Reflection on the UIGEA on the occasion of its 15th anniversary

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This week we reached the 15th anniversary of Internet Illegal Gambling Law Enforcement Act (UIGEA.) in the United States.

A lot has changed in the world of online gaming over the past 15 years. We now not only have legal online sports betting available in over 20 states, but a growing number of states are exploring the legalization of broader forms of online gambling.

Much of the recent discussion around UIGEA has focused on the day-to-day exclusion of fantasy sports from the law, which has allowed DFS to become a national phenomenon that in some ways has put the games to the test. money legalized in the years preceding the Supreme Court rendered its decision in the Murphy Case.

How did we get the UIGEA?

The UIGEA was a reactionary response to the growth of online gambling following the increase in household access to the Internet.

Efforts to ban internet gambling began mid to late 90s when the internet existed in some sort of regulatory black hole, with uncertainty over how and who should regulate space. Never one to shy away from regulating a space they don’t fully understand, Congress first attempted to ban online gambling altogether. However, the votes weren’t there to pass an outright ban.

While the UIGEA’s impetus has been linked to a variety of factors, including uncertainty over whether other federal gambling laws like the Wire law incorporating the internet and the speculation that some terrorist organizations were using online gambling sites to launder money, the reality is that a number of different factors likely combined to push for a gambling ban money on the Internet.

A bridge too far

The law refers to Internet gambling causing debt collection problems and uncertainty over existing laws applying to the Internet as the conclusions to justify enactment.

However, a ban would not prove feasible. Instead, Congress wrapped up its nearly decade-long effort to “ban” online gambling with a law riddled with exceptions that don’t even define illegal Internet gambling. Rather, it made it illegal for processors or payment operators to knowingly authorize or accept funding for illegal Internet gambling operations. The UIGEA has effectively made it illegal to transmit or accept money in association with an illegal gambling operation.

The UIGEA only saw the light of day as a legislative amendment to the SAFE Port Act.

The birth of everyday fantastic sports

Recently, the UIGEA has been associated with the rise of daily fantasy sports. The law, among its many exclusions, organized harmless fantasy sports competitions that met certain criteria of its definition of betting and betting, or prohibited activities.

Of course, in the late 90s and early 2000s hardly anyone conceived the idea of ​​playing fantastic sports on a time horizon shorter than a full season. But let online gamers find a workaround, and they did.

Shortly after passing the UIGEA, Daily Fantastic Sports would be created in the minds of Kevin Bonnet, a poker blogger, who was forced to change gears when the UIGEA shut down the world of legal online poker in the United States.

Excluding fantasy sports would only really gain in popularity when FanDuel and DraftKings made great advertising strides on the scene from 2014. With the growing popularity of daily fantasy, lawmakers began to notice, but the train had largely left the station putting daily fantasy sports back in the box.

Even when some daily fantasy sports companies ditched the language of exclusion from the UIGEA, there does not appear to have been much interest from the Department of Justice (although there have been rumors of grand juries in Florida, we still don’t know what the scope of those federal investigations was.)

Important application?

Although it has been in existence for 15 years (although passed in 2006, the bill did not come into force for several years), the law has not generated a long history of enforcement against online gambling operations.

Indeed, the most important prosecutions under the law have taken place following the april 2011 indictments against the operators of several leading poker sites. The sites encountered problems as they allegedly tried to disguise deposits as other types of business transactions in order to thwart banking systems, which would automatically block payments to gambling sites.

Despite a few high-profile applications of the law, like other federal gambling laws, UIGEA prosecutions appear to be a low priority for the federal government.

What about the next 15 years?

Even before the UIGEA entered into force, efforts were made to undo what the statute was about to do and replace it with reasonable restrictions. However, the legislation introduced at that timeRepresentative Barney Frank did not go anywhere.

If history is any predictor of the future, we’ll likely see one or two high-profile UIGEA lawsuits over the next 15 years. However, the law is so riddled with exceptions that it may be a less desirable weapon for prosecutors than other federal laws.

Despite all of its shortcomings, the UIGEA does a few things well. More specifically, the law clarifies the issue of intermediate routing (when data passes through a state en route to a state where activity is permitted.) However, even where the UIGEA provides useful clarification, the rule of statutory interpretation limits this interpretation to the UIGEA only, leaving the question open to other federal laws, including the law on wires.

Times have changed since the adoption of the UIGEA. While deficient, the law could be a useful tool to protect the legal and regulated market by targeting those who break the law and threaten to undermine regulated operators in the emerging US market.

Editor’s Note: The views expressed reflect those of the author and not necessarily those of Legal Sports Report.


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