The Unlawful Internet Gambling Enforcement, or the UIGEA, is a slick bit of con work by US politicians. Attached to a terrorism bill called the SAFE Port Act in 2006, the UIGEA was a last minute addition to a must-pass security measure. The manner in which the UIGEA was passed was borderline criminal. Political stooges like Senator Bill Frist on Tennessee and Representative Bob Goodlatte of Virginia pushed for passage of the UIGEA, not because it was the will of the people… but the will of their political donors.
The UIGEA prohibits gambling businesses from “knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law.” However, it excludes fantasy sports that meet certain requirements, skill games, and legal intrastate and tribal gaming.These criteria enable those political donors to continue to do business here in America while shutting down their competition. Pretty slick, and worth every penny.
However, I’m going to place a wager. I predict that gambling will be broadly legal in the United States by the end of this decade. It will start with online poker, which is currently legal only in Nevada, New Jersey, and Delaware. But it will expand from there, both in categories of games and in geographic acceptance. This is already happening, to a certain extent: The wheel’s started spinning, and the ball is in play. When it drops, the video gaming business will win big. The makers of today’s mobile games will build tomorrow’s mobile casinos.
They’ve tried before. Zynga, the granddaddy of social gaming, launched a real-money gambling site in the U.K. last year, calling it Zynga Plus Casino. It collaborated with bwin.party, a Gibraltar-based gambling company that reported nearly 770 million euros in revenues in 2012. (That’s about $1.05 billion in current dollars.) But Zynga has had a tougher time gaining headway in the U.S. Entrenched anti-gambling statutes and complicated interstate regulations are difficult hurdles to clear. Barely a few months after it had opened its casino for business in the U.K., Zynga told analysts that it had given up on plans to let Americans in the door.
The biggest roadblock facing Zynga, and anyone else, is the Unlawful Internet Gambling Enforcement Act of 2006. Originally drafted as a last-minute rider on a port security bill, the UIGEA has been used to prohibit companies from offering Internet-based poker, sports books, and games of chance to Americans. Its passing put an end to a decade-long gold rush in online gambling in the U.S., led by sites such as Bodog, PokerStars, and Full Tilt Poker.
A series of indictments, issued most notably in United States v. Scheinberg, showed that federal authorities were willing to prosecute broadly and aggressively on behalf of the UIGEA. In Scheinberg, U.S. Attorney Preet Bharara alleged that the founders of PokerStars, Full Tilt Poker, and Cereus (Absolute Poker) were guilty of bank fraud and money laundering as a result of transferring funds to and from players online. PokerStars and two other defendants agreed to forfeit over $731 million to settle the case, and PokerStars was permitted to continue business operations.
This story originally appeared on the Slate website.
