It seems like just yesterday that the federal government of the United States of America decided to bring the hammer down on online gambling. Although ten years ago, the memories and wounds are still as fresh as if it all just happened yesterday. As an industry, the world has never seen something so massive and so infinitely full of potential as the online gambling market. Driven by and large by America’s huge population of gamblers, poker sites and online casinos and sportsbooks were exploding in the early to mid 2000s with thousands of gambling sites popping up seemingly every month. And because of market parity and competition, players were finding very lucrative sites at which to play, as site B would have to outdo site A in bonuses and rewards for playing. The industry was operating like a well-oiled machine and was growing at a rapid pace. Then, in late 2006, everything immediately changed when the UIGEA was signed into law.
President George W. Bush, love him or could do without, will ultimately end up having one of the worst presidential legacies in American history. This is just a fact. On his watch, America suffered its largest terrorist attack in history. The USA got into two foreign wars. Hurricane Katrina devastated the New Orleans region while the federal government did practically nothing to help. And one of the newest and best industries in America was crippled due to the UIGEA being signed into law. Overall, Bush had a lot of things go wrong and some could argue that much of it wasn’t in his control. Though when it comes to the UIGEA, this seemed an intentional push to take gambling away from Americans.
The Gist of the Unlawful Internet Gambling Enforcement Act of 2006
Basically, the Unlawful Internet Gambling Enforcement Act of 2006, known as the UIGEA, is a federal regulation that prohibits individuals and corporations from accepting money for gambling wagers using online methods. That’s the gist of the UIGEA law as explained on legalbettingonline.com, and it’s incredibly simplistic to understand on its face. However, there are two areas where the UIGEA gets very muddy. Area one: The reason(s) for the UIGEA even coming into existence seem to be very convoluted. Area two: The implications past online gambling are very confusing, as all sorts of language was packed into the bill immediately before it was signed.
Before we get into the rubbish that was added, we’ll first touch on the supposed reasoning behind the law. After 9/11, America was in the grips of panic. Most people can remember this well, and we still have things like the Patriot Act to remind us all of the power we gave government as a trade-off for our safety. We’re not going to get into the politics of this. However you feel about this is your business, and has nothing to do with gambling. However, it does brush up against gambling when you get to speaking about terrorism. You see, Bush was terrified that these online e-wallets and other payment systems could be used to fund terrorist cells and plots, either on purpose or inadvertently. So, if you’re President of the United States and want to get people to stop exchanging money online, where do you turn? The logical answer, for the administration, was to turn to the most popular and most used banking of the day, which happened to be online gambling.
But this isn’t the full story. From America’s inception there has been this blatant strain of hypocrisy running through the nation. The European settlers who put down roots in America claimed to be fleeing persecution and thus wanted freedom, and this ultimately resulted in a revolution and the Constitution. America was supposed to be the freest land to ever exist, all about ultimate personal freedoms. But we quickly started to learn that this was just an illusion, just some words on paper. Prohibition took away alcohol over a century ago, and things like the war on drugs ensures that there are always officials telling people what they can and cannot do with their own bodies. And this has long also been the case with gambling. Even in 2016 we see politicians like Marco Rubio and Lindsey Graham who object to gambling on a moral basis, so they’re pushing to have the federal government put even more bans in place with a bill called RAWA. While the Bush cabinet won’t come right out and say it, it’s objective reality that many in Congress supported the UIGEA because they oppose gambling on moral reasons. Shady online banking was just the pry-bar they needed to get the proverbial camel’s nose under the tent.
As for the language, this could be an entire website to itself. The UIGEA was actually passed on the last day before Congress took a break (one of the many breaks it takes each year) for the ’06 elections. At the time it was voted on, no one on the Conference Committee had even seen the final version of the bill, and it was packed full of brand new additions that were not reviewed before the vote was carried out. Though since supporters in Congress put this bill up to be part of the SAFE Port Act, and a matter of national security, the UIGEA ended up passing easily. Luckily for most sites, they still had time to comply before the bill went into effect. Though there’s still dozens of pages of language that don’t have much to do with gambling, and this has led to civil suits, court battles, people trying to find backdoors, and the whole nine yards. Once you get away from the gist of the law, things start to get mind-numbing.
