The Interactive Gaming Council (IGC), the leading trade association for the international interactive gambling industry, issued a statement this week in response to the Unlawful Internet Gambling Enforcement Act (UIGEA) after it was passed by Congress on Sept. 30. The UIGEA has since also been signed into law by President George W. Bush as part of the SAFE Port Act.
"This bill doesn't do anything to protect American consumers who choose to enjoy Internet poker and other games," said Keith Furlong, IGC deputy director. "But the immediate effect is to drive the industry further underground. Gambling sites will devise new methods for getting money from/to a market where players have shown a resilient demand for this type of entertainment. The sad thing is, however, that many of the largest and most responsible companies, some of whom are major public companies listed on the London Stock Exchange, are being forced to stop providing real-money games."
According to the IGC, it's important to note that while the bill focuses on the transmission of money from the player to the operator of gambling sites, it doesn't make it a crime for an individual to gamble online. American players will still be able to play without fear of prosecution, but many of the reputable sites will no longer accept their wagers.
"This will prove to be a classic case of unintended consequences. In the guise of protecting vulnerable Americans - minors who want to gamble and adults who can't control their gambling - Congress has actually heightened the risk to these groups," Furlong said.
"It has driven away the operators who followed the most socially responsible practices. It has also increased the possibility of online gambling being used for money laundering, because it has outlawed the most easily tracked methods of payment."
Rick Smith, IGC executive director, added "With few exceptions, U.S. states have demonstrated over many years that they can successfully regulate the bricks-and-mortar gambling industry. That industry employs thousands of people and generates millions of dollars in tax revenue.
"The same principles could have been followed in the Internet gambling industry. With licensing and rigorous regulation of online gambling sites, rather than futile attempts at prohibition, governments can ensure that games are fair, operators are honest and solvent, and vulnerable players are protected. And the governments could have reaped millions in taxes."
The Internet presents a unique challenge to the regulation of any activity, but the IGC pointed out that Congress demonstrated no interest in even studying the issue of regulating online gambling rather than banning it.
"This was a sneaky election ploy," Furlong said. "It's no coincidence that a ban on Internet gambling is part of the 'family values' platform of the extreme right, which wants to distract voters from real problems, such as the war in Iraq, and at the same time impose its moral agenda on Americans, depriving them of their freedom of choice."
Senate Majority Leader Bill Frist (R - Tenn.) led the push to get the UIGEA added to the SAFE Port Act and passed by Congress. He defended the bill as a way to prevent gambling addiction which "undermines the family, dashes dreams, and frays the fabric of society." Representative Jim Leach (R - Iowa) also led the charge against online gambling and said that online gambling wasn't "socially useful."
"What a contrast between the U.S., which after all went through a notoriously unsuccessful attempt to ban alcohol, and Britain, which is methodically preparing to license and regulate online gambling, starting next year," Smith said.
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