The Department of the Treasury has today released the regulations required by the Unlawful Internet Gambling Enforcement Act (UIGEA). The regulations appear to be as weak and confused as the UIGEA.
The regulations require all banking systems to stop unlawful Internet gambling transactions, but state clearly that it is very difficult to figure out what is deemed unlawful as the UIGEA does not make anything illegal that was not already illegal under federal and/or state law.
The new regs point out the complications of implementing a list of what is and isn't illegal Internet gambling...
"Any government agency compiling and providing public access to such a list {of unlawful gambling sites} would need to ensure that the particular business was, in fact, engaged in activities deemed to be unlawful Internet gambling under the Act. This would require significant investigation and legal analysis. Such analysis could be complicated by the fact that the legality of a particular Internet gambling transaction might change depending on the location of the gambler at the time the transaction was initiated, and the location where the bet or wager was received. In addition, a business that engages in unlawful Internet gambling might also engage in lawful activities that are not prohibited by the Act."
The fact that the regs point out that certain transactions would be legal in some states, but not in others could be interpreted as the government believing that casino games such as poker, slots, bingo, and blackjack, are actually not illegal under federal law and only illegal in states where laws explicitly say they are illegal. The only betting activity deemed illegal under federal law would be on sports, made illegal by the 1969 Wire Act.
This begs the question, can operators such as Party Poker, and/or 888 Holdings, based legally out of the UK, re-enter the US market while only disallowing bets and wagers from citizens in states where online gambling is expressed as illegal?
Currently, Microgaming powered casinos such as All Jackpots, and The Gaming Club, allow gamblers from all states in the US where Internet gambling is not deemed specifically illegal. Could Playtech branded casinos such as the infamous Golden Palace re-enter the US market now too?
Some analysts also believe it would be difficult to determine what is illegal and not because of the exceptions in the UIGEA for the Horse-Racing industry and state run lotteries.
The beginning of the regs also take some of the fear off the actual gamblers in the United States who were nervous about receiving or sending money to any offshore gambling site.
The regs state that the only people who could be held accountable for breaking any of these regulations (thus breaking the laws created by the UIGEA), or implementing these regulations, would be participants, defined as anyone who is "an operator of a designated payment system, or a financial transaction provider that is a member of, has contracted for services with, or is otherwise participating in, a designated payment system. The proposed regulatory definition clarifies that an end-user customer of a financial transaction provider is not included in the definition of 'participant', unless the customer is also a financial transaction provider otherwise participating in the designated payment system on its own behalf."
The costs of implementing a list by the US government to deem certain transactions as unlawful Internet gambling transactions for the banks to use as a guideline were deemed by the Treasury to be 'significant'.
"This is because establishing a list would require considerable fact-finding and legal analysis once the U.S. Government identifies a gambling website. The Government must engage in an extensive legal analysis to determine whether the gambling website is used, at least in part, to place, receive or otherwise knowingly transmit unlawful bets or wagers. This legal analysis would entail interpreting the various Federal and State gambling laws, which could be complicated by the fact that the legality of a particular Internet gambling transaction might change depending on the location of the gambler at the time the transaction was initiated and the location where the bet or wager was received," the regs state.
Just in record keeping alone, the Treasury estimates that it would take 368,254 hours of work to implement these regulations.
The UIGEA, which has been debated as the worst law in United States history, may have been proven to be so with the long awaited release of the regulations for the Act.
