UIGEA Regulations Published

by Poker Team

It was announced last night that the outgoing Bush administration has published the rules and procedures to be followed as part of the Unlawful Internet Gambling Enforcement Act.  The controversial act, passed in 2006 as part of the Safe Ports Act, is now accompanied by the even more controversial announcement of these guidelines. The controversy lies in the fact that the regulations will take effect just one day before incoming President-elect Obama is sworn in as the 44th President of the United States.  Much to the dismay of backers of online poker and other skill games, poker was not given any exemption.  Fantasy-sports leagues and horseracing were however exempted, which raises eyebrows because horseracing is among the purest forms of gambling but is largely state-run.

The Poker Player’s Alliance, the country’s most vocal advocate of online poker was displeased with the announcement as its chairman, former Senator Alfonse D’Amato issued the following statement without tipping his hand to the PPA’s next courses of action: “The PPA remains optimistic that the new Administration and the new Congress will recognize the failures of UIGEA and will act swiftly in the New Year to overturn this flawed policy.”

In terms of details, the regulations are calling for banks to conduct due diligence in handling transactions from gamblers to online poker sites. Banks, payment processors and other affected institutions are to be in compliance by December 1, 2009.  The regulations came in the form of a 66 page document, the first 50 pages of which were an attempt to provide explanations of what many skeptics view as ambiguous language.

Some of the documents highlights include:

  • Transfers from gamblers to online sites are under the regulations whereas payments from sites to gamblers are not.
  • Unlawful internet gambling is still not clearly defined.  Rather, the onus will be on individual states to make the critical distinction.
  • Payment transfer services such as Western Union and MoneyGram have exemptions made for in-office transfers while they are expected to block internet initiated transactions.

Though many calls from UIGEA opponents to halt the formalization of the regulations were made, they went largely ignored.  For example, some argued that placing the responsibility squarely on the shoulders of financial institutions already facing major upheaval through the current economic landscape of the country would be a strain on their already compromised resources.  To argue the point, the document argues that blocking payments from gamblers to online sites would be reducing the risk of having gamblers default on their credit when time to make payments comes making it an inherent win for the credit card industry.

There also exists the moral implication; a premise noted by the document in its acknowledgement that “the final rule could restrict excesses related to unlawful Internet gambling by underage or compulsive gamblers.”  In response, US Rep. Shelley Berkley (D-NV), was quoted by the Las Vegas Sun as saying:

“These rules place an unfair burden on banks and other businesses that will now be forced to play the role of law enforcement. Instead of making the situation better, these regulations will only create chaos, huge headaches and high costs for all those involved. I am appalled that at a time when our nation faces the worst economic crisis we have seen in 70 years, President Bush remains obsessed with a regulation that will only harm the financial services sector.”

The public discourse on this latest event is only beginning and the debate is sure to heat up as inauguration day approaches.