Last week US representative Barney Frank introduced a bill that seeks to overturn the UIGEA. The UIGEA was introduced by the Bush administration and has rubbed a lot of people the wrong way. Frank’s Bill, if passed, will rectify the disasters caused by the UIGEA.
One of the aggrieved parties is the European Union. Because of the UIGEA the European online gaming operators have lost out on the American online gaming market. This has put them to tremendous financial loss. The European Commission, which oversees trade policy for the European Union, has opined that the UIGEA violates the commitments made by the United States to the World Trade Organization. The European Commission is sure that if it seeks legal redress under the provisions of the World Trade Organization it will win. However the Commission prefers a negotiated settlement with the United States in this matter. Accordingly it has initiated discussions with the United States, but these discussions were stalled by the Bush administration. This adversely affected ties between the European Union and the United States. If the UIGEA is struck down then American players will be able to access the European online gaming sites and the issue will be resolved. Therefore Frank Barney has said that he is committed to pushing his bill through as quickly as possible.
The UIGEA has prevented American players from accessing online gaming sites by making it illegal for financial services providers to transfer funds to the online gaming sites. Because the provisions of the UIGEA are not clear, financial processing has become very difficult in this regard. Though some financial services providers continue to transfer funds to online gaming sites many have stopped doing so in the United States. Because of this lack of clarity many credit card companies have classified state lotteries as gambling ventures and are rejecting transactions for purchases of lottery tickets. This has affected the revenues of some of the states quite severely. Another advantage of overturning the UIGEA is that the processing of financial transactions with respect to online gambling will become clear and streamlined and players will have no problems in funding their online casino accounts.
The online gaming industry’s three leading software providers have left the United States market. Cryptologic and Playtech left the market in 2006 as soon as the UIGEA was passed. Both these companies took a beating on the stock exchanges because they had lost a major revenue sector. Microgaming left the United States market in December 2008. These three online gaming software providers are losing out because of not being able to service American customers. Likewise American online players are losing out because they are unable to access some of the best online casinos in the industry. Overturning the UIGEA will allow these online gaming service providers to come back to American markets and this will be a win-win situation for both them and the American online players.
Some of the biggest online gaming companies were also forced to leave the United States market in 2006. They too suffered heavy losses on the stock exchanges. Not only that, but these companies are being prosecuted by the Department of Justice for offering online gaming services prior to the enactment of the UIGEA. One of them, PartyGaming has already arrived at a settlement with the Department of Justice. If the UIGEA is repealed then the others will also be able to return to America and will not face prosecution for the earlier periods.
What Frank’s bill proposes is to legalize online gambling and have it regulated by the state. This will enable American players to wager online in a safe and regulated environment that takes care of issues like underage gambling and problem gambling. This will also enable the government to levy taxes on online gambling and generate revenue. However it is not expected that Frank’s bill will be without opposition. There is a strong Republican lobby that is against online gambling and this lobby will make it difficult for Frank to push his bill through.