Before the Unlawful Internet Gambling Enforcement Act, there was no clear answer on whether online gambling was legal. The United States Court of Appeals for the Fifth Circuit rule in November 2002[1] that Federal Wire Act prohibits electronic transmission of information for sports betting across telecommunications lines but affirmed a lower court ruling that the Wire Act "'in plain language' does not prohibit Internet gambling on a game of chance." Although some states have specific laws prohibiting online gambling, many do not but in order for an online gaming company to start up, it will require a license from the state, in which no states currently give out online gambling licenses.
Criticisms
Opponents of the UIGEA such as Michael D Schmitt has criticized the act and believes that it will not work comparing it to prohibition of alcohol. He also criticizes the government to basically "forcing" this controversial bill to be passed with the non-controversial attached SAFE Port Act. Some senators and congressmen have even stated that they were not even allowed to see the final version of the gambling portion before putting in their votes. [2]
Many have argued that the act has failed to address the dangers of online gambling. Online gamblers in the United States remain unaffected by this act and will continue gamble online. They state that the act and the Department of Justice successfully forces easily regulated large publicly-traded companies out the market and introduces small unscrupulous private companies into the market. In doing so it could result in amplified the risks of consumer abuse, underage gambling, problem gambling and money laundering. Critics believe that regulation of online gambling is a better alternative.[3]
Responses from online gambling sites
All online gambling sites listed on the London Stock Exchange or similar markets have stopped taking United States players due to the passage of the Act, while most non-public companies have announced an intention to continue taking US customers.[4][5]
PartyGaming, which runs PartyPoker.com, had its publicly-traded stock drop almost 60% in 24 hours as a result of the bill's passage. The company was moved from the FTSE 100 Index to the FTSE 250 Index on October 11.[6]
WTO dispute
Antigua and the United States have been involved in a long-running World Trade Organization dispute over U.S. restrictions on online gambling. The WTO ruled on January 25, 2007 that the U.S. is in violation of its treaty obligations by not granting full market access to online gambling companies based in the island nation.[7] On March 30, 2007 the WTO confirmed the U.S. loss in the case.[8]
On June 19, Antigua filed a claim for USD $3.4 billion in trade sanctions against the United States, along with a request for authorization to ignore U.S. patent and copyright laws. This claim was filed a day after similar demands for compensation were made by the European Union.[9]
The United States settled the dispute by granting concessions in other sectors. The administration of President George W. Bush refused to disclose the details of those concessions, however. In April 2008 Congressmen Barney Frank and Ron Paul called for the agreements to be made public. They stated that the concessions "could cost the United States many billions of dollars in compensation" and that the administration's invocation of "national security" as a reason to block disclosure under the Freedom of Information Act (FOIA) was "a misuse of the FOIA process."[10] When the administration continued to keep the information secret, Public Citizen brought suit on behalf of Ed Brayton, a journalist whose FOIA request had been denied.[11]
Challenge to UIGEA
In May 2009, U.S. Congressman Barney Frank introduced a bill to overturn the gambling aspects of the Act, "The Internet Gambling Regulation, Consumer Protection, and Enforcement Act," which seeks to repeal the major online gaming obstacles of the UIGEA and go further in protecting Americans from fraud, while safeguarding against underage and problem gamblers.[12]
Frank also introduced a bill to delay the implementations of the UIGEA for one year, until Dec. 1, 2010.[13] The bill was put into effect, however, the regulations were only extended until June 1, 2010.
Enforcement
In April 2011, the founders of PokerStars, Full Tilt Poker, and Absolute Poker, the three largest Internet poker companies that then accepted U.S. players, were among those indicted for in charges that including violations of the UIGEA. According to the United States Attorney in New York, the companies allegedly tried to circumvent UIGEA rules with the help of others who acted as "payment processors" by helped disguise gambling revenue as payments for non-existent goods such as jewelry or golf balls.[14]
References
- ^ "No. 01-30389. - IN RE: MASTERCARD INTERNATIONAL INC. Internet Gambling Litigation. - US 5th Circuit". Caselaw.lp.findlaw.com. 2002-11-20. Retrieved 2011-05-06.
- ^ "17 Southern California Interdisciplinary Law Journal 2007-2008 Prohibition Reincarnated - The Uncertain Future of Online Gambling following the Unlawful Internet Gambling Enforcement Act of 2006 Symposium Issue: Association of American Law Schools Section on Law &(and) Humanities - Law & Order: SUV - Sexuality, Videos and You - Note". Heinonline.org. Retrieved 2011-05-06.
- ^ "The U.S. On Tilt: Why The Unlawful Internet Gambling Enforcement Act Is A Bad Bet". Law.duke.edu. Retrieved 2011-05-06.
- ^ Players walk away as US law wipes out 90% of PartyGaming's poker revenue from The Guardian
- ^ Fiona Walsh, business editor. "The Guardian: Last chance saloon for online gaming firms". Business.guardian.co.uk. Retrieved 2011-05-06.
- ^ Fiona Walsh. "The Guardian: PartyGaming drops out of FTSE 100. Retrieved 9 October 2006". Business.guardian.co.uk. Retrieved 2011-05-06.
- ^ WTO rules against US in online gambling case
- ^ "Reuters: WTO confirms U.S. loss in Internet gambling case". Uk.reuters.com. Retrieved 2011-05-06.
- ^ "Antigua demands trade sanctions". BBC. 2007-06-20. Retrieved 2011-05-06.
- ^ Polson, Sarah (April 2, 2008). "Congressmen request trade settlement details". PokerListings.com. Retrieved 2008-05-27.
- ^ Polson, Sarah (May 21, 2008). "Group sues government for settlement info". PokerListings.com. Retrieved 2008-05-27.
- ^ Murphy, Stephen A. (2009-09-17). "Frank's Bill to Regulate Online Poker Unlikely To Be Heard This Month". CardPlayer.com. Retrieved 2011-05-06.
- ^ Murphy, Stephen A. (2009-05-06). "Barney Frank Introduces Two Poker-Related Bills". CardPlayer.com. Retrieved 2011-05-06.
- ^ "Internet Poker Sites Seized For Fraud". InformationWeek. April 15, 2011. Retrieved 2011-04-16. "The 2006 Unlawful Internet Gambling Enforcement Act made it a crime for gambling businesses to knowingly accept most forms of payment for illegal Internet gambling. The defendants allegedly tried to circumvent these rules with the help of individual payment processors, also named as defendants, who helped disguise gambling revenue as payments to phony merchants selling non-existent goods such as jewelry or golf balls."
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