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The UIGEA

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The US passed the Unlawful Internet Gambling Enforcement Act in 2006. This was an attempt to regulate online gaming by the United States legislation. The purpose of the act was to define rules and regulations for online gaming. Up to that point there had been rules in places stopping people from using ‘electronic wire transfer services’ to bet on sporting outcomes, but nothing in place to keep people from wagering on games of chance (slots, blackjack, poker etc.). Up to and just prior to the passing of the UIGEA, America was seeing a surge of online gambling sites, most specifically poker was taking the nation by storm. Online gambling companies within the US were seeing profits totaling upward of 2.4 Billion within the industry.

In, what many would call, a knee jerk reaction, the United States government decided to take steps to curb online gambling, similiar to steps taken in the past to curb alchol during the US prohibition. The UIGEA put in a ridiculous amount of obstacles to run a gaming site within the US, and so many companies, as opposed to facing legislative pressure, fled the US market entirely. This vacuum was quickly picked up by the World at large, and in 2009 alone online gambling accounted for over 22 Billion in profits. In 2011 the US Government began to enforce the act, and brought major online gambling companies like PokerStars, Absolute Poker, and Full Tilt Poker under indictment for violating the UIGEA.

The problems with the UIGEA are numerous, but of most concern were that it was in no way trying to help ‘problem’ gamblers, nor keep underage US citizens from gambling online. It was a draconian, hastily put together, measure that ignored the benefits, entertainment value, and tax revenue online gambling could offer to a Government sorely in need of revenue.

It’s important to note, though, no law is in place that specifically bans online gambling within the United States. What it comes down to is that it’s illegal to take sports bets online, in the US, and it is illegal for banks to manage funds created by online gambling. It isn’t illegal for you (as a US gambler) to put your funds into online gambling, it’s the bank’s responsibility to bar you from such transactions and not prosecute you. Prosecution of online players is almost unheard of. The enforcement of the UIGEA, after it’s initial push on online poker sites, became hazy. Making it more difficult for the US government was the economic woes it began to face in the years between 2006-2009. Goldman & Sachs released a report claiming the US government was missing out in $6 Billion in taxes by banning online poker.

Challenges have been brought to the act, from within the US Government, but as it stands right now, the act is still enforceable and no one has dared to challenge its authority, especially after the poker site closures of 2011. US players can, and regularly do, play in sites overseas and it’s the norm for banks to turn a blind eye on this kind of thing as it doesn’t directly go against the UIGEA.

In recent years, the biggest challenge to the UIGEA has arisen from daily fantasy sports sites. These sites have been skirting the rules of the UIGEA while turning immense profits in the process. Most of these companies have pre-paid years worth of taxes to the US government in hopes that a regulatory act like the UIGEA won’t fall down on their industry. So far, no one really knows what will happen. What is clear, though, is that much like prohibition, the UIGEA is hurting more than it’s helping.

Either way, whether you’re from the US or not, hop into a game or two and let these things sort themselves out!

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