Online Casino Spotlight

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.

The long awaited regulations of the Unlawful Internet Gambling Enforcement Act have been postponed for six months from December 1, 2009.  Joe Brennan, Chairman of Interactive Media Entertainment and Gaming Association, informed the online gambling industry after the Federal Reserve and U.S. Treasury Department decided to delay the hearings.

The news came just a week before the hearing that was scheduled to be held by the House Financial Services Committee concerning two online gambling bills presented by Massachusetts Democrat Representative Barney Frank.  These bills could change the entire landscape of the online gambling industry, particularly the one that aims to undo the UIGEA entirely.  The UIGEA was enacted in 2006 after the industry was somehow connected to an unrelated port security measure spearheaded by Senate Majority Leader and Tennessee Republican Bill Frist.  Unfortunately for U.S. players, the SAFE Port Security Act was passed unanimously in the Senate.  With everything put on hold until next year, the fate of Franks bills is up in the air.

Regarding the hearing, which was to be held Thursday December 3 in Room 2128 of the Rayburn House Office Building, Michael Waxman, a spokesman for Safe and Secure Internet Gambling Initiative, reported to Poker News Daily that Barney Frank is demonstrating his commitment to changing the government’s perception on internet gambling.  He mentioned how the Chairman is looking to replace the failed attempts at prohibition with a viable regulatory framework that protects the consumer.  Waxman noted that Congressman Frank’s dedication is further indicated by strategically scheduling the hearing and approaching it on the heals of a push for the reformation of the U.S. financial industry, which is what the committee has been focusing on exclusively over the past six months.

As it stands now, the six-month delay will take online gambling regulation to June 1, 2010, just before election season rolls around next year.  Although pressing issues such as the slumped economy and healthcare have understandably hogged the spotlight since more than a year ago, online gambling just may have its day to shine in the sun.

When breaking the news, Brennan shared his thoughts by saying how encouraging it is to see that things are moving in the right direction, yet still unfortunate that it took this long. He also mentioned that hopefully one of Frank’s bill, which already has 63 co-sponsors, can at least be heard in the next months.

Neither Federal Reserve Chairman Ben Bernanke nor U.S. Treasury Secretary Timothy Geithner were available for an official comment on the delay at press time.  The PPA (Poker Players Alliance), National Thoroughbred Racing Association, the American Track Operations Association and members of the Kentucky Congressional delegation all filed petitions to the two government officials in letter asking that regulation of the UIGEA be instated in one year.  Alabama Republican Congressman Spencer Bachus and Arizona Republican Senator Jon Kyl asked Bernanke and Geithner to uphold the original December 1 compliance deadline but it was to no avail.

Many players in the United States and other countries will probably be sad to know that it is indeed legal to gamble online in the United Kingdom.  This is mainly because the UK government views the online gambling arena as a legit and more interestingly, a profitable industry that can deliver significant tax revenues under the right legislation and regulation.  The U.S. on the other hand, sees it as a potentially dangerous industry that is difficult to control and has therefore, elected to prohibit it, or at least this is their attempt with the Unlawful Internet Gambling Enforcement Act.

Potential Revenues

The foreign countries where many online casinos operate openly embrace the internet gambling industry.  Operators pay these governments thousands of dollars to obtain gaming licenses in addition to taxes and other expenses.  Antigua, Grenada, Gibraltar, Curacao and the Dominican Republic are just a few of many small countries whose economies have received a significant boost from the online gambling business.  While the UK government does not regulate these offshore casinos, not all are corrupt or looking to cheat players.  Conducting business in general over the internet is risky whether the government is involved or not.  However, the online gambling space is becoming much safer and as a result, more trusted by UK citizens.

Proceeding with Caution

Due to the fact that offshore casino operators are not subject to scrutiny by the UK government, players need to be more cautious than ever.  Even though the country is more open to the internet gambling industry, if someone happens defrauds you, it will be very difficult to prove your case to any type of authorities.  Therefore, the best approach for UK players to take is to “wager with caution.”   Also keep in mind that all online casinos exist to make money by attracting as many new players as they possibly can.  The only way this can be achieved is by offering an honest service and establishing a good reputation.   If it starts to become known that the casino is not paying out winnings or involved in other questionable practices, word will travel fast and damage any credibility they have established.  The good thing is that most casinos, with the exception of the fly-by-not operators, have proved to be safe and reliable.

If you are someone who is concerned about transmitting sensitive personal information such as your name, address and credit card numbers over the internet to an online casino, you must understand the same risks exist when doing business with  other companies whether they are licensed in the UK, involved in the gaming business or not.  The internet can be a haven for criminal activity and not even legislation and regulation from the government can stop it from occurring.  Fortunately, reputable online casino operators take every to ensure that the information you share with them remains private and secure.  This is made possible by the use of secure servers and encryption technologies that protect data and prevents hackers from intercepting and thieving confidential information.

