How Safe Ports and Online Poker Are Related

In the past year there has been a lot change in the online poker industry. The executives of the biggest operators have found themselves indicted by the United States Department of Justice after enforcement of the Unlawful Internet Gaming Enforcement Act (UIGEA) and the sites they operate no longer allow USA players.

So what does all this mean and where do we go from here? Before we answer those questions we wanted to take some time to explain the full ramifications and state facts as it relates to the UIGEA.

The UIGEA was passed in September 2006 and signed by then President George W. Bush. The law basically made it illegal for banks and credit cards to knowingly process transactions for Internet gaming purposes.

The law was passed as part of the "Safe Ports Act" which was passed to basically protect US ports from falling into the hands of foreign owners. In true American Political form, the UIGEA was added to the bill last minute to a completely unrelated piece of legislation. Parties voting on the "Safe Ports Act" really had no idea what they voting for when the UIGEA was added to the bill last minute. The Safe Ports Act was something that would pass easily (and did), and some ambitious representatives added the UIGEA last minute. Reps. Leach and Goodlatte authored the UIGEA and snuck it in.

The law came into effect January 19, 2009, but compliance was not required until December 1, 2009. In May 2009, Chair of the House Committee on Financial Services Barney Frank introduced 2 bills. The first to overturn the implementation of the UIGEA and the second to delay the implementation of the UIGEA for one year. The second bill was enacted but only extended the implementation until June 1, 2010.

At this time we saw many, if not all publicly traded poker, casino and sportsbook operators leave the US market. The biggest and most regulated poker sites and casinos could no longer accept USA players.

This leaves us where we are today, with FullTilt Poker, Poker Stars, Absolute Poker and UB.com no longer accepting new or existing USA players. Americans can no longer enjoy a pass time at the most respected online poker sites that were available to them.

So I thought this was the United States of America, home of the free? Well maybe home of the tax paying free. The United States government did not receive a cent in revenue from taxes from online poker and gaming sites. In fact, the United States now has to give the island nation of Antigua concessions in trade after a World Trade Organization (WTO) ruling.

A major employer and revenue generator for Antigua is/was gaming. Antigua went to the WTO with a complaint that the US was in violation of treaty obligations by not allowing Market Access to its residents and the WTO agreed. Antigua then made a 3.4 billion dollar claim against the US which they have not received a cent. Instead the US granted concessions in other sectors. The US is actually losing money by offering such concessions rather than allow its citizens access to online gaming.

The concessions were never made public in the interest of "National Security" even after Barney Frank and Ron Paul stated the concessions "could cost the United States billions of dollars in compensation" and demanded the agreements to made public. To date we are not aware these agreements have ever been made public.

Now the government is charging executives with Money Laundering and making accusations that online gaming funds terrorism globally. Well I ask this question, if a company is publicly traded on the London Stock Exchange, and their financial records are public knowledge, how could they be funneling money to terrorists. Not saying it couldn't happen, but it would be difficult.

Now US residents must play at casinos and poker sites that are not publicly traded, and their financials do not need to be public. The legal, profitable, respected sites can no longer allow US players.

So what do we know and gain from the UIGEA?

1. We know it was passed at the last minute without proper research by regulators.
2. USA residents can no longer play at licensed, publicly traded gaming sites.
3. It has cost the United States millions if not billions in trade concessions to Antigua.
4. It fosters an illegal enterprise without regulation.
5. It puts US citizens in harms way by not allowing them to play at the best poker and casino sites.

So what is the answer? The easy answer is for the United States to legalize and regulate online gaming. It would produce revenue in the form of taxes and players funds were surely be safer. While we think this will happen, it will most likely be quite some time before we see truly USA legal poker sites and casinos in the US.

In the meantime, US players must continue to play at unregulated (by the US government or stock exchange) online poker and casino sites.