The Unlawful Internet Gambling Enforcement Act went into law at 10 a.m. ET, Friday, October 13th, 2006. This law was paired with the Security and Accountability for Every Port Act (SAFE Port Act) and added at the last minute. The report was passed by Congress on September 30th, 2006 and later signed by President George Bush.
Provisions
This act essentially prohibits the transfer of funds from financial institutions to illegal Internet gambling websites excluding horse racing, fantasy sports and online lotteries. Penalties include the criminalization of the owners of those sites accepting funds from bettors. Those operators that are effect by this act include:
- Those that knowingly accept wages
- Those in the business of illegal gambling
- Those sponsoring online gaming that violates federal and state laws
- Those accepting gambling funds from credit cards, EFT’s and checks
- Those in connection with a bettor
The ban became effective immediately upon approval. Ironically, the actual participation in online gambling or betting is not illegal, simply funding it is. This targets financial institutions, credit card companies and other online banking companies. Also, internet service providers were required to remove sites that displayed hyperlinks to gambling websites.
Industry responses
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Many advocates against this bill argued that since poker is a game of skill, it should be excluded from this bill. Each state determined that this did not hold water. A study was conducted and decided that any game that contains 51% chance, is considered a game of luck and is therefore part of the bill. One solution is for online poker operators to present a statistical analysis based on hands played to prove this idea.
The most common response from publicly traded gambling websites is that they’ve stopped taking bets from United States customers. On the other hand, non-publicly traded websites continue to take bets from United States customers despite the law. Although they are out of the country, it is still an illegal act within the United States.
At the time, the largest internet poker company, Party Gaming Plc lost 60% of their stock worth within 24 hours of this bill being enforced. With millions of players, this showed the number of United States customers involved in some form of online gambling.
Although there are plenty of online gambling sites still available to United States customers, this act resulted in a huge loss for many publicly-traded companies. It’s likely that online gambling will always be available, but as laws become tougher, workarounds will need to be created.
