Difference between revisions of "Unlawful Internet Gambling Enforcement Act"
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| − | The '''Unlawful Internet Gambling Enforcement Act''' (abbreviated '''UIGEA''') is a 2006 United States federal law that brought regulations to online gambling transactions. The bill lead to many [[offshore betting site]]s withdrawing from the US market. | + | The '''Unlawful Internet Gambling Enforcement Act''' (abbreviated '''UIGEA''') is a 2006 United States federal law that brought regulations to online gambling transactions. The bill prohibits US financial institutions from knowingly accepting and processing payments from online gambling businesses that are considered illegal under federal law. The bill lead to many [[offshore betting site]]s withdrawing from the US market. The Unlawful Internet Gambling Enforcement Act is controversial due to the manner in which it was passed through Congress. |
== History == | == History == | ||
| Line 5: | Line 5: | ||
=== 2005: House of Representatives === | === 2005: House of Representatives === | ||
| − | On November 18, 2005 representative Jim Leach of Iowa introduced the Internet Gambling Prohibition and Gambling Enforcement Act.<ref name="leach">[https://www.congress.gov/bill/109th-congress/house-bill/4411/text "H.R.4411 - Internet Gambling Prohibition and Enforcement Act"], ''Congress.gov'. November 18, 2005. Retrieved on 2020-02-16</ref> It's purpose was to prevent various payment methods from being used for unlawful online gambling.<ref name="leach" /> Leach's proposed bill redefined terms of the 1961 [[Federal Wire Act]]. A ''bet'' was now defined as any game subject to chance, and a ''communication facility'' includes transmissions over wired and mobile networks. | + | On November 18, 2005 representative Jim Leach of Iowa introduced the Internet Gambling Prohibition and Gambling Enforcement Act.<ref name="leach">[https://www.congress.gov/bill/109th-congress/house-bill/4411/text "H.R.4411 - Internet Gambling Prohibition and Enforcement Act"], ''Congress.gov'. November 18, 2005. Retrieved on 2020-02-16</ref> It's purpose was to prevent various payment methods from being used for unlawful online gambling.<ref name="leach" /> Leach's proposed bill redefined terms of the 1961 [[Federal Wire Act]]. A ''bet'' was now defined as any game subject to chance, and a ''communication facility'' includes transmissions over wired and mobile networks. These changes were made in order to include online poker in the scope of the bill. |
| − | Representative Shelley Berkley of Nevada attempted to amend the bill by expanding it's reach to include online schemes classified as ''games of skill''. Berkley's amendment failed by a vote of 114 - 297.<ref name="berk">[https://www.congress.gov/bill/109th-congress/house-bill/4411/amendments?searchResultViewType=expanded&KWICView=false "Amendments: H.R.4411 — 109th Congress (2005-2006)"], ''Congress.gov'. July 11, 2006. Retrieved on 2020-02-16</ref> The Internet Gambling Prohibition and Gambling Enforcement Act | + | Representative Shelley Berkley of Nevada attempted to amend the bill by expanding it's reach to include online schemes classified as ''games of skill''. Berkley's amendment failed by a vote of 114-297.<ref name="berk">[https://www.congress.gov/bill/109th-congress/house-bill/4411/amendments?searchResultViewType=expanded&KWICView=false "Amendments: H.R.4411 — 109th Congress (2005-2006)"], ''Congress.gov'. July 11, 2006. Retrieved on 2020-02-16</ref> The Internet Gambling Prohibition and Gambling Enforcement Act was passed by the House of Representatives on July 11, 2006. |
=== 2006: Senate === | === 2006: Senate === | ||
| − | The Internet Gambling Prohibition and Gambling Enforcement Act stalled in the Senate. Proponents of the bill decided to cut it down and tack it on to the end of unrelated legislation. | + | The Internet Gambling Prohibition and Gambling Enforcement Act stalled in the Senate. Proponents of the bill decided to cut it down and tack it on to the end of unrelated legislation. It was added to the SAFE Port Act; which was viewed as a must-pass bill that provided counter terrorism funding. The law passed the Senate on September 30, 2006 on the last session of Congress before the mid-term elections. The majority of Congressmen did not have an opportunity to read the final language of the proposed gambling legislation. |
| − | President George W. Bush signed the SAFE Port Act into law on October 13, 2006. | + | President George W. Bush signed the SAFE Port Act (and thus the UIGEA) into law on October 13, 2006. |
| − | === 2009: Internet Gambling | + | === 2009: Internet Gambling Regulation, Consumer Protection and Enforcement Act === |
