D Day for Online Gambling? UIGEA Takes Effect
June 1, 2010 marks the day that the Unlawful Internet Gaming Enforcement Act (UIGEA) finally goes into effect after passing as an attachment to a Port Security Act in October 2006. The law makes banking institutions responsible for preventing transactions from gamblers to online gambling establishments operating offshore. The much watered down law does not hold banks responsible for monitoring payouts from online gambling operators to bettors while checks and ACH transactions are, for the most part, exempt. Because certain forms of online gambling such as horse racing and state lotteries were carved from the legislation, the banking sector has argued that this makes it nearly impossible to distinguish the "good online gambling" transactions from the "bad one's" (presumably online poker and sports wagers).
With nearly four years having passed between UIGEA becoming law and the actual "enforcement", many online gambling sites have had plenty of time to prepare for the worst possible outcome, though further "setbacks" can be expected.
As of September 2009, most banks were already complying with the UIGEA regulations anyway, according to Steve Kenneally, the vice president of American Banking Association.
John Pappas, Director of the Poker Players Alliance, believes the June 1 date is being blown out of proportion in some circles. The world will not end on this day.
"Many people believe that any ill effect of the UIGEA has already been felt over the last four years," said Pappas. "While I can't make any guarantees, I do have a sense that this will be more of a blip on the radar screen than a catastrophic event, as some may have predicted."
Originally slated to go into effect October 1 of last year, the Treasury and Federal Reserve announced a six month reprieve.
Poker Players React to June 1
Online poker players insists they too are exempt from UIGEA enforcement, though most experts in the field would argue this is simply not the case.
From Two Plus Two.com, one member had this to say in regard to an online poker exemption:
"The UIGEA can't apply to Internet poker because the sites are not ‘in the business of Unlawful Internet Gambling'. They are only in the business of providing a software platform for players to play and bet against each other. The site doesn't participate in the wagering; they only take a fee for the service."
That may be a bit of a stretch considering US law enforcement agencies are going after online poker venues, specifically the payment processing companies that service them, more aggressively than ever before.
The fact is that after the law was passed in 2006, many of the major online poker rooms pulled out of the US market while a large chunk of the casual player base found it close to impossible to send and receive money. They too effectively pulled out of the market. Only the diehards remained. In recent months, some would argue, it has become easier for the casual poker player to come back on board.
PokerSiteScout.com, which monitors online poker room "real cash player" traffic, reports this week that poker traffic fell 1.7%. But this has more to do with the current recession perhaps than with any legal obstacles. In fact, online poker traffic has risen quite a bit since this same period last year.
The worldwide online poker market is still growing, but at a relatively sluggish pace. According to PokerScout's ACES indicator, online poker traffic is increasing at an annual rate of 9%.
NetSpend Pulls Out of Online Poker Market
A popular method of depositing and withdrawing monies from one's online poker accounts will cease to work as of June 1 supposedly.
NetSpend, a prepaid debit card, has been informing its customers that they will now adhere to UIGEA policy enforcement.
A number of members at the Two Plus Two forum site confirmed this news:
"Just received an automated call on my contact Phone number from Netspend. It was to inform me that they will be enforcing the UIGEA laws and I will not be able to use the card for any future online gambling transactions. they apologize for the inconvenience and it's not their policy. So it seems they know what I was using the card for and have been cool with it until now."
"Just got the exact same voicemail telling me netspend will decline any further transactions with online gambling sites. Sucks for us and for them because thats about the only reason I know of that anyone would waste their time getting an All-Access visa card anyway. Looks like I'm gonna have to start E-checking it."
Per NetSpend's terms and conditions:
If you use your Card number without presenting your Card (such as for a mail order or telephone purchase), the legal effect will be the same as if you used the Card itself. For security reasons, we may limit the amount or number of transactions you can make on your Card. Your Card cannot be redeemed for cash. You may use your Card to access cash at an Automated Teller Machine (ATM). You may not use your Card for online gambling. You may not use your Card for any illegal transactions.
Allejandro Botticelli, Gambling911.com
