law passed in the United States Congress on September 30, 2006 and signed by President George W. Bush on October 13, 2006. The law (surreptitiously passed with the Safe Port Act) is intended to eradicate online gambling by prohibiting US banks and credit card companies from transferring funds between Internet-based casino web site operators located offshore and their American-based gambling enthusiasts."
There is no clear connection between the UIGEA and the rest of the Safe Port Act and it is not clear whether most of the voting Congresspersons were even aware of its inclusion in the Act.
So the UIGEA bans online gambling, right?
Not exactly. The biggest problem with this act is that no one is really sure what it means; what is clear however is that its language in no way bans online gambling outright for individuals. What is deemed illegal is the transfer of funds by banks, credit card companies, and payment processors such as PayPal from gamblers to online casinos and vice versa. In the wake of the passing of the act, most online casinos panicked and left the American market, helping perpetuate the popular belief that internet gambling is illegal. One payment processor, NETeller, settled with the US Department of Justice, paying a sum of $136 million after being found guilty of handling billions of dollars from America.
So how is the UIGEA being enforced?
Poorly. Rather than creating clear guidelines as to what types of activity are and are not legal, the Act has instead created ambiguity for the parties who are supposed to be enforcing the rules, namely, the financial institutions. Either these banks must block all transactions which resemble gambling, or they must pick and choose in a non-uniform manner.
So what next?
In response to the UIGEA, Congressman Barney Frank is leading the fight to legalize and regulate online gambling through his bill, the Internet Gambling Regulation and Enforcement Act (IGREA). Frank, among others, attest that rather than dissuade Americans from gambling online, it simply pushes them underground to use offshore payment processors, causing them to send billions of dollars outside the country. Co-signed by almost fifty Congresspersons thus far, the IGREA would create clear rules to the regulation of internet gambling including a system of taxation which would lead to several billions of dollars of taxes for the federal government.
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