US Gambling in the Midst of UIGEA

Online gambling in United States is endangered with the passing of the UIGEA or Unlawful Internet Gambling Enforcement Act. It was enforced in 2007 and since then it has dramatically curtailed the online gambler population. Many gambling websites have already stopped operating and many online gamblers have controlled their urge to gamble for the fear of being caught.

Such scare continued to linger despite the efforts to assure people. A few online gambling sites offer gambling system in roulette in which the prizes double with succeeding loss. This martingale system aims to attract more players. Many people aren’t aware of this prohibition and so aren’t familiar with its specifics. This led to false notions, and because of that, information campaign regarding UIGEA has become necessary.

Gambling Sanction

The major implication of UIGEA is to prevent operation of online gambling sites, thereby, preventing players to gamble. This is a US law and is being enacted in two ways. First, it compels legal operations of gambling sites through qualification assessment and issuance of gambling license as administered by Financial Crimes Enforcement Network, which will oversee the legalities of operations. Second, other games shall be reclassified and redefined for delineation; hence, games like chess, roulette, and poker shall be removed from the UIGEA scope.

UIGEA does have a good result-security in gambling for US players. Since it tracks down different online gambling sites, it is almost impossible for them to run away, supposing they commit crimes. The main issue is that the UIGEA stirred the industry drastically. A more pressing situation is its ineffective enforcement. The irregularity in enforcement made UIGEA a culprit of setbacks in the online gambling world, no less.

General Picture

UIGEA is so inefficiently enforced that it has become a culprit of profound problems encountered in online gambling today. The issue has a lot to do with the shareholders who invested funds in gambling sites. Because of the impending prohibition of gambling, many shareholders withdrew their shares from online gambling sites because of fear of bankruptcy. This slump causes many gambling websites to shut down operations. As more sites closed, people began to believe that it was going to be the end of online gambling in the United States. Many of these online venues lay the blame on UIGEA for their closure and non-operation. What was supposed to safeguard the gambling market lead to its near demise.

This ineffective enforcement of UIGEA also caused another repercussion. As it is not implemented in some states, there is confusion across the country as to the scope of this law, whether it aims to ban gambling and ban citizens to gamble online or not. Nevertheless, UIGEA does not necessarily prohibit American players to join online gambling websites. But some states did not understand the bill correctly. So many of the US gamers have now succumbed to the idea that they could no longer enjoy gambling online. Despite the number of states allowing gambling, the anxiety in the whole country is very real. As you can see the truth, the nation’s opinion regarding gambling is not in unison. And up to the time that UIGEA continues to be in partial implementation, this nationwide confusion goes on.

Internet Gambling Laws – US, UK and the World

Legal minds turned to Internet gambling laws as a specialty when the industry went beyond growth and exploded into the public mind. “The law surrounding Internet gambling in the United States has been murky, to say the least,” according to Lawrence G. Walters, one of the attorneys working with gameattorneys.com.

In contrast, Internet gambling laws in the U.K. have made the lives of providers and players a bit easier. The passage of the Gambling Act of 2005 has basically legalized and regulated online play in the U.K.

With the objectives of keeping gambling from promoting “crime or disorder” the U.K. act attempts to keep gambling fair, in addition to protecting younger citizens and others who may be victimized by gambling operation. Unlike the United States, which still clings to the 1961 Wire Wager Act, the U.K. significantly relaxed regulations that are decades old. A gambling commission was established to enforce the code and license operators.

A Whole Other Country

According to Walters and many other observers of the Internet gambling laws scene, the United States Department of Justice continues to view all gambling on the Internet as illegal under the Wire Act. But there are details in the federal law that defy attempts to throw a blanket over all online gambling.

The Wire Wager Act forms the basis for federal action on Internet gambling laws in the United States. The law was meant to complement and support laws in the various states, focusing primarily on “being engaged in the business of betting or wagering” using wire communication to place bets or wagers on sporting events or similar contests. The law also comments on receiving money or credit that results from such a wager. The keys are “business,” “money or credit” and “wire communication facility.”

But as many attorneys and proponents of fair Internet gambling laws emphasize, the federal law does not specifically address other forms of gambling. This has left the law open to interpretation when it comes to online casinos specifically and using the World Wide Web to play online games.

October 13, 2006 is a crucial date in the controversy surrounding the legalization of gambling. For anyone wishing to understand Internet gambling laws, the federal law passed on that day is essential knowledge. President George W. Bush signed the Unlawful Internet Gambling Enforcement Act (UIGEA), which is intended to limit some “financial transactions” used for online gambling.

But even if current federal gambling laws can clearly define something as simple as a legal gambling age, the newer UIGEA has not settled all the dust raised around the issue of online gambling. Attorneys such as Walters (and many others) have pointed out that the UIGEA seems to refer only to financial transactions and wagers that are illegal where the wager or transaction is made. Some wagers may be legal while others may not be legal. It’s as simple as that.

The UIGEA had some effect on Internet gambling, in that many successful companies got out of the business, at least in the United States. In fact, with the passage of the law in 2006, most U.S. online players found they could not play at an online casino or poker room, for a short time. Many of the gambling providers found ways to establish offices and servers outside of the U.S. so that could invite United States players back in.

