UIGEA

Safe Port Act

When President George W. Bush signed the SAFE Port Act into law on October 13, 2006, he also made it functionally illegal for American gamers to play their favorite games online, at least for money through UIGEA.

The SAFE Port Act was intended to add a new facet to the United State's "war on terror". Included in the act were sections focusing on additional security requirements for various maritime facilities, the creation of a so called "Transportation worker identification credential", a grant system that would enable ports and harbors to install additional security features, the container security initiative (intended to give law enforcement officials greater power over what enters the country via shipping containers), a wide range of foreign port security assessments, and something called the Customs Trade Partnership Against Terrorism. Other facets of the act were meant to modernize the United States Coast Guard and a few nuclear detection provisions.

Unlawful Internet Gambling Enforcement Act

One aspect of the SAFE Port Act act created much alarm in the online gaming world – specifically Title VIII, known as the UIGEA, or Unlawful Internet Gambling Enforcement Act.

The UIGEA had bipartisan support, and why not? President Bush made it seem as though this act was intended to keep children from becoming "addicted" to online gaming, and it would seem unwise for political officials to speak out against such a law. Unfortunately for Bush, and for the politicians who supported this part of the act, in terms of stopping all online gambling activity, the UIGEA leaves much to be desired.

UIGEA - Fantasy Sports, Online Lotteries & Horse Race Betting

If the intention of the UIGEA was to stop or at least slow down online gaming, you would think that all funds transfers and gambling activity by gamers in the United States would be addressed. Not so – the language of the act still allows for the transfer of funds from the United States to gambling specific websites in certain cases. Fantasy sports are not covered (and this is a huge chunk of the online gaming world – the Fantasy Sports Trade Association estimates US player involvement at around $ 2 billion annually), and online lotteries as well as horse race betting are still allowed. By leaving out all segments of the online gaming world, the government leaves themselves open to criticism. How concerned about gambling addiction can they be when billions of dollars are still legally transferred from American bank accounts into online gaming accounts every year?

Since the passage of the act, and exclusively because of it, all online gambling sites listed on the London Stock Exchange (and many other similar markets) have ceased doing business with Americans and stopped registering players from the United States, while most non-public companies have announced an intention to continue taking US customers. Again, it is difficult to take the UIGEA seriously when there are more loopholes present in this act than at a weaver's convention.
The UIGEA had a wide ranging and wholly negative impact on the online gaming world. One example shows the overall effect of the UIGEA on these otherwise legal corporations – Party Gaming Plc, which runs PartyPoker.com, saw its publicly traded stock drop over 60 % in less than a day as a direct result of the passage of this bill. This is just one example among many.

Barney Frank & Ron Paul

Some congressman, notably Barney Frank (D-MA) and one time presidential hopeful Ron Paul (R-TX), have argued vehemently against this bill, including pointing out the inconsistencies in the Bush administrations approaches to online gaming. They argue that hush-hush concessions between the United States and the government of Antigua (made in the summer of 2007 and kept mostly secret) should be made public (they have yet to be made so) in order that the American people understand just how little this bill had to do with national security.

Ron Paul has gone so far as to suggest that the UIGEA is merely a smoke screen to divert attention away from the truth – that the American government is really setting up their own framework for taxing and regulating Americans who gamble online. While much of this is speculation, the government of Antigua is still (as of this writing) seeking multiple billions of dollars in trade sanctions against the United States over the UIGEA.

UIGEA and ACH - Automated Clearing House

What does the language of the UIGEA mean for the American online gamer? Not terribly much, unfortunately for Bush and his cronies. Online gambling in America represents over $ 12 billion every year, and try as they might the American government (even after a decade of attempts) will be hard pressed to interfere. A specific electronic payment processing system used on every electronic payment overseen by the Federal Reserve is more than effectively blind to the problem of online gaming. This processing system, known affectionately as ACH (for Automated Clearing House) cannot tell the difference between a purchase at Wal Mart, a mortgage payment, or a funds transfer to Rotten Cherry Casino. Until the entire American financial system is turned on its ear, and the ACH is fine tuned into oblivion, American who want to test their luck at online slots will be able to do just that.

Legal Online Transactions

The problem, more often than not, is finding a website that will do honest business with you. They do exist – no, I'm not going to point you toward them – and the transactions made between these sites and their customers are often completely legal. As quoted on MSNBC, "At this point you can't do that any more than you can ask Western Union to block all transactions to pet food companies." That from Ken Dreifach, an attorney with Sonnenschein, Nath & Rosenthal in New York City. Well put, Ken – there isn't much the government can do to gamblers or to the sites that welcome them due to the nature of the financial system.

Besides the practical reasons this bill is as unenforceable as it is undesirable, there is the bare fact that officials at the Federal Reserve and employees of Internet service providers don't want to play along with Bush and his cabinet. There are several precedents – a bill in California made it illegal for gambling sites to advertise on the web, at which time the sites simply changed their addresses or bought "sponsored" ads at the very same sites they were banned from advertising on.

While the UIGEA looked far reaching, and did have a negative impact on several gambling organizations, don't think that it shut down internet gambling in America. On the contrary, it seems to have heightened awareness – that gaming online as an American in fact is possible, and more than possible, it is pretty easy.