About the Unlawful Internet Gambling Enforcement Act (2006)

If you're a poker player in the United States, then you've probably heard of the Unlawful Internet Gambling Enforcement Act of 2006. There's a lot of uncertainty and confusion surrounding this legislation, so we've decided to explain it in detail and dispel some of the common misperceptions about it. You may be under the impression that the UIGEA makes playing online poker illegal throughout the United States, but this myth is actually untrue.

What the UIGEA Really Says

The text of the UIGEA is contained in 31 U.S.C. §§ 5361 - 5367. The meat of the law is in §5363, which bars gambling operators from accepting the following types of payments from another person for “unlawful Internet gambling”:

(1) 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);
(2) 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;
(3) 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
(4) 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 regulation, which involves a financial institution as a payor or financial intermediary on behalf of or for the benefit of such other person.

The next section, 5364, provides for the formulation and implementation of rules by the Federal Reserve to block the processing of targeted transactions by banks. §5366 sets out the penalties for violating the law, which can include a fine and/or imprisonment for up to five years.

The key thing to note is that all of this language applies either to the gambling companies themselves or to financial institutions that process payments. There's nothing at all penalizing individuals for placing bets over the internet.

What Forms of Gambling Are Covered?

The UIGEA does not take steps to delegitimize any permitted types of gambling. In fact, in §5362(10)(A), we discover that:

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.

So no kind of gambling is deemed to be illegal by the UIGEA as such. It merely adds enforcement and transaction-blocking mechanisms to forms of gambling that are otherwise stated to be illegal in relevant federal or state laws.

For a while, it was believed that the Wire Act of 1961 (which amended 18 U.S.C. chapter 50) outlawed interstate and international online poker at the federal level. The wording of the Wire Act specifically addresses wagering on sports, but the phrasing is a bit vague, and it's not clear whether it's meant to apply exclusively to just sportsbetting or whether other types of gambling are included. Moreover, the internet wasn't even around at the time the Act was passed, raising questions as to whether or not it's appropriate to treat online games as though they're covered by it.

In the wake of the passage of the UIGEA, the authorities were of the opinion that online poker and casino games were disallowed under the Wire Act. It was on this basis that they proceeded with the Black Friday actions against online poker companies in April 2011 although none of the indictments mentioned the Wire Act specifically. PokerStars, Full Tilt, and Absolute Poker had to shut their doors to American players.

Later that same year, Illinois and New York requested clarification from the Department of Justice on how the Wire Act impacts online lottery sales. In a surprising opinion, the DoJ revised its stance. It not only said that online state lotteries were OK, but it also expressed the view that the Wire Act deals solely with betting on sports.

This means that there are currently no federal-level laws prohibiting online poker. It's only illegal where state or local rules deem it so. Accepting and facilitating deposits for online poker is all right except in a handful of states. Unfortunately, banks and other financial firms tend to be quite conservative when it comes to exposing themselves to legal liability. Almost all of them continue to follow the financial restrictions that were put in place to comply with the UIGEA despite the fact that most of these rules aren't legally required anymore.

Impact of UIGEA on Players

With the processing of U.S.-based gambling transactions believed to be contrary to the law, many poker providers, particularly those that were publicly traded, opted to exit the American market in late 2006 and early 2007. They included the then market leader, PartyPoker, along with iPoker, Cryptologic, PKR, and countless other poker rooms. PokerStars, Absolute Poker, Full Tilt, and Ultimate Bet were among the sites that chose to remain, but the wisdom of their decision came into question just a few years later with the incidents of Black Friday in 2011, which bankrupted three of these companies (AP, FT, and UB).

The inconveniences of the UIGEA for successfully depositing and withdrawing money remain to the present day. Ewallets, like Skrill and Neteller, do not accept Americans as customers, and many credit card transactions are declined, so clever workarounds are needed. Money transfer services and prepaid debit cards have come to the assistance of many would-be players. Perhaps the most valuable tool when it comes to moving money to and from online gambling sites is the digital currency Bitcoin. It's not subject to the arbitrary meddling of banks or governments, and it allows for the speedy transfer of funds with low fees. To learn how to start using BTC for poker, head over to our guide on how to get set up with Bitcoin.

History of the UIGEA

As controversial as the actual text of the UIGEA is, what many find even more objectionable is the way it was passed through Congress. It was attached as a last-minute addition to the unrelated SAFE Port Act of 2006. Many legislators didn't even have time to read the bill before it was adopted 409-2 in the House on September 29 and unanimously by the Senate on September 30. The SAFE Port Act was signed by President George W. Bush on Oct. 13, 2006. It took a while for all the banking regulations to be drafted, which finally happened in 2009 although Congressman Barney Frank was successful in having the final implementation delayed until June 2010.

Criticism of the UIGEA came not just from within the United States but also from abroad. The tiny island nation of Antigua, which hosts several internet gambling companies, filed suit against the U.S.A. with the World Trade Organization. WTO member parties agree to allow goods and services into each other's markets, and Antigua felt that the U.S.A. was engaging in unfair business practices by closing its domestic gambling market to outside competition. Actually, the suit predates the UIGEA and was based upon previous restrictive legislation, but the enacting of the 2006 law made the situation worse. The case has gone through a large number of appeals and other bureaucratic moves, and the WTO has found consistently in favor of Antigua and against the United States. These hasn’t yet been a resolution to this situation yet, but Antigua isn't pleased and may consider drastic remedies, such as ignoring U.S. intellectual property protections.

Conclusion

The Unlawful Internet Gambling Enforcement Act of 2006 certainly threw a monkey wrench into the world of online poker. Those most affected by the changes are the operators of poker games, not regular players. Suffice it to say that you're not breaking any federal laws if you participate in internet poker games. To find a place to enjoy card games online, take a look at our list of the best online poker sites for US players who wish to play for real money.