UIGEA implementation today

Today marks a very significant day for online gambling in America.  Almost 4 years after being passed into law, the UIGEA net-gambling payment blocking laws come into effect.

The original implementation deadline was January 1, but this was pushed back after Rep. Barney Frank and his cohort of pro-online gambling politicians managed to successfully convince Treasury Secretary Timothy Geithner that the financial sector was ill-equipped to comply with their obligations under the Act.  I’m not sure what has changed in this regard, but no further deadlines were entertained and as of now payment processors are to block all payments deemed to be related to ‘unlawful online gambling’.

An unreasonable burden

Banks and other financial institutions have long complained that they will have difficulties complying with UIGEA.  You see, the legislation places much (all) of the burden of identifying and then blocking ‘unlawful online gambling’ transactions on the financial institutions.  An unneeded administrative burden on the face of it.  But when it is considered that the legislation does not actually define or give guidance as to what ‘unlawful online gambling’ is, the bank’s groans and grumbles start to sound quite reasonable.

After all, legal experts have for some time been divided on exactly what is or is not legal when it comes to online gambling – what hope do the banks have in making this determination accurately.

VISA, Amex, Diners Club to join Mastercard with payment blocking

Mastercard caught a few online gambling operators and players by surprise back in February when they decided to begin blocking payments prior to the implementation deadline.  Rumours also circulated that America’s other dominant card issuer, VISA would soon follow suit, however these seemed to be unfounded with most US facing operators having no issues with either VISA or AMEX….until now.

Presumably, if you are a US resident, your Mastercard, VISA, American Express, Diners Club, JCB or any other credit or debit card should no longer be accepted to deposit at an online casino, sports book or poker room.

Of course what should happen, and what in practice will happen may be 2 very different things.

Is this the end of online gambling access for US residents?

Interestingly enough, more than one prominent US facing (but offshore based) operator has defiantly predicted that in reality little will change from today.  Prohibition measures imposed on popular pastimes have proven time and again to be ineffective throughout America’s history.

And other payment options will fill the void left by VISA, Mastercard et al (if indeed their blocks work) where the demand continues to exist. In fact virtual wallets tailored to US players like UseMyWallet and eWalletXpress are already available.

What will remain unchanged is the fact that US players will not have access to the large, stock exchange listed European based operators as these guys all pulled out of the market back in 2006 when the law was passed.

The next few months will be interesting to say the least.   If a whole bunch of US facing operators start going out of business  – we’ll know that UIGEA is working…if they don’t then we’ll know that it is just another attempt at prohibition that has failed miserably.

Then of course there is the possibility that new laws repealing and replacing UIGEA are passed by Congress.  Draft laws have been floating around Washington’s corridors of power for months now gaining sponsor support but when, if ever they will be considered by the House is anyone’s guess.

As always, the likely future of online gambling in America remains harder to pick than a broken nose!