UIGEA Causes Major Problems

Profit losses, claims and disagreements

The Unlawful Internet Gambling Enforcement Act was signed by President Bush October 13th, 2006. From then on, it was illegal for online gambling sites to perform transactions with financial institutes, thus making it impossible for Americans to make bets online. As poker is rising and rising, big online pokerrooms suffered major profit losses. For example, Party Gaming, mothercompany of PartyPoker, suffered a profit loss of about 43 million US dollars. In the first half of 2006, Party Gaming showed a profit of $320,5 million, and over the same period in 2007, their profit was $277,4 million, $43 million less. Also their stocks value devaluated from 155 pence to 22,75 pence, in only 1 year. Party gaming now searches for joint ventures in Russia and China, to re-establish their market sector.

Neteller, an online bank has made a loss in the first half year of 2007. In the first 6 months in 2006, their profit was $58 million, while in 2007 it was a loss of $24,7 million. These facts can directly be explained by the Americans not playing online anymore. Of course, Neteller and Party Gaming aren't the only companies losing money because of the UIGEA.

Even in the World Series of Poker we could see the consequences of the UIGEA. Poker is growing and growing, and big online pokerrooms give away a lot of tickets for big tournaments like the WSOP. The more players in a satellite, the more tickets to be given away. This lead to a massive 8357 players in july 2006. Expectations for 2007 rose to about 12000 competers. But because of the UIGEA, fewer online tickets were to be won and the WSOP of 2007 only found little over 6000 people playing.

David vs. Goliath
The small state Antigua and Barbuda, where many online gambling- and pokersites are established, has asked the World Trade Organization(WTO) if they could claim $3,4 billion for commercial sanctions on the USA. Antigua believe the UIGEA is illegal, and the WTO agreed on that. A spokesman of Antigua stated the following about their claim, "We feel we have no other choice in the matter, we have fought long and hard for fair access to the U.S. market and have won at every stage of the WTO process." The US believes they do have the right to do this and didn't answer the claim. They also think it is fairly excessive, such a huge amount of money.

Japan and India have also connected to Antiguas claim. This can have major consequences. According to the WTO, if the US doesn't pay, Antigua may sell unlicensed American copies of shoes, DVD's and other American products.

Now the biggest problem for the US is yet to arise. The EU also suffers profit losses of about 4 million dollars. The EU refused a proposal for compensation from the US and if the WTO rules apply here as well, the US may suffer from their big market on DVD's, shoes, clothes etc.

Offensives against UIGEA
Surprisingly enough, the biggest offensive against the UIGEA, comes from the US itself. Robert Wexler, a congressmember from Florida has prosecuted a bill that requests skill games like poker, bridge, chess and mahjong to be removed from the UIGEA. A spokesman of Wexler said the following about the bill, "It allows Americans to play poker online as they should have every right to do. Skill games should be treated differently than games of chance, as players win and lose based on their abilities."

Two members of the Congress in the USA, Republican Steve Israel and Democrate Peter King both wrote an argument essay in the New York Post. Their main point was that the UIGEA had to vanish. They wrote under the head: "Web gambling, tax, don't ban". They offered a solution to the issue. Give licenses to safe internet rooms and in that way make sure circumstances for players are safe. Also at this moment, no money is made by the US government on the $13 billion spend on online gambling. When taxing the gambling, the US government would also make some money and they would still make online gambling less attractive. Israel and King would like to see a new law: the Internet Gambling Regulation and Enforcement Act (IGREA in short) with their ideas in it.

Countries like France are in favour of online poker. France has declared online poker as legal and it thinks no monopoly positions or laws on online skill games should be there. Together with France, online gambling is allowed and seen as legal all over the world. Only in large areas of the US and a handful of countries in Europe it is illegal to play online. Online rooms do accept people from these areas though, and it hardly ever happens someone gets prosecuted for online playing.

The future will tell us which measures the US will take and if the UIGEA will be alive for a longer period of time. At this moment, the UIGEA support doesn't look very strong and few people agree with the law.

Article Written by member BlueRain