| − | On May 5, 2009 representative Barney Frank proposed legislation to repeal the Internet Gambling Prohibition and Gambling Enforcement Act. His bill titled Internet Gambling Regulation, Consumer Protection, and Enforcement Act would | + | On May 5, 2009 representative Barney Frank proposed legislation to repeal the Internet Gambling Prohibition and Gambling Enforcement Act.<ref name="frank">[https://www.govinfo.gov/content/pkg/BILLS-111hr2267ih/html/BILLS-111hr2267ih.htm "Congressional Bills 111th Congress"], ''111th CONGRESS''. May 6, 2009. Retrieved on 2020-02-17</ref> His bill titled [[Internet Gambling Regulation, Consumer Protection, and Enforcement Act]] would allow online gambling businesses to apply for licenses to operate legally subject to strict federal regulations: |
| + | |||
| + | <blockquote>Internet gambling in the United States should be controlled by a strict federal licensing and regulatory framework to protect underage and otherwise vulnerable individuals, to ensure the games are fair, to address the concerns of law enforcement, and to enforce any limitations on the activity established by the states and Indian tribes.<ref name="frank" /></blockquote> | ||
| + | |||
| + | The proposed Internet Gambling Regulation, Consumer Protection and Enforcement Act did not include sports betting in order to remain in accordance with the 1961 [[Federal Wire Act]]. Representative Jim McDermott supported Frank's bill suggesting that licensed gambling businesses would be required to pay 2% of all customer deposits to the federal government: | ||
| + | |||
| + | <blockquote>We are losing billions of dollars in federal and state taxes every year because a prior Administration and its supporters drove legitimate U.S. online gambling off-shore by passing an ill-conceived late-night amendment in Congress that has done nothing except make Americans more vulnerable to scams when they wager online and cost us billions in lost revenue.</blockquote> | ||
== UIGEA == | == UIGEA == | ||
| − | The Internet Gambling Prohibition and Gambling Enforcement Act was signed into law on October 13, 2006. The | + | The Internet Gambling Prohibition and Gambling Enforcement Act was signed into law on October 13, 2006. The bill prohibits U.S. financial institutions from knowingly accepting and processing payments from unlawful gambling sites. Title 31 of the U.S. Code ''Subchapter IV - Prohibition on Funding of Unlawful Internet Gambling'' sections 5361 to 5367 outline the details of the Act. |
=== Congressional findings === | === Congressional findings === | ||
| Line 27: | Line 33: | ||
Congress believed that current gambling legislation was not adequate in the Internet era. Online betting frequently crossed national and state borders. In 1999 the National Gambling Impact Study Commission recommended legislation that would prohibit wire transfers to online betting sites and their associated banks.<ref name="cornell">[https://www.law.cornell.edu/uscode/text/31/5363 "PROHIBITION ON FUNDING OF UNLAWFUL INTERNET GAMBLING"], ''Cornell Law''. June 3, 2019. Retrieved on 2020-02-13</ref> | Congress believed that current gambling legislation was not adequate in the Internet era. Online betting frequently crossed national and state borders. In 1999 the National Gambling Impact Study Commission recommended legislation that would prohibit wire transfers to online betting sites and their associated banks.<ref name="cornell">[https://www.law.cornell.edu/uscode/text/31/5363 "PROHIBITION ON FUNDING OF UNLAWFUL INTERNET GAMBLING"], ''Cornell Law''. June 3, 2019. Retrieved on 2020-02-13</ref> | ||
| − | === | + | <blockquote>New mechanisms for enforcing gambling laws on the Internet are necessary because traditional law enforcement mechanisms are often inadequate for enforcing gambling prohibitions or regulations on the Internet, especially where such gambling crosses State or national borders.<ref name="cornell" /></blockquote> |
| + | |||
| + | === Definitions === | ||
| + | |||
| + | Section 5362 of the Internet Gambling Prohibition and Gambling Enforcement Act redefined terms used in existing gambling regulations. One of the most notable changes was expanding the definition of ''bet or wager'' to include games of chance. This increased UIGEA's reach allowing it to prohibit online poker. | ||
| + | |||
| + | <blockquote>The term “bet or wager” means the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game subject to chance, upon an agreement or understanding that the person or another person will receive something of value in the event of a certain outcome.<ref name="cornell" /></blockquote> | ||
| + | |||
| + | === Financial transactions === | ||
| + | |||
| + | Internet Gambling Prohibition and Gambling Enforcement Act states that online gambling businesses may not knowingly accept payments from another person for unlawful Internet gambling. This includes but is not limited to credit, electronic fund transfers, and checks. These restrictions outlined in Section 5363 target the Internet betting sites directly and not the players.<ref name="cornell" /> | ||
| + | |||
