The online gambling industry has always been a self-regulated business. The general public has only been made aware of this recently — in November 2008 — when the TV program 60 Minutes aired a special on a major poker scam that took place with an online poker company. (Read about it here.)
Many believe that the 60 Minutes broadcast was just enough to get things finally rolling in the direction of regulation. The broadcast proved that, while the industry may have flourished in the self-regulated mode, the player has not been 100 percent safe from scams — and never has been. We have seen scam casinos come and go, companies go public and then leave their primary market, companies confiscate player funds due to disputes where the player has no control, unlicensed and unproven operators open and close websites at their discretion … the list goes on forever.
As 2008 comes to an end and a new president prepares to take office in the United States, there is some renewed momentum now for the new administration to see value in allowing some form of regulation. The obvious note is that the industry is not going anywhere and will continue to adapt to any laws or pressure. The fact that the players are unprotected, but will continue to play, is starting to concern more liberal politicians.
Recently, a major land-based casino stated that they are very interested in being able to provide their services online in order to make up for the revenue drop (see story on land-based casino revenue drop in 2008) from customers unwilling to travel. So, this could be the start of a trend that sees land-based casinos embracing online gambling — instead of regarding it as a threat, which they have historically done (read about that here).
The Unlawful Internet Gambling Enforcement Act (UIGEA), passed in 2006 to start the process of criminalizing online gaming, has been considered ineffective because it calls for banks to police gaming transactions and determine which are legal and which are not. The banks have openly declared that this is impossible and unreasonable. The regulations for the UIGEA have never actually been put into place. Depositing has always been tricky. There are many options to funding your account depending upon your geographic location and your gaming needs. Examples of online casino deposit options are displayed by this casino.
Recently there was a major push to get these regulations cleared before the new administration comes in. The "midnight drop" was met with heavy opposition from the gambling industry, from the banking industry, from numerous lobbyists, and from key members of the new administration.
Ineffective though it may be, the UIGEA still wiped out more than 60 percent of the market share for public companies like PartyGaming.com and Neteller.com, as they were chose to leave the U.S. market rather than face any potential criminal charges. The UIGEA was passed because the online gambling industry had no defense and maintained a "wait and see" mentality for a decade. The leader of the UIGEA movement was ex-Senate Majority Leader Bill Frist, who at the end of the Senate session in 2006 attached UIGEA to the Safe Port Act and was able to sneak this to the President's desk with zero opposition. Six months later, a letter was found to his supporters — the Religious groups of the south. He was quoted as bragging to them that he was able to wipe billions off of the market value of several major companies. He made it obvious this has efforts were only to please a group of supporters who were against gambling in general.
This was obviously long before the gambling industry had much organization or intention of protecting themselves. This also proves that there really is not any general opposition among the U.S. public when it comes to preventing adults from being able to spend their money how they wish, and wager from their own homes if they choose.
Even before the UIEGA passed, betonsports.com was shut down by the U.S. government. They were able to detain the CEO on U.S. soil and eventually detained the owner of the company. This company was one of several companies on the radar screen of the U.S. government pre-UIGEA. The company focused primarily on sports and was naturally a target because of the 1961 wire act. Betonsports.com used vans and buses to promote their company at major U.S. sporting events. They actually took wagers out of the vehicles at one point. This was widely publicized, and frowned upon by many members of the industry. They felt as if this would be pushing to government too far, and that it would be just enough for an indictment. When the indictment was actually unsealed it was obvious that this was one of the key reasons for their investigation. They were also a public company at the time.
Bodog.com, another sportsbook, is privately held. Many industry experts blamed the size and aggressive advertising of Calvin Ayre — the owner of Bodog.com — for the passage of the UIGEA. Several months before the UIEGA passed, Ayre was seen on the cover of Forbes listed as one of the newest billionaires, and boasting about his ability to pull billions of dollars out of the U.S. economy and into his gambling website, completely protected from any laws or U.S. prosecution. Notice the publish date of this article — six months before the passage of the UIEGA. (Read the article here.) To this day, Bodog.com remains in service and Ayre is a free man. They recently had some issues with a credit card processing company and had funds confiscated. They were also subject to patient trolls who were able to confiscate their primary domain name. This was unrelated to gambling law and likely due to the fact that they are such a large target to everyone now.
Sportsbooks have been the primary target of the DOJ. To the best of my knowledge, the DOJ has never had an open case against any online casino or poker websites. This is likely because the NFL and NCAA are major lobbyists against sports betting, and because there is the Wire Act from 1961 that loosely defines the laws against interstate sports betting — aimed at slowing down organized crime. Another major black cloud over the online gambling industry has been credit sports betting. This is where an individual is issued a line of credit to wager with an online website. There have been numerous organized crime-related arrests. The media has repeatedly generalized this issue as an "Online Gambling" problem when in reality street bookmakers has been using the internet as a tool. This has very much hurt the efforts of those trying to regulate the industry or repeal the UIEGA.
Regulation of the industry will completely open media outlets to online gambling sponsorships once again. Currently, these outlets are officially preventing themselves from taking advertising funds from gambling websites. The DOJ handed down numerous "aiding and abetting" letters to multiple marketing companies years ago and were very effective in getting them to block gambling sites without any convictions, just by fear. This i
s something that will likely loosen up in the next year as regulation gets closer. The overturning of the UIEGA must take place in order for any of this to occur. Fortunately, it is only a matter of time before this takes place.
To this date, there is no law in place that prosecutes the player or prevents the player from wagering online. The poker industry has been making a huge push for regulation. Combined with the Poker Players Alliance (PPA) — with more than 1 million members — the daily broadcasts of television exposure, the popularity of the game in general, and the fact that it is considered a game of skill and not a game of chance, online poker may well be legalized and regulated sometime soon. Experts feel that online sports betting will never have a chance. Online casinos, even though they represent a game of chance versus a game of skill, are being considered in the same territory as online poker. Unlike sports betting, online casinos have no major opposition. Most online poker sites offer some form of casino gambling for their customers as well.
Lee Sheilder is a online gambling writer for www.RomeCasino.com.