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.

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.

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.