| + | <blockquote> | ||
| + | No person engaged in the business of betting or wagering may knowingly accept, in connection with the participation of another person in unlawful Internet gambling— [credit, an electronic fund transfer, check, or any other form of financial transaction].<ref name="cornell" /></blockquote> | ||
| + | |||
| + | === Regulator policies === | ||
| + | |||
| + | The UIGEA provides federal regulators with 270 days in order to develop procedures to identify financial transactions to unlawful online gambling sites. Authority is granted to block payments labeled as restricted transactions as defined by the Act. Section 5364 exempts regulators from investigating transactions in which the recipient of the funds is not directly indicated. This was primarily added in the case of paper checks as the payee is not expressly indicated. | ||
| + | |||
| + | <blockquote>Exempt certain restricted transactions or designated payment systems from any requirement imposed under such regulations, if the Secretary and the Board jointly find that it is not reasonably practical to identify and block, or otherwise prevent or prohibit the acceptance of, such transactions.<ref name="cornell" /></blockquote> | ||
| + | |||
| + | === Civil remedies === | ||
| + | |||
| + | The UIGEA prohibited U.S. banks from knowingly accepting financial transactions from illegal gambling sites. This did not reach overseas payment processors. Section 5365 of the Act grants state attorney generals authority to bring civil action in federal court if a restricted transaction has been initiated or received in their jurisdiction. | ||
| + | |||
| + | <blockquote>The attorney general (or other appropriate State official) of a State in which a restricted transaction allegedly has been or will be initiated, received, or otherwise made may institute proceedings under this section to prevent or restrain the violation or threatened violation.<ref name="cornell" /></blockquote> | ||
| + | |||
| + | The Act additionally allows state officials to order Internet service providers to remove websites that process financial transactions for online gambling sites. | ||
| + | |||
| + | <blockquote>be limited to the removal of, or disabling of access to, an online site violating section 5363, or a hypertext link to an online site violating such section, that resides on a computer server that such service controls or operates, except that the limitation in this subparagraph shall not apply if the service is subject to liability under this section under section 5367.<ref name="cornell" /></blockquote> | ||
| + | |||
| + | === Criminal penalties === | ||
| + | |||
| + | Penalties for violating the Internet Gambling Prohibition and Gambling Enforcement Act include a fine and a maximum of five years imprisonment. Guilty parties may also be restricted from any further involvement in online gambling. | ||
| + | |||
| + | <blockquote>Upon conviction of a person under this section, the court may enter a permanent injunction enjoining such person from placing, receiving, or otherwise making bets or wagers or sending, receiving, or inviting information assisting in the placing of bets or wagers.<ref name="cornell" /></blockquote> | ||
| + | |||
| + | === Prohibited circumvention === | ||
| + | |||
| + | The final section of the UIGEA holds financial institutions and internet service providers accountable for directly operating or having connection to unlawful online gambling sites. | ||
| + | |||
| + | <blockquote>A financial transaction provider, or any interactive computer service or telecommunications service, may be liable under this subchapter if such person has actual knowledge and control of bets and wagers, and operates, manages, supervises, or directs an Internet website at which unlawful bets or wagers may be placed, received, or otherwise made, or at which unlawful bets or wagers are offered to be placed, received, or otherwise made; or owns or controls, or is owned or controlled by, any person who operates, manages, supervises, or directs an Internet website at which unlawful bets or wagers may be placed, received, or otherwise made, or at which unlawful bets or wagers are offered to be placed, received, or otherwise made.<ref name="cornell" /></blockquote> | ||
== References == | == References == | ||
<references /> | <references /> | ||
Latest revision as of 18:10, 17 February 2020
The Unlawful Internet Gambling Enforcement Act (abbreviated UIGEA) is a 2006 United States federal law that brought regulations to online gambling transactions. The bill prohibits US financial institutions from knowingly accepting and processing payments from online gambling businesses that are considered illegal under federal law. The bill lead to many offshore betting sites withdrawing from the US market. The Unlawful Internet Gambling Enforcement Act is controversial due to the manner in which it was passed through Congress.
