UIGEA and US Online Poker

by James Carter on February 19th, 2015.

UIGEA US Online PokerThe Unlawful Internet Gambling Enforcement Act of 2006 has made a name for itself in the poker industry by being one of the major causes for why playing online poker in the US is confusing and difficult right now.

Strangely, the bill was rushed through the congress alongside a sure-pass SAFE Port Act the night before the Bush administration would take control - even more strange is that nobody in the Senate-House Conference Committee had time to read the final language of the bill.

But the strangeness continues: the UIGEA is by definiton an enforcement act which only makes something illegal if it's illegal - in UIGEA's case, it makes processing "unlawful" online gambling transactions illegal but there's no federal law definition for what "unlawful online gambling" means.

Online poker is unlawful in some states, such as Utah and Washington. But since it's only unlawful in those states, the UIGEA should only apply in those states as well, right? Since nobody has pointed out a law that makes online poker illegal on a federal, it's difficult to understand why it's a common thing to claim it does so.

The UIGEA had a huge effect on the online poker industry. Party Poker left the US market before the UIGEA bill was even signed into law which was weird on its own right since, as discussed, they would already have to break some law before the UIGEA if they violated it and therefore they lost a couple of weeks worth of income (they were making 2-3 million dollars a day, after all).

In the beginning of 2007, the most popular online gambling payment processor, Neteller, left the US market as well, which complicated getting money to and from online poker sites. (Neteller has since returned to New Jersey and will likely be in other states that have legalized online poker too.)

Within a year of when UIGEA was signed into law, many USA online poker sites and payment processors left the market or folded. There was hardly a week without news of another online poker company disappearing from the US. It became increasingly difficult to move money around and play, however, with PokerStars and Full Tilt Poker still in the market, there were more US players than ever online.

And then the US online poker market took its second big blow on April 15th, 2011. In a nightmare scenario, 11 individuals, including people from PokerStars and Full Tilt Poker, were charged with bank fraud and money-laundering for violating the Illegal Gambling Business Act and, surprise, surprise, the UIGEA.

Interestingly, when PokerStars reached a settlement with the US government for $731, they admitted to no wrongdoing. Undoubtedly, the lawyers at PokerStars felt like the company processed no "unlawful online gambling transactions" since, again, there's no federal definition for that.

It's incredible that, at the time of this writing, it's been almost eight years since the UIGEA was signed into law and there's still a lot of confusion about how it affects the US online poker industry. There are players who believe that online poker is illegal in the US because of the UIGEA, and those who believe otherwise; there are companies whose top-level lawyers believe that their business aren't involved in "unlawful" online gambling transactions and then there's the US government that believes they are.

Hopefully, at some point, this issue gets straightened out for good.

More about the UIGEA: