Sunday, October 07, 2007

Inside the UIGEA Regulations, Part 1: Introduction and Background

The publication a few days ago of the Department of the Treasury’s proposed rules for implementation of the Unlawful Internet Gambling Enforcement Act [UIGEA], has led to a lot of top-level news pieces noting the release, a lot of questions being asked about what’s really inside… and not much real meat. Truth is, reading 52-page regulatory PDF is damn boring stuff, even if it does concern poker. Still, someone’s got to sift through it and separate the nuggets from the leavings.

So with the up-front declaration that not only am I not a lawyer, I don’t even play one on TV, I’ll still sacrifice a couple of hours for you all and see just what the Washington bureaucrats have in mind.

The UIGEA, as noted in the regulations, defines “unlawful Internet gambling” as “placing, receiving, or otherwise knowingly transmitting a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is unlawful under any applicable Federal or State law in the State or Tribal lands in which the bet is initiated, received, or otherwise made.” However, the UIGEA specifically is not construed to alter any existing act, relying instead on what it portrays as the “underlying substantive Federal and State laws.”

It’s key point number one, because apart from the morass of state laws the UIGEA must somehow negotiate and coordinate, the two federal decrees of most relevance are the Wire Act and the Interstate Horse Racing Act. The Interstate Horse Racing Act and subsequent amendments deal only with pari-mutuel wagering, and horseracing was specifically carved out within the UIGEA anyway. As to the Wire Act, previous court decisions have held that it applies to sports wagers only, not to other contests. In fact, in a decision involving an online gambling site from some years ago, a disgruntled customer attempted to stop payment made to an online site, and the court ruled against him and in favor of Master Card, which is what he’d used to run up his debts.

Also poker has never been mentioned in any of the previous federal gambling laws, and is not mentioned anywhere in the 52-page document released by the feds regarding implementation of the UIGEA. The truth seems to be that when push comes to shove, the feds want no part of taking on the “poker as a game of skill” defense. That doesn’t mean that poker sites won’t be clipped because of overzealous, too-broad banking regulations, however. That’s… umm… happened way too much already.

In Part 2, we’ll peek at some of the implementation features proposed for the UIGEA.

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