Back in 2006, after years of digging a hole in the sand, the United States finally buried its head in the sand to become oblivious to i-gaming with the enactment of the Unlawful Internet Gaming Enforcement Act ("UIGEA"). UIGEA certainly has controversial roots -- it was enacted as a rider to the Safe Ports Act of 2006 -- and the final regulations implementing UIGEA stuck to its controversial roots.
At a very basic level, UIGEA operates by placing the onus of enforcement squarely on the shoulders of financial institutions by requiring financial institutions to both identify and block the processing of payments to i-gaming sites. The ultimate policy goal of UIGEA is to ban i-gaming in the United States. And, guess what, UIGEA has proven to be quite successful as financial institutions have quickly moved to block payments to most website which have some semblance to offering gaming. Just ask the New Hampshire Lottery how successful UIGEA has been -- shortly after enactment credit card companies began blocking payments for online purchases of lottery tickets. My partner Michael Lipton and I submitted a white paper to a recent NAGRA conference which has an overview of the international approaches to i-gaming, which is available online at http://www.dickinson-wright.com/News2.aspx?id=486.
The policy justification espoused in support of UIGEA is similar to arguments opponents of legalized gaming often make. That is, for many opponents, i-gaming is a moral issue and, in their view, the public must be protected from the temptation to gamble. Adopting policies based on moral views can be a dicey proposition -- one would only need to point to Islamic extremism as an example of the slippery slope of regulating morality. Independent policy reasons, which do raise legitimate concerns, may offer a better justification. Combating money laundering and fraud come to mind as reasonable policy concerns.
During the short period following enactment of UIGEA and promulgation of its final regulations (which occurred in early 2009), there have been several efforts to repeal UIGEA and expressly authorize i-gaming in the U.S. Congressman Barney Frank -- who has been a long-time advocate in support of i-gaming -- subscribes to the "keep on trying" philosophy. Congressman Frank this year introduced his annual legislation to legalize i-gaming in the U.S. This time, however, the outlook has remarkably changed. Congressman Frank is publicly predicting that 2010 will usher in i-gaming in the U.S., see the link at the Foxnews.com report for more information http://www.foxnews.com/politics/2009/07/05/rep-barney-frank-optimistic-o... Senator Robert Menendez has introduced companion legislation in the U.S. Senate, but with a significant distinction in that the permitted games would be limited to the so-called "games of skill". Major casino operators have also inched closer to supporting i-gaming and the experience of other nations may further tip the balance.
Stepping aside the moral issues, perhaps it is now time for regulators to start thinking about the regulation of i-gaming. Can effective measures and technology be implemented to reduce the incidence of money laundering and fraud? The United Kingdom sure thinks so, as does the Remote Gambling Association (see the article at http://www.gamingintelligence.com/index.php/newsbites/2560-report-dispel...). As legislation moves through Congress, we just might be watching the U.S. slowly unbury its head from the sand and recognize that i-gaming is here to stay and that adopting a regulatory system for i-gaming may better approach than hiding like an ostrich.
- Peter
The views expressed in this blog are entirely my own and are not, and in no way should be construed to be, the views of my law firm, Dickinson Wright PLLC or any of its clients.
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