Online Casino Gambling

The Unlawful Internet Gambling Enforcement Act or (UIGEA) was passed by Congress in 2006 much to the chagrin of the online gambling industry. Many online casino executives took the act so seriously it restricted players from the United States without even reading the statute so as to abide by the law. The history of the law is tremendously short due to the fairly new concept of internet gambling.

Since 1998, Congress has attempted to pass anti-online gambling legislation. These efforts continued to fail due to the hurdles surrounding the law making process in the United States. Each year the bill was presented it was held up because of lobby groups each having their hand out. The result of this interference was Congress running out of time before the bill could be presented.

In 2006 the Republican Congress was fighting to segregate themselves from connections to online gambling lobbyist Jack Abramhoff who was surrounded by corruption and scandal. As a result, the party created the American Values Agenda which prohibited online gaming. The Agenda was led by Representatives Bob Goodlatte and Jim Leach.

They believed online gambling was removing billions of dollars from the American economy. Also, they stated online gaming was highly prone to fraud, national security, money laundering and various forms of theft. These angles attempted to deter Americans from participating in the activity.

Despite their claims, polls revealed American’s felt online gaming was a personal choice. In 2006, the Conservative Congress flipped to a Democratic Government. Despite this defeat, Republicans cleverly attached the UIGEA bill to a Homeland Security bill just before the power shift. Therefore, the bill was passed and online gambling was no longer legal in the United States.

The entire political environment in 2006 favored anti-gaming legislation in both Houses. In the summer of 2006 two bills were introduced by the House:

• The Leach Bill
• Goodlatte Bill

The Leach Bill attempted to halt electronic fund transfers to online casinos. The Goodlatte Bill expanded the scope of the Wire Act to include online casinos and poker rooms. This came about through a change in the terminology of the business of betting. The House eventually collaborated on a single bill that combined aspects from both bills.

The UIGEA is a tremendously important piece of legislation for the United States. Although the potential for reversal is always on the mind of gaming enthusiasts, this may never become a reality due to the strict guidelines set forth by this act.

The Unlawful Internet Gambling Enforcement Act went into law at 10 a.m. ET, Friday, October  13^th, 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 30^th, 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

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.

Since the passage of the Unlawful Internet Gambling Enforcement Act in 2006, U.S. crackdowns on online casino operators catering to American citizens have become somewhat commonplace. That said, with two big regulation bills currently under scrutiny in Congress, many online gambling enthusiasts were hopeful that such events were a thing of the past. Hope again American gambling fans, because we’ve got some bad news.

House Resolutions 2266 and 2267 proposing the reversal of the UIGEA simultaneous to the legalization and regulation of online gambling in the U.S. were on the agenda for a House Committee meeting on April 16, but the bills were pushed off the agenda in lieu of what committee members deemed to be more pressing economy-related matters.

The UIGEA is scheduled to go into effect on June 1 of this year. The act was originally scheduled to go into effect in 2009 but the implementation was delayed to give the necessary government bodies time to review HR 2266 and HR 2267. With the new deadline rapidly approaching and no new hearing yet scheduled, many proponents of online gambling are concerned that the U.S. will return to its restrictive online gambling policies.

Until the UIGEA is implemented, the U.S. government has no official stance on online gambling, but many state and federal offices have used the preexisting Wire Act to prosecute casino operators and funds transfer service companies for sending and receiving money to and from American residents for the purpose of gambling online. In fact, on April 16 an Australian payment facilitator named Daniel Tzvetkoff was arrested in Las Vegas amidst allegations of processing almost half a billion dollars in illegal online gambling payments.

If the BetOnSports case which just wrapped in January is any indication of how the U.S. legal system plans to treat such operators, then Tzvetkoff could be in big trouble. BetOnSports founder Gary Kaplan and CEO David Carruthers received four years and three years respectively for encouraging their company to accept payments from American banks. Both men were likewise fined a combined total of more than $70 million.

What do the legislation delays and operator crackdowns mean to the common player? If you’re not American, then neither scenario will affect you. If you are an American gambler, you cannot be prosecuted for playing real-money games online, but funds that are in transit to or from an online casino could be seized by a government body. That’s what happened to hundreds of American players when the Southern District of New York seized more than $30 million last year. None of the funds have as yet been returned to the account holders.

The new American gambling resolutions have been pushed back once again, and the deadline for implementing the UIGEA is drawing ever closer. Many American online gambling advocates thought that 2010 would be the year that the U.S. finally rescinded the UIGEA and legalize regulated online gambling. Lately American gambling industry insiders, operators and fans are sounding a lot less optimistic, and now it looks like their neighbors to the north may get the job done before the U.S. government does.

The Canadian Gaming Summit is in Calgary, Canada this week and the online gambling industry’s leading officials have all gathered to talk about making Canadian online casinos a reality. While online gambling itself is not illegal in Canada – either explicitly or implicitly as it is in the U.S. – operating online gambling establishments inside the country is. Since online gambling is a $1 billion industry in Canada, even without Canadian sites, it’s easy to see how opening the door to native operators could be profitable for the country and some of its tech companies.