Contents
History
2005: House of Representatives
On November 18, 2005 representative Jim Leach of Iowa introduced the Internet Gambling Prohibition and Gambling Enforcement Act.[1] It's purpose was to prevent various payment methods from being used for unlawful online gambling.[1] Leach's proposed bill redefined terms of the 1961 Federal Wire Act. A bet was now defined as any game subject to chance, and a communication facility includes transmissions over wired and mobile networks. These changes were made in order to include online poker in the scope of the bill.
Representative Shelley Berkley of Nevada attempted to amend the bill by expanding it's reach to include online schemes classified as games of skill. Berkley's amendment failed by a vote of 114-297.[2] The Internet Gambling Prohibition and Gambling Enforcement Act was passed by the House of Representatives on July 11, 2006.
2006: Senate
The Internet Gambling Prohibition and Gambling Enforcement Act stalled in the Senate. Proponents of the bill decided to cut it down and tack it on to the end of unrelated legislation. It was added to the SAFE Port Act; which was viewed as a must-pass bill that provided counter terrorism funding. The law passed the Senate on September 30, 2006 on the last session of Congress before the mid-term elections. The majority of Congressmen did not have an opportunity to read the final language of the proposed gambling legislation.
President George W. Bush signed the SAFE Port Act (and thus the UIGEA) into law on October 13, 2006.
2009: Internet Gambling Regulation, Consumer Protection and Enforcement Act
On May 5, 2009 representative Barney Frank proposed legislation to repeal the Internet Gambling Prohibition and Gambling Enforcement Act.[3] His bill titled Internet Gambling Regulation, Consumer Protection, and Enforcement Act would allow online gambling businesses to apply for licenses to operate legally subject to strict federal regulations:
Internet gambling in the United States should be controlled by a strict federal licensing and regulatory framework to protect underage and otherwise vulnerable individuals, to ensure the games are fair, to address the concerns of law enforcement, and to enforce any limitations on the activity established by the states and Indian tribes.[3]
The proposed Internet Gambling Regulation, Consumer Protection and Enforcement Act did not include sports betting in order to remain in accordance with the 1961 Federal Wire Act. Representative Jim McDermott supported Frank's bill suggesting that licensed gambling businesses would be required to pay 2% of all customer deposits to the federal government:
We are losing billions of dollars in federal and state taxes every year because a prior Administration and its supporters drove legitimate U.S. online gambling off-shore by passing an ill-conceived late-night amendment in Congress that has done nothing except make Americans more vulnerable to scams when they wager online and cost us billions in lost revenue.
UIGEA
The Internet Gambling Prohibition and Gambling Enforcement Act was signed into law on October 13, 2006. The bill prohibits U.S. financial institutions from knowingly accepting and processing payments from unlawful gambling sites. Title 31 of the U.S. Code Subchapter IV - Prohibition on Funding of Unlawful Internet Gambling sections 5361 to 5367 outline the details of the Act.
Congressional findings
Congress believed that current gambling legislation was not adequate in the Internet era. Online betting frequently crossed national and state borders. In 1999 the National Gambling Impact Study Commission recommended legislation that would prohibit wire transfers to online betting sites and their associated banks.[4]
New mechanisms for enforcing gambling laws on the Internet are necessary because traditional law enforcement mechanisms are often inadequate for enforcing gambling prohibitions or regulations on the Internet, especially where such gambling crosses State or national borders.[4]
Definitions
Section 5362 of the Internet Gambling Prohibition and Gambling Enforcement Act redefined terms used in existing gambling regulations. One of the most notable changes was expanding the definition of bet or wager to include games of chance. This increased UIGEA's reach allowing it to prohibit online poker.
