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US Online Gambling Post UIGEA

June 8, 2010

The UIGEA Rules have become effective from June 1, 2010. The question everyone is asking is how this will effect the prevailing situation. Those who venture an answer look at it from two perspectives, the sort term and the long term. But first it must be pointed out that this time round there was no opposition to the implementation of the UIGEA rules. When the rules were first to go in effect on December 1, 2009, there was a huge hue and cry resulting in the implementation being deferred by six months. The agencies opposing the UIGEA probably realized that they had been unable to move the legalization of online gambling fast enough in the interim six months. This was the main reason they did not have the will to try for another postponement. In any event the administration would have not conceded a second postponement because it would have sent the signal that they themselves did not believe in the UIGEA.

Two different scenarios have been proposed for the short term post UIGEA situation. Most opinions are that things would continue very much as before. This implies that by and large American players will be able to gamble at offshore online casinos and online poker rooms. Some enterprising online gambling enthusiasts have tried to deposit funds on many online gambling web sites through credit cards and have succeeded most of the time. Players do not seem to be worried that under pressure from the administration the banks may be compelled to block credit card transactions. They seem to be sure that new and innovative instruments for depositing funds will appear in the market.

The other view is that the authorities will come down hard on online gambling. Already in the last twelve months there has been an escalation in the prosecution of online payment processors. This is expected to rise further. There have also been very strong rumors in the market that the Federal Bureau of Investigation has a dossier on leading online poker rooms like Full Tilt Poker and can act any time. It has been said that the FBI has roped in players at the online poker room to testify and have also set up their agents as customers of the site. The situation is currently balanced on a knife edge and one cannot say which way it will swing.

In the long run every one seems to be sure that there is no option to the legalization and regulation of online gambling. John Pappas, Executive Director for the Poker Players Alliance has repeatedly said, “It’s not a question of if it will be legalized, it’s a question of when.” The time frame is the matter of debate. Barney Frank, the sponsor of the Internet Gambling Regulation Bill is talking of getting the regulation through by the end of the year. However his record is so poor that few actually believe him. He has been citing more important economic matters as the reason for the delay and the grim economic situation is not going anywhere in a hurry.

It is becoming more and more clear that the thrust for legalization will come from the states. The states are strapped for cash and see taxing of regulated online gambling as a means to balance their budget. New Jersey and California have moved considerably in this direction. The Supreme Court of Philadelphia has declared that if a state legalizes online gambling the provisions of the UIGEA will not apply there. That seems to be the way ahead.

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