Newsweek just published a commentary on the state of online gaming titled, “High Stakes for Online Gamblers.” Author Jeremy Herb took opposition with the pending UIGEA decision that is scheduled to take affect December 1st. He wrote “The problem with UIGEA is it raises more questions than it answers. The law does not make it illegal for people to gamble as it focuses on bank transactions. But it failed to define what’s considered ‘illegal internet gambling.’ The Treasury and the Fed, which are instructing banks on how to enforce the law, did not define illegal gambling either.”
Herb’s arguments and criticisms of the UIGEA are not new. He is only writing what many critics have been citing over the past few years. The UIGEA is a law that is vague, at best. This vagueness makes it difficult to enforce. The law is centered around making banking institutions unable to process transactions that are made from online gambling. It puts the responsibility of flagging and denying transactions that are affiliated with gambling in the hands of banks. Problems have already happened because overzealous banking institutions are not only denying illegal transactions, but they are also denying transactions that by all accounts are legal, but are related to legal lotteries and legal drawings. People are finding their funds either frozen or seized, despite them not coming from illegal gambling.
Herb goes on to explain some of the background to UIGEA and enlighten readers on the conflict between the industry and the Wire Act, an older law that is often used to prosecute online gambling operators. He writes, “The Justice Department believes all Internet gambling is illegal based on the 1960s Wire Act, which was designed to stop bookies from using telephones and passed long before the Internet as we know it existed. The gambling industry disputes this, arguing the Wire Act only applies to sportsbetting, not games like poker or roulette. In 2002, the Fifth Circuit Court ruled the Wire Act only applied to sportsbetting but that didn’t sway any opinions at Justice. Several offshore executives of online casinos and ‘e-wallet’ payment processors have been arrested in the past few years. In June, the Justice Department froze $33 million in payments to American players from four online casinos.”