The term “bet or wager” means the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game subject to chance, upon an agreement or understanding that the person or another person will receive something of value in the event of a certain outcome.[4]
Financial transactions
Internet Gambling Prohibition and Gambling Enforcement Act states that online gambling businesses may not knowingly accept payments from another person for unlawful Internet gambling. This includes but is not limited to credit, electronic fund transfers, and checks. These restrictions outlined in Section 5363 target the Internet betting sites directly and not the players.[4]
No person engaged in the business of betting or wagering may knowingly accept, in connection with the participation of another person in unlawful Internet gambling— [credit, an electronic fund transfer, check, or any other form of financial transaction].[4]
Regulator policies
The UIGEA provides federal regulators with 270 days in order to develop procedures to identify financial transactions to unlawful online gambling sites. Authority is granted to block payments labeled as restricted transactions as defined by the Act. Section 5364 exempts regulators from investigating transactions in which the recipient of the funds is not directly indicated. This was primarily added in the case of paper checks as the payee is not expressly indicated.
Exempt certain restricted transactions or designated payment systems from any requirement imposed under such regulations, if the Secretary and the Board jointly find that it is not reasonably practical to identify and block, or otherwise prevent or prohibit the acceptance of, such transactions.[4]
Civil remedies
The UIGEA prohibited U.S. banks from knowingly accepting financial transactions from illegal gambling sites. This did not reach overseas payment processors. Section 5365 of the Act grants state attorney generals authority to bring civil action in federal court if a restricted transaction has been initiated or received in their jurisdiction.
The attorney general (or other appropriate State official) of a State in which a restricted transaction allegedly has been or will be initiated, received, or otherwise made may institute proceedings under this section to prevent or restrain the violation or threatened violation.[4]
The Act additionally allows state officials to order Internet service providers to remove websites that process financial transactions for online gambling sites.
be limited to the removal of, or disabling of access to, an online site violating section 5363, or a hypertext link to an online site violating such section, that resides on a computer server that such service controls or operates, except that the limitation in this subparagraph shall not apply if the service is subject to liability under this section under section 5367.[4]
Criminal penalties
Penalties for violating the Internet Gambling Prohibition and Gambling Enforcement Act include a fine and a maximum of five years imprisonment. Guilty parties may also be restricted from any further involvement in online gambling.
Upon conviction of a person under this section, the court may enter a permanent injunction enjoining such person from placing, receiving, or otherwise making bets or wagers or sending, receiving, or inviting information assisting in the placing of bets or wagers.[4]
Prohibited circumvention
The final section of the UIGEA holds financial institutions and internet service providers accountable for directly operating or having connection to unlawful online gambling sites.
A financial transaction provider, or any interactive computer service or telecommunications service, may be liable under this subchapter if such person has actual knowledge and control of bets and wagers, and operates, manages, supervises, or directs an Internet website at which unlawful bets or wagers may be placed, received, or otherwise made, or at which unlawful bets or wagers are offered to be placed, received, or otherwise made; or owns or controls, or is owned or controlled by, any person who operates, manages, supervises, or directs an Internet website at which unlawful bets or wagers may be placed, received, or otherwise made, or at which unlawful bets or wagers are offered to be placed, received, or otherwise made.[4]
References
- ↑ 1.0 1.1 "H.R.4411 - Internet Gambling Prohibition and Enforcement Act", Congress.gov'. November 18, 2005. Retrieved on 2020-02-16
- ↑ "Amendments: H.R.4411 — 109th Congress (2005-2006)", Congress.gov'. July 11, 2006. Retrieved on 2020-02-16
- ↑ 3.0 3.1 "Congressional Bills 111th Congress", 111th CONGRESS. May 6, 2009. Retrieved on 2020-02-17
- ↑ 4.0 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 "PROHIBITION ON FUNDING OF UNLAWFUL INTERNET GAMBLING", Cornell Law. June 3, 2019. Retrieved on 2020-02-13