Unlawful Internet Gambling Enforcement Act

The Unlawful Internet Gambling Enforcement Act (UIGEA) is a U.S. law passed in 2006 which regulated online gambling. UIGEA “prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law” (source: www.web.archive.org). The passing of this unfortunate law has had a massive impact on online gambling in both the sports betting and poker landscapes. UIGEA sought to eliminate online gambling by preventing the use of U.S. financial institutions for online gambling-related purposes. This, of course, is easily worked around by any savvy bettor and resulted in incredible devastation to U.S.-based companies in the gambling market. Bettors can simply circumvent this absurd law by funding accounts without using U.S. banks. Instead of regulating a market that most would agree requires regulation because of the dangers, this Act forced consumers to rely on possibly dangerous, unregulated, overseas vendors as the marketplace because easily regulated larger domestic companies had been forced out of the market. If the true goal of UIGEA was to protect the U.S. consumers, UIGEA has failed miserably.

History

UIGEA was introduced in the House of Representatives in November of 2005 and signed into law on October 13, 2006 by President George W. Bush. The Act was famously passed as an add-on to unrelated, non-controversial legislation on the last day of the 2006 Congress, with no member of the Committee actually seeing the final language of the bill before it was passed.

Online Sports Betting and UIGEA

When UIGEA was passed in 2006, most offshore gambling companies stopped taking in action from U.S.-based customers. This action resulted in a sharp decrease in traffic to their websites, forcing many of these companies to simply shut down. Today, there are a handful of top foreign-based sports gambling websites that are still operating in the United States. Companies like BetOnline, 5Dimes, and Bovada, among others, have circumvented UIGEA by reducing their payment processing options. UIGEA at its core attacked companies for accepting payments for wagers made over the internet, so these companies operating today process U.S payments via wire transfer services instead.

Online Poker and UIGEA

Similar to sports betting, all public gambling sites on the London Stock Exchange ceased to accept U.S. players due to the passage of UIGEA. As stated above, this has driven U.S. bettors to non-public, unregulated companies where shady business is much more easily achieved. Predictably, the vast majority of U.S.-based online poker companies had to shutter operations, most notably the largest provider, Party Poker. The largest major online poker companies PokerStars, Full Tilt Poker and Absolute Poker were attacked by the United States in a court case which was decided on April 15, 2011, infamous in the poker community as “Black Friday”. The sites immediately stopped offered money play to their U.S. customers, freezing hundreds of millions of dollars in player funds for countless users in the process. Online poker suffered massively as a result of this – an estimated 40% of traffic for the three major companies came from U.S. users. Poker had been growing rapidly in the United States up until this moment, and likely will not regain the level of popularity unless other legislative action is taken.

FAQ

What products were excluded from UIGEA?

UIGEA specifically excludes fantasy sports and skill games.

Was online wagering on Horse Racing a part of the UIGEA?

UIGEA did not discuss the legality of online wagering in regard to horse racing.

What law passed in Washington 2006 in regards to online poker?

A law passed in the state of Washington in 2006 made it a felony to play online poker.

What criminal penalties can breach of UIGEA lead to?

Criminal penalties under UIGEA include up to five years in prison, fines, and disbarment from gambling.

To what law was UIGEA added?

UIGEA was added as a last-minute addendum to the non-controversial SAFE Port Act, which was a piece of legislation aimed at improving maritime security in response to increasing terrorism threats at U.S. ports.

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