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Even in the context of American style conservative nanny-statism, the Unlawful Internet Gambling Enforcement Act (UIGEA) is an extraordinary law. A direct offspring of the  “American Values Agenda”, this law, passed in 2006, in combination with the Wire Act effectively prohibits any kind of internet gambling operation in America. The law outlaws games of pure chance like online slot-machines, any kind of wager on the outcome of sporting or election events as well as games of skill like online poker. In April 2007, U.S. Congressman Barney Frank introduced a bill to overturn the Act, saying “The existing legislation is an inappropriate interference on the personal freedom of Americans and this interference should be undone.” On June 7, 2007, Rep. Robert Wexler (D-FL) introduced HR 2610, the Skill Game Protection Act. This act would legalize Internet poker, bridge, chess, and other games of skill. On September 26, 2008, Sen. Robert Menendez (D-NJ) introduced S.3616, the Internet Skill Game Licensing and Control Act. This bill would amend title 31, United States Code, to provide for the licensing of Internet skill game facilities, and for other purposes. None of these bills have passed as yet.

It is worth noting that the law only targets the gambling website or a financial institution used for the transaction. The act of gambling itself is legal, or at least quasi-legal in so far that the Feds have never prosecuted an individual for gambling online. Nonetheless, the presence of the UIGEA means that it extremely difficult to find a website that will accept a customer living in the USA.

There are many laws that take away individual freedom in order to protect a person from his own choices. However, there are two features that make the UIGEA particularly egregious.

First of all, the Act is blatantly discriminatory because physical gambling is already legal in much of the USA. One can go to a Vegas casino and legally play all the games that the UIGEA bans. So an important consequence of the Act is that it helps boost the business of influential Las Vegas hotels. Corporatism and special interests have always played their part in the Bush administration and this law is another example where a policy that favors large business houses is cloaked in the garb of public interest.

Secondly, the American government has decided that the UIGEA not only applies to companies based in the US but also any internet company situated anywhere in the world that accepts a bet from an American. Most of these companies have been forced to shut down their US business after the passage of this act. Those that were less careful paid harshly. On July 16, 2006 David Carruthers, the CEO of BetOnSports, an UK based online gambling website, was arrested at Dallas-Fort Worth International Airport in Texas while changing planes on his way from the United Kingdom to Costa Rica. He is still under 24 hours house detention in a hotel in St. Louis awaiting trial. Shortly later, Gary Kaplan, the founder of the same company, was arrested in the Dominican Republic. He was extradited into U.S. custody with the help of the Interpol and currently faces up to 83 years of imprisonment. The Canadian founders of Neteller, strong opponents of the UIGEA, were similarly detained while on a visit to the US.

All this despite the fact that operating a gambling website is fully legal in all the countries that these individuals were based in.

Notwithstanding the Kaplan episode, the actual probability of the US extraditing the operator of an online gambling company from another country is low. This is primarily for diplomatic reasons, as outlined in this excellent paper. However, if such a person ever accidentally sets foot on US soil, woe befall.

The real damage of the UIGEA, however, is to millions of American customers whose basic freedom to spend their money in the way they want is curtailed. This point of view was eloquently presented by Radley Balko, senior Reason editor and popular blogger, in a courageous testimony to the US Congress:

Online poker is merely a new evolution of the game, similar to the way Civil War poker games introduced the straight, and gave us variations like draw and stud poker. The Internet merely removes the geographic barrier preventing those who love the game from finding opponents of similar skill who are willing to wager similar amounts of money.

No one is hurt when two or more consenting adults sit down for a game of poker, be it online or in person. Why any of this should be of concern to the federal government is rather perplexing. I respect the fact that many Americans—and many members of Congress—may have moral objections to gambling, online or otherwise. To them, I’d say, simply, “don’t gamble, then.”

But in a nation where Las Vegas is one of our fastest growing cities and most popular tourist destinations, where Indian casinos are commonplace, where horse racing is a national past time, and where nearly every state in the union derives public funds from state lotteries, singling out Internet gambling for prohibition seems arbitrary and, frankly, hypocritical.

Yes, it’s possible a parent could bet away their family’s savings, or their child’s education fund in an online poker game. They could also fritter that money away on eBay. Or on booze. Or fancy cars and exotic travel.

These are all personal decisions, of course. And if a free society means anything, it means we should have the freedom to make bad choices, in addition to good ones. The ban on Internet gambling punishes the millions of Americans who were wagering online responsibly due to anecdotal evidence of a few who may do so irresponsibly. It’s an affront to personal responsibility, and symptomatic of a Nanny Statist government that treats its citizens like children. A government based on the principle of liberty doesn’t police the personal lives of its citizens for bad habits, at any level, much less at the federal level.

The UIGEA also happens to be one of those nanny-state laws that has personally affected me.

I wrote earlier how betting on political futures is a smart investment for the politically savvy citizen. However, when I actually wanted to place a bet on the election results, I found that most websites refused to accept my credit card. Finally I found one, Sportsbook, that did. After doing some research and satisfying myself that Sportsbook is one of the most reputable and reliable companies in the online gambling business, I placed a significant bet on Obama winning the election and a smaller bet on his winning Florida. This was at a time when my calculated probability of his winning these two was significantly higher than the perception of the typical American adult, as a result of which I got excellent odds.

I ended up making an eighty percent profit and put in a withdrawal request. However it was taking some time for my money to reach me, so after two weeks I asked them what the matter was. To my surprise, I got an immediate and friendly reply. They explained in detail exactly what the problem was. They stated unambiguously that they had never missed a payment and they will ensure I get my money. However, the UIGEA forced them to resort to long-winded payment procedures to circumvent the law. They send me a link to this post that explained exactly how they do it

From then on, they sent me a weekly update about the status of my withdrawal request. And when they finally said the cheque was on its way, I received it in a couple of days.

So here’s my recommendation. If you want to place an online bet, use Sportsbook. Their exemplary customer service was the one shining light in this whole sordid episode.

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