UIGEA - What is the Unlawful Internet Gambling Enforcement Act?

Unlawful Internet Gambling Enforcement Act
The UIGEA and How It Impacted US Poker Players?

Perhaps no law is as widely known by name - and as universally derided - among poker players as the Unlawful Internet Gambling Enforcement Act (UIGEA).  The controversial law was passed in 2006 and came into full effect in 2009, but the impacts of the UIGEA continue to be felt by poker players around the world to this day.

While most online poker players know that the law exists and have some opinion on its merits, there are fewer players who completely understand exactly what it is the law does and doesn't do.  We've created a guide to the UIGEA that explains the law in plain language and answers many of the basic questions typical poker players have about a law that completely changed the face of online poker - the Unlawful Internet Gambling Enforcement Act.

What Does the UIGEA Do?

There are a number of misconceptions about the UIGEA.  Some people believe that the UIGEA makes playing online poker a crime (it doesn't).  Others believe that it specifically outlaws online gambling (the UIGEA doesn't do that either). 

The law actually has a fairly narrow scope:  To prohibit certain financial institutions from processing transactions related to unlawful online gambling.  Past that one primary goal, the UIGEA has little to say about online gambling, nor does it contain any new law that makes the act of participating in online gambling illegal.

Can Poker Players Violate the UIGEA?

If you're simply playing poker in New Jersey, Utah or any USA state for that matter, it would basically be impossible for you to violate the UIGEA.  As mentioned above , the purpose of the law is to force financial institutions like banks to put measures into place that will make it difficult for online casinos to make and accept payments.  The UIGEA isn't concerned with individual players, nor does it make anything that wasn't illegal beforehand now somehow illegal.

From a player perspective, the only impact of the UIGEA is that moving money to and from an online poker site is a more complicated task post-UIGEA than pre-UIGEA.  The legal risk for poker players (who are not somehow involved in the work of payment processing for the site or acting as a de facto payment processor by handling transactions for other players) stemming from the UIGEA is effectively nil.

How the UIGEA Was Passed

The UIGEA is obviously controversial among online poker players due to the law's content, but there's another controversy attached to the UIGEA that has nothing to do with online poker or gambling and everything to do with the often-murky workings of the US government. 

The way most think of a bill becoming law is something like this:  A bill is written, presented to Congress and voted on.  The UIGEA did not follow that clean of a path.  Instead, the text of the UIGEA was added to another bill in a complicated bit of procedural trickery that allowed the UIGEA to be voted on before those voting had even been allowed to review exactly what the UIGEA proposed to do.  The larger bill in question - the Safe Port Act - was regarded as a must-pass piece of legislation that dealt with port security from terrorist threat.  With no one willing to go on record opposing such a bill, the passage of the UIGEA was assured.

What Were the Immediate Impacts of the UIGEA?

After the passage of the UIGEA, many publicly-traded online poker sites opted to exit the US market rather than face the threat of shareholder backlash for operating in what was now a legally gray market.  Not all online poker sites took this view, obviously, as many continued to serve players from the United States after the UIGEA was passed.  To give you a sense of the divide, a little under half of the top online poker sites at the time stopped accepting poker players from the United States after the UIGEA became law.

Many of the sites that remained in the US market received qualified legal opinions that the UIGEA did not apply to their business.  Notably, both PokerStars and Full Tilt Poker have made compelling arguments in their ongoing civil battle with the US government that no federal US law explicitly covers online poker, making the act of attempting to close down online poker sites one that greatly exceeds the authority of US officials.

Did the the UIGEA Reduce Online Gambling Options for Americans?

Yes, but only temporarily.  That's according to a 2011 executive report by industry lobbying group the American Gaming Association (AGA) titled Online Gambling Five Years After the UIGEA.  The AGA report asserts that there was an immediate reduction of the online gambling market in the United States following the passage of the UIGEA, but that the market return to previous levels within only a few months after the bill became law.

The regeneration of the US market even in the face of the UIGEA suggests either that the bill has been far less effective than intended or that the demand for online gambling options in the United States is simply greater than imagined when the UIGEA was authored.  Either way, the landscape for online gamblers from the United States remains much the same as it was before the UIGEA was passed in terms of number and variety of online poker choices for the typical player from the US.

Does the UIGEA Apply to International Companies?

International law is a notoriously tricky area, but this much is clear:  The passage of the UIGEA alone does not render online gambling illegal in the United States, so it certainly doesn't make gambling online illegal in other countries (assuming it would otherwise be legal in said countries).  There's also nothing special about US law insomuch that it doesn't override or supercede the law of other countries; even if the the UIGEA did make it a crime to play poker online, that law would simply have no force beyond the borders of the United States.

In short, international companies do not have to comply with the UIGEA, but international companies operating in the United States may have a unique obligation to comply with aspects of the law in the course of their business in the US.