The Canadian-based Optimal Group Inc. recently brokered a non-prosecution agreement with the United States Department of Justice to forfeit $19.2 million in funds. The case was tied to Optimal’s involvement as an e-wallet provider to process billions of dollars related to online gambling operations.

US government pursuing online gambling operations

The United States has been actively seeking out any e-wallet providers that have been involved with any online gambling sites. The US has used a variety of laws to make their case. Among these laws are the Wire Act, the Unlawful Internet Gambling Enforcement Act and the Illegal Gambling Business Act.

From 2004 to 2006, Optimal’s e-wallet company Firepay was operating in the United States. “Optimal, operating an electronic wallet called Firepay, processed more than $2 billion worth of illegal gambling transactions for United States customers,” the  U.S. Attorney’s office said. When the United States enacted their Unlawful Internet Gambling Enforcement Act in October of 2006, Optimal no longer accepted payments from customers within the US. Prior to the legislation, about 80% of their payments were from customers in the United States.

Under the deal, Firepay acknowledged a violation of federal law by providing wagering in the United States. The Optimal Group agreed to forfeit $19,182,418 as part of their non-prosecution arrangement with the US. Optimal stated that the amount was a “disgorgement of property involved in and proceeds received from the payment processing services that were provided by the company’s subsidiaries to Internet gambling merchants in relation to U.S. customers of such merchants.”

Firepay is no longer in operation. The Optimal Group has focused their business interests into some different areas. The Group’s WowWee business is a leading designer, developer, marketer and distributor of innovative hi-tech consumer robotic and entertainment products. The operation is also involved in the development of toys.

Electracash also a target

The US is also looking into the operations of many other foreign and domestic e-wallet providers. The California based online cash processor Electracash Inc. has been a target of the government in recent months. In July, US federal authorities seized bank accounts of the company. The accounts were allegedly used to process payments from online gambling operators. Now, the government is seeking to gain access of Electracash e-mails to find further evidence of illegal activity.

UIGEA related seizures could be winding down

While the government has been able to seize some funds from several e-wallet providers tied to the Unlawful Internet Gambling Enforcement Act, the seizures could soon be a thing of the past. With Massachusetts congressman Barney Frank’s reform legislation to end the UIGEA gaining momentum, the government could focus on taxing online gambling operators instead of the far more difficult process of trying to enforce laws that are vague in nature. The current policies of the United States have done nothing to stop the continued growth of the online gambling industry. The impending UIGEA reforms would enable federal authorities to direct their energies towards more substantive issues and concerns.

Supporters of online gambling suffered a crucial blow in the ongoing fight for regulation.  This past Tuesday, a U.S. appeals court in Philadelphia ruled in favor of the Unlawful Internet Gambling Enforcement Act against the iMEGA (Interactive Media Entertainment & Gaming Association) in a 3-0 decision.  According to a few legal experts following the case, the court ruling should come as no surprise.

Joe Kelley, a Buffalo State law professor, explained that whenever you contest an act of Congress, you have an uphill battle on your hands and an incredibly long shot at winning.

Of all the arguments made, the iMEGA emphasized that the UIGEA was a violation of privacy rights outlined in the Constitution.  The online gaming trade body sited two cases in which the UIGEA infringed on privacy, using Lawrence vs. Texas and Reliable Consultants Inc. vs. Earle as its examples.

However, Judge Dolores Sloviter, who had the final say on the matter, didn’t leave any assumptions in regard to the decision to dismiss the iMEGA’s claims.  She firmly stated that the organization’s dependence on the aforementioned cases were misplaced and ultimately, irrelevant.  According to Sloviter, both the Lawrence and Earle cases specifically involved state laws barring certain forms of consensual sex between adults in the privacy of the home.  In regards to the UIGEA, she noted that even in the confinements of the home, gambling does not have the same constitutional magnitude of those individual cases.

While the court rejected all attempts and arguments by iMEGA’s high powered attorneys, there is one glaring loophole in the ruling that could give online gamblers and operators a small ray of hope.  In justifying the legality of the UIGEA, the appeals court did not find anything in the legislation that makes any form of gambling in the United States illegal.  Instead, the ruling verifies that similar to the Illegal Gambling Act, the UIGEA is only in place to enforce existing gambling laws.  Because there are currently no federal laws prohibiting online gambling, it can be concluded that the act only applies to online gamblers who reside in states that have laws in place against wagering over the internet.

The court applied the “reasonable man” test, a commonly used legal method asserting that the legislation could be perfectly comprehended by an individual of normal intelligence.  It then went on to specifically apply the UIGEA to existing state legislation, in affirmation that the court’s interpretation of the act only holds prevalence in jurisdictions where online gambling has been deemed illegal by other laws.  This essentially means that other than wagering on sports events over the internet, which is prohibited on a federal level, online gambling is legal and financial transactions should be allowed to those players in states without legislation against it.

