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What Is The UIGEA?

The UIGEA, properly known by its full name, the Unlawful Internet Gambling Enforcement Act of 2006, enjoys the dubious distinction of being not only the law that nearly singlehandedly killed the domestic US online gambling industry but also one of the most controversial bills of any kind in recent history. The UIGEA, also called the Leach Act after the bill’s primary sponsor, Rep. Jim Leach of Iowa, was controversial enough in and of itself, being at best a vaguely worded proscription against gambling businesses should they accept payments for a bet placed online. What gives the UIGEA its real infamy is the underhanded way in which it was passed.

In essence, the UIGEA was tacked on to a completely unrelated ports security bill the day before members of Congress adjourned for the 2006 Congressional elections. At the time UIGEA was passed out of Senate-House Conference Committee, it is highly likely that almost none of the legislators who voted on it had ever read the bill’s official language if they had ever heard so much as heard of it before. The bill was then quickly passed through both the full House (which returned a 409-2 vote) on Sept. 29, 2006, and the full Senate (which voted unanimously) the following day. This all came about despite the fact that the language of the bill was entirely different from its previous form, which had been debated and passed by the House on May 4 and the Senate on Sept. 14. Then-President George W. Bush Signed the bill that would become the UIGEA into law, attached as it was the SAFE Port Act, on October 13 to complete the deed.

As might be imagined, the upheavals wrought on the country’s booming internet gambling industry were massive, with many operators electing to leave the country outright. However, the aftershocks of the controversial law can still be felt to this day, as it was the UIGEA, more than any other piece of federal legislation involving sports betting that paved the way for legal offshore sportsbooks and casinos that still fill the niche left by the departure of US companies. In order to better understand the repercussions the UIGEA had and the role it continues to play in shaping the future of online gambling, we’ll first take a closer look at the law’s history and then dive into the particular prohibitions – and exemptions – of this controversial law.

What Effect Did The UIGEA Have On The Online Gambling Industry?

In short, the UIGEA dismantled much of the US’ domestic online gambling industry, including the industry leaders. For instance, PartyGaming, then an online gaming giant thanks to its hugely popular PartyPoker.com brand, saw its publically traded stock values drop nearly 60 percent within 24 hours of the passage of the UIGEA after it voluntarily left the US market, which comprised 80 percent of its business. The company never recovered. This trend was repeated elsewhere, with many other top online gambling sites vacating the US market.

Though passed in late 2006, the UIGEA’s banking-related impositions didn’t take effect until January 19, 2009, the day before Barack Obama was sworn in as the 44th President of the United States. This delay was due to a position adopted by the Bush administration that it would not finalize any rule made after Nov. 1, 2008, and since the UIGEA’s final regulations were released on Nov. 12 of that year, the whole process was kicked down the road until Obama took office. At any rate, compliance by the financial institutions was not required until Dec. 1, 2009, in order to give “non-exempt participants“(that is, the newly illegal online gambling entities) an opportunity to take appropriate action to avoid prosecution.

The reactionary steps from the online gambling community were mixed, with some, particularly the publically traded gaming websites, exiting the US market altogether. Most of the privately held online gaming sites like the legal offshore sports betting sites we recommend for US bettors – Bovada, BetOnline, SportsBetting and 5Dimes – all continued accepting American account holders and still do to this day. However, some online poker services remained in the US market, perhaps viewing the passage of UIGEA as a “shot across the bow” at online gambling sites still accepting American players.

The foolishness of that move was revealed on April 15, 2011, a day referred to in internet gaming circles as “Black Friday.” The Department of Justice crack down hard on five of the biggest online poker companies (Absolute Poker, Full Tilt, PokerStars and Ultimate Bet), indicting their owners, payment processors and even employees, and seizing 70-odd bank accounts held by the companies. These operators and their financial processors were charged with multiple violations of the UIGEA, and even got slapped with money laundering charges – enough to get many of the individuals charged with life sentences.

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