Break Time

It’s now time to stop, take a deep breath and turn to Internet gambling laws in the various states. Some have passed their own rules and regulations (before and after UIGEA). In a few states, companies cannot operate an online gambling business. In other states it is illegal for an individual to place a bet using the Web. Some legal experts argue that these individual-state rules are unconstitutional since commerce across state lines should only be regulated by federal law, not state law. Commercial online gambling businesses don’t operate in the United States, however. If you want to visit their “home offices” you may have to travel to Malta, Gibraltar or Curacoa.

The 2005 U.K. law generally allows remote sites such as these. The rules are not so relaxed in the U.S. However, a recent appellate court ruling in the U.S. states that, in at least one case, an Web-based gambling site did not violate states laws. Most legal minds urge gamblers and others interested in the issue to stay tuned.

Some have given their attention to finding benefits of legalized gambling, noting that this huge industry might be a key to economic recovery in the United States. At the heart of their argument are examples such as established lotteries run by various states, in addition to the government revenues that flow in to state coffers from riverboats and land-based casinos.

Part of this effort rests on the shoulders of more than 100 legal representatives working for common sense in Internet gambling laws. This hoard of attorneys has the task of trying to keep the World Wide Web/Internet free from government intervention.

Bob Ciaffone is considered one of the experts on the subject of gambling and poker in general, and on the transition to online gambling. He suggests that any regulation of Web-based gambling should reduce competition from outside the U.S., so that the citizens of the U.S. would benefit in legal gambling states. His detailed plan would parallel the U.K. situation since that country passed its 2005 rules. Ciaffone also strongly urges U.S. lawmakers to keep Internet gambling laws separate from the 40-year-old Wire Act, which was passed to control illegal gambling over the telephone.

In essence, Ciaffone writes that the UIGEA attempted to do the right thing, but does it in all the wrong ways. The restrictions have severely handicapped what could be a great revenue source with proper regulation, according to Ciaffone.

Consider a statement on the UIGEA from the most-recognizable poker player in the world, Doyle Brunson. Though is comments apply to his favorite game of poker, they can easily relate to all Internet gambling laws. He said, in essence, that his company received good legal advice that indicates Internet poker is not “expressly” illegal. He encourages U.S. players to learn the laws of their own state.

Super Casino Gambling – Online and Offline

Land-based casinos and online casino revenues and site releases are growing faster then ever. Even after the dust has settled following the recent American law prohibiting deposits to online gambling companies, large organisations such as Party Gaming, Ladbrokes and VIP Casino club are all increasing their efforts to attract a wider European or global audience.

Gambling itself is a compulsive and addictive activity, with numerous regulatory societies attempting to outlaw and even ban online gambling around the globe. Regulatory environments themselves differ from country to country. While the US has sought keenly to identify ways of banning online gambling, the UK has lead the way to ensuring that online gambling remains a choice for many, but does not become a threat to others.

Its recent release of a new Gambling Act has sought to protect children and problem areas from abusive gambling, while attempting to levy a tax duty on all income from gambling both offline and online. The Act will make it illegal to entice children to gamble and there will be compulsory age checks for online gambling websites.

Its new Gambling Act will provision for the construction of Super Casinos in selected areas across the country, though this has been scaled down from an initial 40 super casinos to around 8, following complaints from the public and opposition parties. The Gambling Act will allow casinos to operate 24 hours, with unlimited jackpots, and gambling will be allowed on Sundays and Bank Holidays. As far as online websites are concerned, when the Act comes into force at the end of September 2007, companies will be able to apply for a license to operate online gambling website from a UK base.

Countries differ in terms of how they levy a tax on gambling. For example, some will tax each bet individually while countries like the UK, tax only the gross profits that gambling organisations make. Territories like Malta and Gibraltar offer competitive tax regimes as well as the benefits of an off-shore financial centre.

Australia has a large gambling population, where statistic show that 80% of its population gambles. Super casinos are also allowed in Australia, with Sydney’s Star City reputedly the size of 7 football fields. A recent study also showed that Australians spend more money each week on gambling than they do on alcohol or clothes. State government proceeds from gambling have increased to around $3.8bn per annum, since 1998.

What of other jurisdictions across the globe?

Below is a list of some countries and some interesting figures relating to gambling.

Australia

80% of population gamble

Legal age to gamble is 18

$80 billion gambling turnover in 2006

States received $3.8 billion in gambling duties 2006

Online gambling is permitted

Sweden

95% of population gamble

Legal age to gamble is 18

58 billion Swedish Crowns turnover in 2006

Government received 5 billion Crowns in tax in 2006

Online gambling is permitted

Spain

70% of population gamble

Legal age is 18

EUR30 billion gambling turnover

Receives EUR1 billion in gambling taxes

Recently allowed online gambling licenses

Macau

60% of population gamble

Legal age is 18

$6 billion in gambling takings 2006

$1 billion state revenues from gambling

Online gambling is permitted

UK

70% of population gamble

Legal age to gamble is 18 (though lotteries and pools and low stake machine permit 16)

£53 billion gambling expenditure in 2006

UK received £1.3 billion in gambling duties in 2006

Online gambling permitted

US

80% of population gamble

Legal age 18 (most casinos age 21 as this is legal alcohol age associated with casinos)

$82 billion gambling expenditure 2006

States received over $8 billion in gambling revenues 2006