The Unlawful Internet Gambling Enforcement Act

In 2006 Congress passed the Unlawful Internet Gambling Enforcement Act.  UIGEA made it illegal for online gambling companies to accept money for unlawful Internet gambling transactions and it called for regulations on the banking and payment processing industry. 

In a joint letter, a coalition of family and faith-based organizations including Focus on the Family Action, American Family Association, Eagle Forum, National Coalition Against Legalized Gambling, American Values, Family Research Council, Christian Coalition of America and American Association of Christian Schools, explained that:

Internet gambling represents the most invasive and addictive form of gambling in history. Speed, accessibility, availability and anonymity make Internet gambling the perfect storm for gambling addiction.  Internet gambling also creates fertile ground for criminal activity and threatens homeland security by potentially funding terrorist activity. 

More than 230 million Americans access the Internet, many of whom are children and adolescents. Internet gambling extends beyond state borders, beyond democratically enacted laws and is piped directly into millions of homes. Before Congress passed UIGEA, nearly 3,000 online casinos could be accessed instantly with the click of a mouse.

Several key companies have been successfully prosecuted under UIGEA.  On November 14th, 2007 Catherine Hanaway, United States Attorney for the Eastern District of Missouri, testified before the United States House of Representative Committee on the Judiciary concerning internet gambling and reported:

The prosecution of BetonSports, PLC, which owned several Internet sportsbooks and casinos, in the Eastern District of Missouri was the result of a joint investigation by the FBI and IRS Criminal Investigation with assistance from the Florida Department of Law Enforcement, the Tampa Police Department, the Jacksonville, Florida Sheriff’s office, NFL Security, and the NCAA Enforcement Office.  The prosecution of Gold Medal Sports, an Internet gambling sportsbook in the Western District of Wisconsin in 2001-2002, was the result of an investigation by the IRS, Criminal Investigative Division, the FBI, United States Postal Inspection Service, and the State of Wisconsin’s Department of Justice.

These joint efforts have led to several successful and ongoing prosecutions, the latter of which I cannot comment on beyond the information available in the public record.  For example, on July 18, 2007, in the Southern District of New York, the Internet payment company, NETeller, admitted criminal wrongdoing and agreed to forfeit $136,000,000 for its part in a conspiracy to promote Internet gambling businesses and to operate an unlicensed money transmitting business.  The company also agreed to return $94 million held in the accounts of U.S. customers since January 2007 and will submit to a monitor for a period of 18 months. Two founders of NETeller, Stephen Lawrence and John Lefebvre, who are Canadian citizens, pled guilty to conspiring to promote illegal Internet gambling businesses. They agreed to forfeit $100 million.  In March 2007, three individuals in Maryland were sentenced for running an illegal sports bookmaking operation in Baltimore and Washington, D.C., which used an off-shore wire room in Dominica.

Evidence of UIGEA’s success can also be observed by looking to the frequency in which people are gambling online.  A study released in October 2007 by The Annenberg Public Policy Center of the University of Pennsylvania found that:

Card playing for money among college-age youth (18 to 22) has declined, according to the latest National Annenberg Survey of Youth. Weekly use of the Internet for gambling also declined among this age group. Both declines are statistically significant.

“This year’s strong drop in weekly card playing among college-age youth indicates that the fad has peaked,” said Dan Romer, director of the Annenberg survey. “The strong drop in use of Internet sites also suggests that federal legislation restricting the transfer of funds to Internet gambling sites has had its intended effect. Whether this will last remains to be seen.”

The U.S. Department of the Treasury and the Federal Reserve System board of governors released proposed regulations for UIGEA on October 1, 2007.  The 52-page proposal was open to public comments until December 12, 2007 and several organizations submitted comments including Focus on the Family Action.  They outlined six broad concerns regarding the proposed actions that can be found on there website located at