If legislators have their way, online casino-style gambling in
the US will cease on 1 December 2009 with the implementation of the
Unlawful Internet Gambling Enforcement Act (UIGEA).
Passed in 2006, the Act has since been subject to a study into
applicable regulations by two federal bodies.
Under regulations published by the US Department of the Treasury
and Federal Reserve Board (Fed), implementation and enforcement of
the online gambling ban will rest heavily on the payments
According to the two federal bodies, regulations cover automated
clearing house systems, card systems, cheque collection systems,
money remittance businesses and wire transfer systems.
Participants in these designated payment systems are required to
establish and implement written policies and procedures designed to
“identify and block or otherwise prevent or prohibit transactions
in connection with unlawful internet gambling.”
In essence, the payments industry is required to identify which
online gambling businesses are lawful and which are not. Under the
UIGEA, certain forms of online gambling including betting on horse
racing and interstate lotteries are deemed to be legal.
Unsurprisingly, payments industry members are unhappy with the
situation they face, as American Bankers Association vice-president
Wayne Abernathy told a Congressional hearing earlier this year.
“Punting the enforcement obligation to the banking industry and
the other participants in the US payment system is an unprecedented
delegation of governmental responsibility with no prospect of
practical success in exchange for the burden it imposes,” said
Warning of negative consequences faced by the payments industry,
he stressed: “The path leads to an increased cost and
administrative burden to the banks and erosion in the performance
of the payments system, but it will not result in stopping illegal
internet gambling transactions.”
According to the Treasury and the Fed, the regulation will
affect 3,459 banks, 4,068 credit unions, three card system
operators and eight money-transmitting business operators.
The total cost in terms of clerical record-keeping labour-hours
to establish the required policies and procedures is estimated at
However, if other costs such as training, auditing and legal
expenses are included the Treasury and the Fed believe the total
first year cost will exceed $100 million.
It still remains unclear precisely how large the global online
gambling market is. However, estimates by US gambling industry
research firm Christiansen Capital Advisors indicated that in 2008
it will be worth around $21 billion, up from about $6 billion in
Of the 2008 total, the US will account for between 40 percent
and 50 percent.