Casinos.co.uk: Casino News Archive
Tuesday 24th October 2006
The UIGEA - Is Your Business in Compliance?
On 30 September 2006, the US Congress passed the
Unlawful Internet Gambling Enforcement Act 2006,
which was signed into law by President Bush on 13th
October 2006. The Act went through in the final hours
of the Senate's legislative session as an amendment to
the Safe Port Act, a bill seeking to improve maritime
and cargo security.There was little discussion about the
Act in the Senate, no procedural objections were
raised by Senators that could have derailed it and it
was signed by President Bush without mention of the
Internet Gambling prohibition being a component of
the Safe Port Act. The Internet Gambling Enforcement
Act was a Bill that had failed several years running in
the Senate.
The Act essentially prohibits acceptance of any
payment instrument by operators for unlawful internet
gambling. Earlier versions of the Bill combined the
Goodlatte and Leach Bills.The Goodlatte Bill amended
the Wire Act to specifically prohibit the use of the
internet for both sports betting and other forms of
casino style games. The Leach Bill prohibited the
acceptance of financial instruments for unlawful
internet gambling. The final wording of the Act Bill
follows the Leach Bill and therefore does not define
'unlawful internet gambling'. This is left to the existing
law, which is arguably not clear on whether it applies to
both sports betting and casino style games. The crucial
point is that the US Department of Justice has always
taken the view that both remote sports betting and
casino styles games are prohibited and unlawful under
the Wire Act.
The Act carves out skill gaming, fantasy sports and
horserace betting where permitted by federal or state
legislation. This has caused some operators in the
remote gaming industry outside the US to cry that the
Act is protectionist and discriminates against foreign
competition.
There is also a carve out for those providing inactive
computer services to operators such as ISP or web
hosting services, and relieving such interactive
computer services providers of liability if the same
promptly takes down the offensive site or link upon
notice. This limitation does not apply, to the extent
such interactive computer service provider has actual
knowledge and control of the illegal gambling activities.
What constitutes actual knowledge and control is not
clearly explained in the Act. In view of this ambiguity,
interactive computer services providers for US facing
operators should look carefully at their factual situation
and take advice.
The Act prescribes a period of 270 days when the
Federal Reserve Bank and the Attorney General are
tasked with developing and issuing regulations to guide
financial institutions how they will need to identify,
code and block illegal gambling transactions. This 270
day period does not however suspend the effect of the
underlying prohibitions of the Act in prohibiting
operators from accepting financial instruments for
unlawful internet gambling and for financial institutions
not to make payments that can be already identified as
payments for illegal gambling. So operators, their
payment system suppliers and other suppliers should
be in compliance already, or face being charged under
the Act as a principal or as an accomplice in aiding and
abetting an illegal activity.
Many of the leading major publicly traded remote
sports betting and casino games companies have
announced that they will no longer operate in the US
market. The leading UK banks have also announced
they will no longer provide services to US facing
operators. Others, perhaps in denial, have decided to
either continue trading with US customers as they
have been or wait until the regulations developed in
the 270 day period are implemented. There will
undoubtedly be more headline arrests in the coming
months before the dust settles and the industry comes
to terms with the new reality.
Aldwych House 81 Aldwych London WC2B 4RP Tel +44 (0)20 7404 4433 Fax +44 (0)20 7430 1133
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www.manches.com
Further Information
For more information and any other gaming related issues
contact:
David Schollenberger
Partner and Head of Gaming Team
Manches LLP
david.schollenberger@manches.com
+44 (0) 207 404 4433
This briefing note is intended merely to provide a
summary of the law in this area and is not a
comprehensive guide. It is not intended to provide legal
advice for specific cases. Note:The law and practice in this
note is stated as at October 2006.
Manches LLP
October 2006
Source:OnlineCasinoNews
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