What Preceded the UIGEA
To be sure, the UIGEA wasn’t the first federal act put in place against gambling. The first would be 1961’s Federal Wire Act, which prohibited people from knowingly accepting gambling wagers via a wired transmission. This is important for the UIGEA because before this bill came to pass, many in Congress simply tried to get the FWA extended to include all of online gambling. This ended up in the United States Court of Appeals for the Fifth Circuit in 2002. The basic gist of this court’s ruling was that while the FWA does prohibit gambling via wired transmissions, this doesn’t necessarily include online banking. Of course, this put lawmakers back to the drawing board, looking for a way by which they could render online gambling illegal. So they conceived of the UIGEA and all the havoc it could cause if they could simply tell all 50 states that they were no longer allowed to offer online gambling.
Most gamblers were blissfully unaware that while online gambling was growing to gargantuan proportions, lobbyists were working hard behind the scenes to have it all shut down in the interest of prohibitive politicians. The UIGEA was first put forth in 2003, though no one could really agree. You have to understand that while a Senator or Representative from a state may be against gambling, he/she still wants their own personal earmarks and desires to be inside of a bill, so the process of making sausage in this particular instance is every bit as corrupt as what you’d see in an Oliver Stone movie. Bills must provide people with personal favors for their states and districts, so it was a long time in the making to get a UIGEA that satisfied everyone who would vote yes. This took over three years, but finally they got it and had it passed without much opposition at the time.
Opposition to the UIGEA
The reason that the UIGEA didn’t meet much opposition in ’06 is that it hitched a ride on the Safe Port Act bill and was being sold as necessary to national security. Still a very sensitive time in America, not many politicians had the courage to stand against anything being labeled as vital for America’s safety, and so the bill was never met with any daunting challenges. This would change in 2009, however, as Barney Frank introduced a bill to overturn the gambling portions of the act. Failing, Frank tried again in 2010, but didn’t ultimately succeed. Now that the terrorist funding scare was over, it became abundantly clear that a majority of Congress still opposed gambling based on their moral reasons more so than any faux funding issues.
In 2011, the Department of Justice (DOJ) reinterpreted both the Federal Wire Act and the UIGEA, stating that online gambling was fine, if a state agreed to it, and that only sports betting was banned by these two federal acts, in accordance with PASPA. As one might imagine, this has infuriated conservatives and the DOJ has had to deal with nearly a dozen lawsuits. The irony here, of course, is that the DOJ is doing what it is Constitutionally bound to do, by leaving non-Constitutional state matters in the hands of the state, whereas Republicans, who claim to be for the Constitution, are the ones demanding that the federal government get to over-reach in its capacity to make online gambling illegal for everyone.
To date, only three states have been brave enough to side with the DOJ against Congress: New Jersey, Nevada, and Delaware. Other states like California and Mississippi are rumored to be in the works to allow for online gambling, but they may still be years away. Unfortunately, the UIGEA still has its grips over most of the USA, even after being ruled illegal as it pertains to online gambling outside of sports betting.
The Impact of the UIGEA
If you were a gambler around ’08 and onward, then you probably already know the impact that the UIGEA had. Once it went into full effect, many sites closed down without actually warning their customer base. Sure, this was cruddy on part of the sites, but they were simply doing what they thought was in the best interest of their business. They figured had they tipped their hands about closing, they would have immediately lost revenue. So, instead, many gamblers were taken unawares by the changes and frozen out of their accounts, to the tune of billions of lost dollars in revenue. And some site owners, who ultimately tried to skate around the boundaries of the UIGEA, got to become intimately familiar with that cloudy language as they were ultimately charged, and some even ended up in jail for their transgressions against the state.
On the whole, some of the largest gambling networks on the planet experienced a 68% decrease in revenue simply because their American audience was gone. The Party Gaming company went from making $12 billion to just $2 billion, having to rely only on an international audience. The impact extended beyond losses, as America put legitimate fear in the hearts of those offering games. Just imagine you were a gambling site based in the UK, Australia, etc, and seen what the American government could freely do regardless of citizens in opposition. Now, imagine you kept catering to an American audience, only next time the federal government decided to make it illegal for people to even gamble. This would cripple sites and networks who put their time and effort into catering to Americans, and so the majority of sites didn’t even deal with Americans because they didn’t want this hassle. This led to almost a two-year window where US-based players had only very, very limited options for gambling, and the sites weren’t even all that good. The UIGEA’s impact was global.
How the UIGEA Affects USA Gamblers
As it stands today, after the market has bounced back and more and more offshore sites offer their services to Americans, the UIGEA has little if any real affect on gamblers. If you’re just an ordinary gambler looking to sign up with a website, you can find one, sign up, and not have to worry about breaking any laws. The UIGEA has no language whatsoever that says people cannot gamble. It’s all about the business of gambling. To that end, you can still gamble where you can find legal gambling offered.