Following announcement of the ruling, Joe Brennan Jr., iMEGA chairman, voiced that the court made it clear that online gambling is unlawful in states with existing laws in place.  He also noted that there is currently only six states that have laws against online gambling, which leaves a total 44 states where it is potentially legally.  Brennan declared that this isn’t a win of any sort, but a good start.

Along with ushering in healthcare reforms and economic stimulus, President Barack Obama may change the face of internet gambling in the United States.  In fact, upon Obama’s president win, a Merrill Lynch representative stated, “We think it could ultimately pave the way for online gaming regulation rather than prohibition.”

UIGEA Violates US-European Union Trade Agreements

The point of contention between America and the European Union is the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA).  UIGEA was originally created in order to prevent any American financial institution from transferring monies into online casinos, with the exception of horse racing and lottery websites.

Currently, the European Commission argues that the United States’ UIGEA legislation is violating EU trade agreements.  While the Bush administration simply ignored working jointly with international organizations, Obama’s approach is much different.  In fact, the Obama administration is currently working to resolve the conflict with the European Commission. A resolution should come forth before the expiration of the “grace period,” or else the issue will be turned over to the World Trade Organization for further investigations.

While Obama has not declared his stance on internet gambling, his desire to work with the European Commission and United Nations to resolve conflicts may signal legalized online gambling.

The Future of Legalized Online Gambling

What does the future hold for legalized online gambling?  Last year, Congressman Barney Frank proposed a bill that would overturn UIGEA, but upon voting, the bill tied at 32-32.  In order to pass through the committee floor, the bill simply needed one more vote.

However, Frank continues to work to overturn UIGEA, and he believes that his bill will pass in 2009 with the help of both a Democratic president and Democrat majority in Congress.  Frank has 48 cosponsors for his act to revoke UIGEA, and if the bill is passed to legalize and regulate online gambling, then the American government stands to gain significant tax revenue – which is sorely needed to begin to replenish the severe budget deficit.

Along with legislative assistance, President Obama’s stance on conciliatory foreign relations may bode well for legalized online gambling in the United States.  Stay tuned for the latest news at Online Casino Spotlight!

Traditionally, U.S. gambling regulations have been reserved for state governments as opposed to ruling at the federal level.  A prime example would be the Wire Act.  As we all know however, federal law often finds a way to overthrow state legislation.  The DOJ (Department of Justice) has expressed on a number of occasions that the act prohibits all variations of internet gambling in the United States.

Enter the Wire Act

Enacted in 1961, the Wire Act was passed to prevent bookmakers from taking sports wagers via telephone.  At one time, accusations of violations were typically accompanied by a range of other charges such as conspiracy, money laundering and violations of the Illegal Gambling Business Act.  The one key point stressed by gambling proponents is that the Wire Act is enforced towards the gambling operator.  There is no language within the law that says it is illegal for the consumer to place a wager.

Because there was simply no way to have predicted online gaming in the early 1960s, from a practical aspect, there is no way the Wire Act could apply to casino gaming over the internet.  In recent times, the DOJ has been quite busy tangled up in legal disputes in pursuit of conviction for gambling operators, years before Congress even got involved.  In 2000, the DOJ garnered a successful conviction of Jay Cohen, World Sports Exchange president, for violating the Wire Act.

The So-Called Internet Gambling Ban

The UIGEA (Unlawful Internet Gambling Enforcement Act) was enacted in the fall of 2006, a law which states that it is illegal for any financial institution to facilitate monetary transactions between offshore gambling operators and U.S. consumers.  However, this legislation has been controversial from the start as it does not state that it is illegal for those consumers to gamble on internet sites.  The introduction of the UIGEA has led the online gambling industry’s biggest players away from the U.S. market, even though many private entities continue to service it.  These companies are banking that the UIGEA will not be able to block payments, giving them the ammunition to continue operating in jurisdictions in which U.S. authorities have no power.

No-Online Gambling States

Several states, including Illinois, Indiana, Louisiana, Michigan, Nevada, Oregon, South Dakota and Washington have passed laws that prohibit all unauthorized forms of online gambling.  Both Hawaii and Utah have also passed similar legislation.  Lawmakers in Nevada passed a law that permits intrastate internet gambling but have taken very few steps to introduce a viable system.  The argument has always been that implementing such a system would require advanced technologies that have the ability to accurately verify a player’s age and location, a system the DOJ claims would violate federal legislation.

In April of 2008, federal regulators and representatives from the financial industry went before Congress and testified that attempts to enforce the UIGEA would lead to substantial regulatory problems.  Resulting from this testimony was a new legislation introduced by representatives Barney Frank and Ron Paul, supporters of the legalization and regulation of online gambling.  This proposed legislation would prohibit the DOJ, Federal Treasury and Reserve from enforcing any regulations associated with the UIGEA.  To the current day, no official regulations for UIGEA enforcement have been adopted, leaving many still to wonder: what does this law really mean?