Unlawful Internet Gambling Enforcement Act

The Security and Accountability for Every Port Act of 2006 or more commonly known as the Safe Port Act was enacted by the 109th Congress. What most people do not know is that Title VIII of this Act includes a hastily put together Unlawful Internet Gambling Enforcement Act as well.

What is the UIGEA?

Section 802 is cited as "Prohibition on Acceptance of Any Payment Instrument for Unlawful Internet Gambling." In laymen’s terms, this is the legislation that prohibits online gambling and deems it illegal. In order to fully appreciate the significance of this Act it is necessary to cite the findings, verbatim. Therefore, we will cite sections of this act that directly catapulted this legislation into law. "Prohibition on Funding of Unlawful Internet Gambling Findings" Congress finds the following:

  • Internet gambling is primarily funded through personal use of payment system instruments, credit cards, and wire transfers.
  • The National Gambling Impact Study Commission in 1999 recommended the passage of legislation to prohibit wire transfers to Internet gambling sites or the banks which represent such sites.
  • Internet gambling is a growing cause of debt collection problems for insured depository institutions and the consumer credit industry.
  • New mechanisms for enforcing gambling laws on the Internet are necessary because traditional law enforcement mechanisms are often inadequate for enforcing gambling prohibitions or regulations on the Internet, especially where such gambling crosses State or national borders.

Definitions: The term bet or wager:

  • means the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game subject to chance, upon an agreement or understanding that the person or another person will receive something of value in the event of a certain outcome;
  • includes the purchase of a chance or opportunity to win a lottery or other prize (which opportunity to win is predominantly subject to chance);
  • includes any scheme of a type described in section 3702 of title 28;
  • includes any instructions or information pertaining to the establishment or movement of funds by the bettor or customer in, to, or from an account with the business of betting or wagering; and

"Unlawful Internet Gambling"

In General.—The term 'unlawful Internet gambling' means to place, receive, or otherwise knowingly transmit a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is unlawful under any applicable Federal or State law in the State or Tribal lands in which the bet or wager is initiated, received, or otherwise made. "Prohibition on Acceptance of Any Financial Instrument for Unlawful Internet Gambling"

  • No person engaged in the business of betting or wagering may knowingly accept, in connection with the participation of another person in unlawful Internet gambling-
  • credit, or the proceeds of credit, extended to or on behalf of such other person (including credit extended through the use of a credit card);
  • an electronic fund transfer, or funds transmitted by or through a money transmitting business, or the proceeds of an electronic fund transfer or money transmitting service, from or on behalf of such other person;
  • any check, draft, or similar instrument which is drawn by or on behalf of such other person and is drawn on or payable at or through any financial institution; or
  • the proceeds of any other form of financial transaction, as the Secretary and the Board of Governors of the Federal Reserve System may jointly prescribe by behalf of or for the benefit of such other person.

The problem with UIGEA is that it is ambiguous at best. Since it was enacted, banking institutions have had a difficult time enforcing the act because it is neither clear cut nor does it fully explain how to implement the law in all areas of internet gambling. Moreover, there are several states in the US wherein this law either does not apply, or has not been fully implemented due to the inarticulate findings of Congress. Subsequently, Congressman Barney Frank introduced a bill entitled "The Internet Gambling Regulation, Consumer Protection and Enforcement Act of 2009." Hearings were held on this issue to determine its efficacy, and we are still waiting for this bill to be passed by Congress. Currently, it has 63 co-sponsors. The bill would "establish a foundation to permit licensed gambling operators to accept wagers from individuals in the U.S." Moreover, it would seek to allow the rights of each state to determine the efficacy of online gambling activity, and apply other restrictions on the activity as they deem necessary. As we begin a new decade, it is our hope that Congress will revisit this issue and clear up the inconsistencies that have made the UIGEA unenforceable by enacting the Barney Frank Bill.