Posts Tagged ‘Unlawful Internet Gambling Enforcement Act’

Florida Introduces Online Gambling Bill

Wednesday, March 3rd, 2010

The U.S. state of Florida now has a bill in the House that would legalize and heavily regulate online gambling. Representative Joseph Abruzzo introduced the bill called the Internet Poker Consumer Protection and Revenue Generation Act of 2010. Despite “poker” being in the name, the bill would legalize all online casino games, including blackjack.

Some lawmakers in Florida have been trying to get blackjack approved in Florida casinos for a while. Governor Charlie Crist has twice reached a deal with the Seminole tribe to allow legal blackjack tables in their tribal casinos. However, both times the state House has rejected the deals. There are also plans to open up resort casinos in the state, though there is no bill yet for that. In the meantime, the idea of playing blackjack online in Florida has been overlooked.

There is no current law in Florida that makes online gambling either legal or illegal. In 2006, the Unlawful Internet Gambling Enforcement Act (UIGEA) was passed as part of the SAFE Port Act. Though that law doesn’t make online gambling illegal, it does allow for the government to seize funds and punish financial institutions that are used for “illegal” online gambling, though it does not define what gambling is illegal. For that reason, many financial institutions, including credit card companies Visa and Mastercard, can no longer be used for online gambling.

If Abruzzo’s bill passes and is signed into law, online gambling would be clearly made legal in the state of Florida and the government would regulate and tax the industry. Part of the terms for operating an online casino used by Floridians would be to pay a $500,000 application fee and a $1,000 annual licensing fee, in addition to being heavily taxed (the proposal is 20% of the revenue). The state government will place limits on the time you can spend gambling and amount that can be gambled. In addition, they will certify that all software used is safe and fair for the players.

UIGEA is currently being challenged at the federal level. Separate bills in the U.S. House and Senate propose to repeal the law, though neither has been discussed on the floor yet. Even if the UIGEA is not repealed, though, the law allows for states to legalize and regulate online gambling within their own borders.

American Gamblers Can No Longer Use Visa

Tuesday, February 23rd, 2010

Earlier in the year I reported that Mastercard is now blocking transactions between online gambling sites – including sports books, casinos and more – and American customers. At the time, I thought there was a good chance that Visa would follow their lead. Now it has happened.

Visa is now also blocking online gambling transactions, meaning that American customers who want to play some online blackjack or any of their other favorite games cannot use the two largest credit cards to do so. This decision hurts pretty much everyone. The online casinos will lose revenue from people who used to pay using Visa and Mastercard and don’t want to try another method. The players who prefer those two cards miss out on the ability to use them for online gambling. Also, the credit card companies themselves are missing out on the revenue from online gambling.

So why are they doing this? The thinking is that these decisions are due to the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006, which is slated to go into effect in June 2010. Originally it was set to take effect January 1, but a bipartisan petition to delay the implementation was accepted by the Justice Department and the Federal Reserve.

While the UIGEA cannot be used to punish online gamblers in any way, it can be used to seize the funds from “illegal” online gambling and fine or prosecute the financial institutions involved in the transactions. The financial institutions include banks, credit unions, credit card companies and more. What complicates matters is that nowhere in the UIGEA does it state what gambling is “illegal.” In fact, court rulings have found that UIGEA doesn’t make any type of online gambling illegal. It is only a way to enforce the existing gambling laws. However, online gambling is only expressly prohibited in four states. There is currently no federal ban on online gambling.

The financial institutions, however, aren’t willing to take any chances, since the federal government last year made a habit of seizing funds from online gambling and attempting to prosecute those involved. The lawfulness of those seizures is in question, but in a recession that has crippled the financial industry, many companies are unwilling to take the risk of drawing the ire of the federal government. That is why Visa and Mastercard are blocking online gambling transactions from American customers.

Bills have been introduced in both the House and Senate that would repeal UIGEA and they hope to see the floor sometime this year. In the meantime, for Americans who want to participate in online gambling (which is legal in 46 states), there are other payment options available at most online casinos, which can include wire transfers,  money orders and online payment companies such as eWallet. I have also heard conflicting stories about whether or not PayPal is an option.

A Word on the UIGEA

Wednesday, February 3rd, 2010

There is a lot of confusion about online gambling in the United States. Many people think that it is illegal. Some think that some games are illegal while others are not. Allow me to clear that up the best that I can.

First of all, there is no federal ban on online gambling in the United States. There are 4 states that expressly prohibit online gambling. For the rest, it is either legal or kind of murky, with the legislative and judicial branches of government working on finding a solution to the legality question.  Many people think that online gambling is banned by the Unlawful Internet Gambling Enforcement Act (UIGEA). That is not the case.

As the courts have ruled, the UIGEA does not ban online gambling. All it does is allow for the punishment of those who engage in illegal online gambling. Nowhere, however, does it say what would be considered illegal. The UIGEA is an amendment added on to the end of the SAFE Port Act of 2006 (which has nothing to do with gambling). UIGEA does not deal with the gamblers at all. It only regards the financial institutions that pay out money from online gambling. If they pay out funds from “unlawful internet gambling,” then the funds can be seized and the institution can be punished under law. UIGEA can do nothing to someone who plays a game online, even if the activity were to be deemed “illegal.”

Not only that, but most people do not know that UIGEA is not currently in effect. It was passed in 2006, but it was not scheduled to take effect until December 1, 2009. As that deadline approached, lawmakers sought an extension because they thought the middle of an economic crisis was a bad time to be placing more burdens on the financial industry. The Fed and Department of Justice agreed and delayed implementation of the restrictions from UIGEA.

So if you are an online gambler in the United States, let me say this very clearly, there is no federal law making that activity illegal. Make sure your particular state does not ban it and if not, you are committing no crime.