The Effect of the UIGEA on Poker in the United States

Please note this article only refers to poker sites NOT licensed in the USA.  Licensed poker sites within Delaware, Nevada or New Jersey have been exempt from the UIGEA as it now only admits to sports betting legalities.

The Effect of the UIGEA on Poker in the United States

UIGEA: a definition

The Unlawful Internet Gambling Enforcement Act (UIGEA) is Title VIII of the Safe Port Act, which was passed into law in 2006 when it was signed by President George Bush. The gist of the law is to prohibit the transfer of funds from US based financial institutions to internet gambling and poker sites. The law excludes certain forms of gambling such as online lotteries, horse racing and fantasy sports.

Some of the prominent politicians who backed the passage of the UIGEA included Jim Leach (former House Banking Committee chairman) and Robert Goodlatte, as well as Bill Frist and Jon Kyl.

Many were outraged that these politicians managed to sneak the UIGEA through on the back of another, unrelated bill, and polls showed that the majority of US citizens believes that they should have the right to choose for themselves whether they gamble online or not.

The final implementation of the UIGEA went through in June, 2010, although very little change was felt from the actual passing of the bill in 2006.

What the UIGEA Did to Popular Online Poker Sites

On the day following the passing of the UIGEA, known as “Black Monday” (October 3rd, 2006), investors wiped $7 billion off the value of online gambling operations who were listed on the London Stock Exchange. It become obvious almost immediately that these operators would be the first to stop accepting players from the United States as they were answerable to their shareholders. Among the groups most affected was Party Gaming, which had, until then, retained a massive portion of the US poker market. Literally overnight, the group had to remove itself from the US industry and invest its efforts in other locations around the world.

Other online poker rooms made a decision to stay put and see how the market would react over time. Sites such as Bovada.lv and Betonline.ag continued to serve US players, offering them convenient payment methods and customized tournament schedules. These sites managed to capture a huge part of the market, increasing their revenue and allowing them to increase the prize pools in their tournaments and promotions significantly. The down side for these sites is that now legislation changes are being made, the US government may not take too kindly to online poker operators who blatantly flouted the law while the UIGEA was in effect, and analysts fear that these sites may not be awarded operating licenses in a reformed industry.

Sites such as Party Poker, which withdrew from the US in 2006 altogether and has made extensive efforts to work with the Department of Justice in the past several years, has earned the rights to require licenses for legal state online poker websites.

What the UIGEA Means for Online Poker Players in the US

The UIGEA does not prohibit individuals from accessing offshore poker sites or other gambling sites. As such, it is not illegalon a federal level – for players to pay for their online poker entertainment at these poker rooms. However, since the law blocks financial institutions from processing transactions, online poker players may be affected by having their deposits or withdrawals denied from time to time.

The UIGEA has not stopped players in the United States from seeking quality online poker entertainment offshore. While some sites stopped accepting US players, many continued to welcome them with open arms, simply seeking out more convenient payment methods for players to use. It is estimated that there are over 15 million Americans who play online poker for real money each year, the majority of who manage to find a way to play at these sites and pay for their entertainment.

Online poker portals are dedicated to helping US poker players find the best options available to them, with updated information about new payment methods, legislation changes, and more.

The UIGEA and Payment Methods

Before the UIGEA, the majority of online poker players funded their accounts with traditional methods such as credit cards such as Visa or Mastercard, or through alternative methods such as Neteller. Uncertainty reigned in the first few months when banks started clamping down on transactions, and players could never be sure if their requests to pay or withdraw winnings would be honored or not. The initial shock was felt in these months following the UIGEA, but players were soon finding alternative ways through ewallets, pre-paid cards and so forth. Paying with credit cards is still an option for many players, depending on the bank and site.

There are no hard and fast rules governing the UIGEA and payment to poker sites (although the government hopes to believe otherwise). The financial industry in the United States is large and complicated, incorporating thousands of operators with their own systems and methods. As such, banks and financial institutions may choose to interpret the UIGEA differently to their rivals, making it a case of trying and testing for individual players.

The Department of Justice has been pursuing online gambling payment processors in the past few years or so on a more aggressive scale, making it slightly more difficult for players to receive their funds. The bottom line is that it is still possible for US players to enjoy poker at their favorite sites; however they may be charged higher processing fees by the smaller sites. Larger sites are able to absorb these costs as a way to ensure that their customers stay.

The Anti-UIGEA Lobby

Almost immediately following the passage of the UIGEA in 2006, lobbying began to try and bring the law down. The Poker Players Alliance stepped in with active protests, lobbying in Washington, and fundraising in a bid to bring the issue to the public’s awareness. The grassroots group now boasts over one million members and continues with calls for action on an almost daily basis in a bid to at least remove skill games such as poker from the laws governing the UIGEA.

Out of all the politicians who have put up a fight for the overturning of the UIGEA and the introduction of legislation to legalize and regulate online gambling in the country, Rep. Barney Frank has definitely been at the forefront. This Democratic representative was the chairman of the House Financial Services Committee and has partnered with others such as Ron Paul in the past to promote his anti-UIGEA campaigns. In 2007, Frank sponsored the Internet Gambling Regulation and Enforcement Act (HR 2046), followed by the Payment Systems Protection Act (HR 5767) in 2008, both of which did not result in anything besides bringing more awareness to their cause.  The UIGEA lobbying has been successful in verifying that poker is not legal if licensed by the a US State such as Nevada, New Jersey or Delaware.

Summary

The hopes of America’s poker players can be summed up by words spoken by former Senator Alfonse D’Amato, chairman of the Poker Players Alliance, when the HR 2267 passed in the House Financial Services Committee: “The fact is, online poker is not going away. Congress has a choice – it can license and regulate it to provide government oversight and consumer protections, or our lawmakers can stick their heads in the sand, ignore it, and leave consumers to play on non-U.S. regulated websites in all 50 states. I’m glad the Financial Services Committee today overwhelmingly chose to act and protect Americans as well as preserve the fundamental freedoms of adults and the Internet.”

Author: Savanah Lavinder
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