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The Unlawful Internet Gambling Enforcement Act - UIGEA

On October 13, 2006, the Unlawful Internet Gambling Enforcement Act(UIGEA)was quietly passed into law. UIGEA was an amendment that was part of the SAFE Port Act which is a bill that is related to nation security. This bill was intended to stop financial transactions between online casinos and financial institutions and in effect block ways for users to sign up. This was done by ordering banks and financial institutions to identify gaming businesses using a specific merchant code and avoid engaging in any money transfers with them.

Since this bill was passed in so much haste just before senate adjourned for the 2006 elections, there arose so many logistical problems that hadn't been anticipated by the senate. Shortly after the bill was passed there was a domino effect where by online gaming operators blocked their sites from business coming from US players, companies trading in public exchanges overseas stopped dealing with American customers and online casino businesses together with financial institutions like banks, western union, credit companies that had dealings with casinos being adversely affected.

This bill also had loop holes where people could go around the law as there was no way this bill could cover them all. For example some online gaming business figured out ways to get different merchant codes that financial institutions could not easily identify. Banks on the other side were burdened with the task of devoting man power and resources to track down the recipients of paper checks. The US government is also to some extent restricted in that it couldn't cross some jurisdictional lines which made enforcing UIGEA difficult. This is because foreign governments could not be forced to cooperate with the US government.

Due to these problems Rep. Barney Frank of Massachusetts contested this bill which prevented it from going in to effect in December 2009. Currently it's still under debate as discussions about freedom, regulation and taxation continue.

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