What is UIGEA?
Every gambling enthusiast residing in the US is, most probably, familiar with the controversial UIGEA Act of 2006. This can be traced back to 1996 when there was an explosion of online casinos across the globe. The United States saw a proliferation of online casinos and players, a situation that got land-based casino proprietors worried. These owners lobbied to have it slowed down, lest they sink further down in losses. This partly led to the passing of the Unlawful Internet Gambling Act (UIGEA) in 2006 by the US Congress.
Enacted as part of the “Safe Ports Act” – passed to safeguard the US from terrorists’ infiltration at the ports - the law became effective in January 2009. With the UIGEA, It was illegal for banks also, knowingly, process online gambling transactions. While the regulations later clarified that the act covered online gambling deposits, withdrawals were not included. Apparently, UIGEA was hastily prepared with glaring typographical errors and other faults that were detrimental to online gaming.
Effects of UIGEA on Gambling
The signing of the UIGEA bill into law by the then President George W. Bush dealt a huge blow to the US gambling market.
The enactment of the law saw a significant decline in the number of online gamblers. This was partly because many gamblers stayed away from their favourite gambling sites for fear of being arrested or the sites shut down.
Another notable impact is the mass exodus of online poker rooms from the U.S. market, immediately after the signing of the bill into law. The poker rooms include Party Poker, PKR, 888, Paradise Poker and entire networks such as Cryptologic, Ongame, Extraction and Boss Media.
Other gaming entities decided to block US gamblers from accessing their sites. This is largely affected the gamblers from the states with laws covering online gambling and casino licencing that expressly prohibited the operations of such Gaming entities.
The exit of major Gambling bodies from the market and the banning of US residents from other Gaming Sites left the gamblers with limited options. Illegal casinos came up; these were unregulated by the US Government or the Stock exchange. Thus, their financials were away from public scrutiny.
Economically, the US lost tax revenue from the online gaming sites. Furthermore, Antigua – whose main source of revenue is gaming – petitioned WTO against the U.S. The island nation complained that the US violated treaty obligations by denying Market Access to its residents. WTO agreed and directed the US to pay $ 3.4 billion. The users opted to grant Antigua, concessions in other sectors, through which it also lost a lot of money.
Could the UIGEA ever be reversed?
Since its enactment, the UIGEA has received backlash and campaigns against it from diverse quarters. This is with the sole aim of overturning it in a bid to salvage the crumbling world of online gambling.
It all started with the Poker Party Players Alliance protests in 2006, characterised by lobbying and funds drive in a bid create public awareness of the UIGEA issue. This group has, to date, attracted over one million members and presses on with the appeals for action aiming to, at least, get skill games such as poker exempted from the regulations governing the UIGEA.
The introduction of a new administration under President Barack Obama also came with a glimmer of hope. This is when Rep. Jerrold Nadler reintroduced the Midnight Rule Act in January 2009 - initially introduced in November 2008 – with the aim of reversing “President Bush’s last-minute attempts to weaken key legal protections within the federal agencies”.
The UIGEA was among the many last-minute acts introduced by the Bush Administrations and were considered repressive, hence the need for their reversal.
Another notable attempt to overturn the act was in May 2009, with Congressman Barney Frank introducing a bill to reverse the gambling aspects of the Act - The Internet Gambling Regulation, Consumer Protection, and Enforcement Act – that aims at repealing the main online gambling impediments of the UIGEA and further shield Americans from scam, while safeguarding against difficult and underage gamblers.
With the combined incessant appeals from gambling enthusiasts, casino owners, politicians and other foreign bodies for the reversal of the repressive UIGEA Act, there are still hopes that the Act will someday be overturned.
While the US Government pushed for the passing of the anti-gambling law, no one could predict the passing of the UIGEA, to have such an adverse impact as it did. To many, the legislation was a great shock and sent the entire industry into disarray, from online gamers, to the sites that banned them, and to the payment processors who literally shut down overnight. This is why all the stakeholders still hold on to hope that the UIGEA Act will be overturned, eventually.