The Canadian government currently has a laissez faire policy toward offshore operators that does little to protect Canadian players. The Interactive Gaming Council, whose president is the lead speaker at the Summit this week, would like to see the government get more proactive about online gambling by attaching new regulations to any Canadian operating licenses. While profit potential is of course a driving factor, many Canadians believe that legalizing native operators would also offer security benefits to the large number of citizens that already play online.

Proponents of online casino licensing in Canada believe that the existing population of gambling citizens will be more likely to play at sites that they know are licensed and regulated by the Canadian government, and that the government can do more to fight the growing gambling addiction problem if it approaches it from the source.

Under the country’s current online gambling policy – or lack thereof – Canadian citizens are free to play what they like, where they like and when they like. The government has absolutely no involvement in the industry, regardless of how its citizens are affected. That means that Canadian players that choose a less than reputable casino and suffer from identity theft can expect no legal recourse via the Canadian government. It’s gamble at your own risk, but many citizens feel that it’s time for their country not only to claim its share of the revenue but to protect the growing contingent of online Canadian gamblers.

If you are an avid online gambling fan that’s concerned about the recent player account seizures, or alternately if you’re afraid to play online because you’re not sure if it’s legal, then you’ve probably spent some time pondering the title question. Is online gambling really illegal in the United States? Surprisingly, there is no easy or obvious answer.

The Unlawful Internet Gambling Enforcement Act

UIGEA was passed in 2006 as part of the SAFE Port Act. The very name of this law implies that gambling is illegal in the United States, and yet even the UIGEA is somewhat vague about the country’s stance on online gambling as a whole. That’s because the UIGEA only specifically regulates American financial institutions’ involvement with online gambling; it does not address player limitations.

To date, no American players have been arrested for gambling online. In fact, most U.S. poker pros are open about how much money they earn playing online poker. The catch is that any American player caught transferring online gaming funds through their bank account could lose that money permanently to the U.S. government (and even some states).

Currently there are several bills circulating through the upper levels of the U.S. government that aim to regulate and legalize online gambling, but even as they are being considered other departments continue to seize online gambling funds. Oddly enough, while some officials work hard to discourage participation at online casinos and poker rooms, other forms of online gambling like off-track horse race betting are patently legal. Likewise it is legal to place bets via online sportsbooks based out of some states.

Further Online Gambling Clarification

There is currently no legislation that prohibits Americans from playing real-money casino games online. What is illegal is transferring online gambling funds through American banks. Because the United States has legally pursued not only the banks that have ignored these laws but the online casinos, sportsbooks and poker rooms too many gambling sites no longer offer their services to American players. That said, many other casinos target their sites to an American crowd.

It’s a confused topic that many gambling industry insiders believe may be solved within the year. In fact, late in 2009 the implementation of the UIGEA was pushed back an additional six months while Congress considers the pros and cons of legalizing the practice of online gambling instead of banning it.

In the late 1990s, online gambling exploded onto the scene, attracting players from around the world.  Unfortunately, these glamorous virtual casinos also attracted individuals who should not be gambling, kids especially. 2006 marked the year the United States made its attempt to ban online gambling, passing the Unlawful Internet Gambling Enforcement Act that essentially barred casino operators from doing business with the financial institutions that process transactions for American players.  Soon thereafter, several of the leading online casino operators and their software providers left the market by refusing to service U.S. customers.  Be that as it may, online gambling still exists and the tech savvy kids of today can find their way around preventative measures in order to participate.

Regardless of the UIGEA and the legalities surrounding the industry, online gambling is an issue parents need to pay attention to.  Due to the prevalence of the internet and computing in general, gambling online is something that literally done for hours at a time in secrecy.  It can deliver a pure rush of adrenaline to anyone kid who plays, especially when considering that they are free of the interruptions that could occur when trying to gamble offline.  Sadly, many kids have learned the hard way that online gambling is a fast way to part with money they really cannot afford to lose.  Underage gambling can lead to a wide range of problems in the future and put a tremendous strain on the affected family.

Preventive Tips

If you want to keep your children protected from online gambling, take note of the following:

Remind them that gambling on or offline is illegal for anyone under the age of 18.  This is the case in all 50 states even before the UIGEA was enacted in 2006.

Explain to your kids how internet casinos are in the business to make money, emphasizing that they stand to lose far more than they win.  There are actually quite a few kids as well as adults who still do not realize this.

Let your kids know that by acquiring gambling dept, they could be hindering their ability in the future to go to college or even get a loan for the car they always wanted.  Even as an adult, gambling debt can end up damaging your credit rating.

Keep a close watch on your credit card bills.  Players typically use credit cards to wager online and if an anxious kid doesn’t have their own, yours could be the next best alternative.

Lastly, if you are truly concerned about your kids gambling online, consider installing an internet filtering program.  When configured properly, this type of software will prevent them from gaining access to online gambling sites.

Conclusion

It is relatively easy for kids to find their way to an online gambling site these days.  However, this act is illegal, which is why online casinos do not accept memberships or facilitate transactions for minors.  The reputable gambling operators take all the necessary measures to ensure kids are not participating on their sites.  As a concerned parent, it up to you to play your role and make sure these efforts are not in vein.