The Unlawful Internet Gambling Enforcement Act Of 2006
The third and most recent of the big three federal anti-gambling laws is the Unlawful Internet Gambling Enforcement Act of 2006, or UIGEA. It is also the most ineffectual of the anti-gambling laws, even if its immediate effect on the Internet-based sports betting and casino gaming industry was somewhat disruptive.
Essentially, what the UIGEA did was to disallow US-based banks from processing payments to and from online gambling and sports betting websites. By making the banks eligible for prosecution under the UIGEA, there was a strong disruption – at the outset – in the financial pipeline powering the memberships, buy-ins, and payouts for these kinds of “gray market” betting sites.
History Of The UIGEA
By all measures, the UIGEA shouldn’t actually exist. Like so much meddlesome legislation, the Unlawful Internet Gambling Enforcement Act of 2006 wasn’t even passed by a congress that actually read its terms, as it was tacked onto an otherwise unrelated bill called the SAFE Port Act (which, as its name implies, had to do with port security, not Internet gambling and sports betting).
Further, the related legislation was of the last-minute variety, passed on the final day before both houses adjourned for the 2006 elections. As such, most politicians were neither aware of – nor didn’t care about – its scope or whether the law was even practically enforceable. Tucked away in 31 U.S.C. §§ 5361-5367, the UIGEA is summed up neatly:
“The Act prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law...”
Included in the bill are various methods for dealing with offending parties, with banks and other financial institutions involved in the business of fund transfers receiving a sort of technical checklist that they’d have to use in their risk automation protocols. Basically, a bank had to make a “good faith effort” to include safeguards in its systems to prevent any blatant money movement to and from known Internet sports betting and gambling sites. Ultimately, of course, the UIGEA didn’t really do anything to stop the Internet from being the number-one wagering platform for US customers.
Effect Of The UIGEA On Betting Sites In New York
Before the Unlawful Internet Gambling Enforcement Act of 2006 was passed, there was a substantial NY audience for online sports betting sites. After the Unlawful Internet Gambling Enforcement Act of 2006 was passed, there was an even more substantial NY audience for online sports betting sites. However, though the law didn’t temper the appetite for athletics wagering in the Big Apple, the effect of the UIGEA on betting sites in New York (or those sites readily available to NY resident sports bettors) was substantial, at least at first.
With the banks blacklisting various known poker and sports gambling shops that were previously very open about doing business in the NY market (and the US in general), many of them folded. Others were brazen enough to wholly ignore or flout the law, which was especially true for the very popular online poker sites of the time, which – in the early 2000s – were dominating the mainstream consciousness. Companies like PokerStars, Full Tilt Poker, and Absolute Poker – the largest Internet poker brands on the planet back then – famously tried to game the UIGEA. Their founders were all convicted of multiple federal crimes by 2011.
Other sites were more cautious re the UIGEA, as they ceased operations on a limited basis while seeking workarounds to the problems the law presented. And thanks to a rather glaring UIGEA loophole, these problems ended up being very temporary. With betting sites in New York having already been largely forced overseas thanks to the Professional and Amateur Sports Protection Act (PASPA, 1992), these operators merely retooled their payout and withdrawal methods.
UIGEA Loopholes
The main UIGEA loopholes that were eventually exploited to allow the continuation (and constant expansion) of online sports betting and casino wagering in NY and beyond were – in retrospect – quite clear. The first is in the law itself, as the word “knowingly” implies a certain level of leniency and breadth to how payments are interpreted by banks.
By utilizing many different bank accounts, sites like SportsBetting, BetOnline, and other top New York sportsbooks are able to efficiently and promptly deliver checks to players all over the world, including inside the US. Banks have no direct means to divine out where such a check might originate from, as – once the check is even just a single bank removed – the burden for investigation is generally shed by any bank further down the line. Banks make money by moving money. If they can reasonably remove from themselves the responsibility for “knowing” where that money comes from, it is in their best financial interest to do so.
The other UIGEA loophole came a bit later. Whereas the above solution was implemented within months of the law’s passage, the more powerful of the workarounds would take a few years to develop into maturity. Today, that solution is mature and extremely disruptive (in a good way) to not only the gambling and sports betting markets but also to the world’s established banking models altogether. You know this ultimate UIGEA loophole as Bitcoin.
Best New York Betting Site Payouts To Bypass The UIGEA
When it comes to withdrawing your winnings from your Internet sportsbook or online casino, you’ll usually have a few options. Most legal online sportsbooks offer three primary payout vehicles. These are chosen because each, in some way, represents the best New York betting site payouts to bypass the UIGEA.
First and most widely used is the courier check. Another common option is to use a peer-to-peer or money order transfer. The third option is Bitcoin, and its popularity is currently skyrocketing. Bitcoin payouts have higher limits, lower fees, and much faster payout times than the other common avenues, and as more folks jump on the cryptocurrency bandwagon, more are starting to realize the true value of Bitcoin (and altcoins like Bitcoin Cash, Ethereum, and Litecoin).
Bitcoin And The UIGEA
It is worth clarifying one thing about cryptocurrency as it applies to the Unlawful Internet Gambling Enforcement Act of 2006, and that’s that nobody really knows the “who” or the “why” behind the development of Bitcoin. The concept’s creator, Satoshi Nakamoto, is not an actual person, and most investigators and analysts believe that the person or team responsible for Bitcoin wasn’t even Japanese. In fact, there are even a few indications that Bitcoin and the UIGEA might be more related to one another than previously believed.
This largely stems from a theory (perhaps the most meritorious of the many that exist) that Bodog founder Calvin Ayre, a Canadian entrepreneur, was ultimately responsible for the development and deployment of Bitcoin and its revolutionary blockchain technology. The code notations within Bitcoin’s various releases do point to a possible Canadian origin, but more than that, the timing is extremely...convenient.
Ayre, for those that don’t know, is basically the creator of online gambling and sports betting. His empire, threatened by the UIGEA, needed an alternative, bank-free, decentralized way to pay its millions of customers. A few years later, Bitcoin pops up and is almost immediately deployed by Ayre’s many wagering platforms. It was a perfect fit, too – as if Bitcoin were practically made for sports betting.
While Ayre will never give any credence to this particular theory, there’s a very real chance that the Unlawful Internet Gambling Enforcement Act of 2006 was the catalyst for Bitcoin and for the blockchain itself, a technology that is changing the faces of Internet security and global finance alike.
