What is the UIGEA?

The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) is an American law passed in the United States Congress on September 30, 2006 and signed by President George W. Bush on October 13, 2006. The law (surreptitiously passed with the Safe Port Act) is intended to eradicate online gambling by prohibiting US banks and credit card companies from transferring funds between Internet-based casino web site operators located offshore and their American-based gambling enthusiasts

This additional legislation, the Unlawful Internet Gambling Enforcement Act (UIGEA), specifies a punishment of up to 5 years imprisonment, and/or fines, for any "person engaged in the business of betting or wagering" who knowingly accepts a financial instrument for the purpose of "unlawful Internet gambling". Sneakily attached to the Safe Port Act, and passed by members of Congress, most of who knew little or nothing about the UIGEA, this legislation became law - coincidentally on Friday the 13th - when Bush put pen to paper.

Although the Act was signed into law on Oct 13, 2006, a provision in the act gives the Treasury Department and the Federal reserve 270 days to present a set of guidelines that banks and financial instructions could use to be in compliance with the provisions of this act. This time period runs out on about July 20, 2007.


                                     What has been the effect of the new law?

Although the deadline for  banks to actually start enforcing the provisions of the law has not been reached, in the first it's first six months the law has already had a significant effect on Americans who enjoyed the entertainment value of gambling on the Internet.

The most obvious development was the almost immediate exit from the American market  of several of the largest both publicly traded and private companies in the business. These included Party Poker.  the largest online poker room in the world, and Pinacle Sportsbook arguably the most popular sportsbook in the world.
Although several companies have decided to continue their operations in the US, the majority of them have withdrawn.

The next most important development has been the exit of the major payment processors that handled the speedy transfer of funds between these online companies and their clients. Neteller the largest of these entities left the US market after the US Department of Justice brought criminal indictments against its founders.

So, in many ways, the new law, even though the enforcement guidelines are not yet in place has a a significant impact on the Online gambling business as a whole. American citizens have seen dramatic decreases in the number of providers competing for their business, and have a much more difficult time transferring funds between themselves and the offshore operators.