Online Poker FAQ
The Unlawful Internet Gambling Enforcement Act - what does it mean for players, which sites are staying open?
Last updated: December, 2006
Copyright © 2006 onlinepokerfaq.com
On September 30, 2006, the US Senate passed the Unlawful Internet
Gambling Enforcement Act.
What this new law does not do:
-
The new law does make any type of online gambling illegal. It
refers only to forms of online gambling that are already illegal due to
other laws. For example, at the federal level the 1961 Wire Act makes
it illegal to operate an online sports-betting business (but not to be
a customer). At the state level, some states make it illegal to play at
an online casino. But the new law does not make any more forms of
online gambling illegal. It is quite clear about this, saying that
nothing in this new law shall be construed as "altering, limiting, or
expanding any Federal or State law... prohibiting, permitting or
regulating gambling within the US".
-
The new law does not apply to the players. The law addresses
only the operators of online gambling businesses and financial
institutions that transfer money into those businesses.
-
The new law does not mention poker specifically. The interesting
question then is whether online poker is already illegal due to other
existing laws. At the federal level, the executive branch says it is
illegal but has never brought a suit; the judicial branch case law says
it is not, most clearly in the "In Re Mastercard International" case
which held that the Wire Act applied only to sports betting and not
other forms of gambling. A few states do have laws prohibiting online
gambling of any type except those specifically authorized (like the
state lottery).
What this new law does:
-
Prohibits a business from receiving deposits for the purpose of
unlawful online gambling. For example, an online sportsbook that is
already breaking the Wire Act by accepting online bets, is now further
prohibited from accepting deposits. Specifically, the law says: "No
person engaged in the business of betting or wagering may knowingly
accept... credit cards, ... electronic transfers, ... " (etc) where a
person is engaged in "unlawful Internet gambling".
-
Requires regulation of financial institutions.The Federal
Reserve is directed to create new regulations within 270 days that will
apply to financial institutions. The regulations will detail how
financial institutions are to identify and block transactions from the
US to unlawful online gambling businesses. Note that this does
not include transactions to lawful online gambling businesses,
nor does it include transcations in the other direction. Also, it
specifically does not cover paper checks, due to practical difficulties
in tracking them.
What does this mean for the players?
-
Some sites have decided to leave the US market. Party Poker is
the largest such site. If you live in the US, you will not be able to
play at these sites any longer. All of the sites have said they intend
to honor existing account balances. See below for the full list of
sites that are rejecting US players.
-
Other sites will stay and absorb the displaced players. Some
sites will sense a business opportunity and will stay in the US market.
Poker Stars and Full Tilt Poker are the largest sites to announce this
is their intent.
-
Old ways of depositing money may be replaced by new ones.
Financial institutions will begin blocking certain types of
transactions into online gambling sites, even legal ones, just to be on
the safe side of the law. As the regulations are written, the sites
will find legal ways for people to transfer money and will make it easy
for the players.
Links to more information:
List of sites leaving the US market:
List of sites staying in the US market:
Copyright © 2006 onlinepokerfaq.com.
Unauthorized copying prohibited.