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The US Gambling Situation


Just two years and three months after it was passed into US law, the Unlawful internet Gambling Enforcement Act of 2006 (UIGEA) was finalised, with the 'final rule' becoming effective on 19 January 2009, the eve of George Bush's departure from the White House.

UIEGA 'speeds' into action

Despite the consistent and vocal calls by financial institutions and gambling lobbyists to defer the introduction of the anti gambling laws based on impractibility and costs, the implementation of the UIEGA will become effective in 2009, with complete compliance required by 1 December 2009.

The 38 month delay between proposal and implementation on the UIEGA could be seen to have been based on a number of ambiguous issues surrounding the UIEGA:

  • Unknown precise definitions of 'unlawful gambling'
  • Exemptions from the legislation dependent upon type of transaction house

Although the Department of the Treasury and Federal Reserve Board have had difficulty in attempting to address the issues of those affected by the new legislation, notably the financial institutions on whom the procedures and costs associated with compliance rest, the two agencies have granted passage for the Act.

However, Senior Representative Barney Frank, has now tabled the beginnings of a regulated regime for state by state US gambling laws to be developed.

Potential for industry regulation

Although UIEGA is scheduled to move forward into the workings of the US financial transactions industry, there is an increasingly vociferous group of commentators suggesting that the US Authorities should and could look to the regulation and taxation of the internet gambling industry in the US.

The argument between regulation and not regulating the internet gambling industry essentially boils down to two opposing 'views'

  • regulate to control and tax the online gambling industry
  • do not regulate - we cannot come up with an argument but we are sure that a few religious nuts and firebrand clerics could make a meal of this point!

 

Reasons to regulate

the argument for regulation of the US internet gambling industry principally focuses on the ability to take control of the online casino industry via a reduction in black market gambling (more likely to involve money laundering and a lack of control over underage / problem gambling), as well as generating much needed tax revenues for the US Government.

  • Licensing regime resulting in reduction of consumers utilising black market sites
  • Licensed and regulated sites providing greater control over underage gambling and the possibility of money laundering
  • Tax revenue benefits to Federal and / or State coffers

 

The latter argument is particularly noteworthy in the current economic climate.

The exisiting US legislation and stance on internet gambling generates $0 revenues from an industry that continues to swallow $billions of US consumer spend.

The opportunity cost to the US authorities, both socially and financially, of maintaining the present legislation is, in our opinion, huge.

Reasons not to regulate

As previously states, we cannot offer an argument for not regulating the industry.

While we kind of appreciate the social and religious aspects of banning online gambling in the US, we are also of the opinion that the current situation has not and does not stop people from being able to gamble online.

Hence, in the absence of an argument against regulation, we feel that the US Authorities could move towards a position of taxing and controlling the gambling interests of millions of US consumers.

 

 

 

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