UIGEA stands for Unlawful Internet Gambling Enforcement Act. It is Title VIII of the Safe Port Act and was passed on September 30, 2006. It was not originally part of the Safe Port Act that was passed by the senate on September 14, 2006, but rather there is a view that it was snuck into the Safe Port Act without any debate in the senate. UIGEA prohibits the transfer of funds from financial institutions to Internet gambling sites. The Act does not include fantasy sports, horse/ harness racing or online lotteries.
UIGEA does not, in fact, prohibit online gambling. What it does do is prohibit transfers of funds from financial institutions to online gambling sites. In other words, the Act does not prohibit individuals from playing online casino games, but rather the problem lies with online casinos based in the US from accepting funds from US citizens, into online casino accounts.
There is much controversy that continues to surround UIGEA and this brings with it many discussions and complaints. The small island of Antigua brought a case against the US to the World Trade Organization. It claimed that by the US banning online gaming, the revenue to the small island would be drastically affected. It also claimed that since online lotteries and horse racing were not banned by UIGEA, that neither should online casinos and poker rooms be. There has also been opposition against UIGEA by the Interactive Media Entertainment Gaming Association (iMEGA) who claims that UIGEA prevents US citizens from being able to live their lives as they desire, in the privacy of their own homes.
There is much ambiguity surrounding the wording of UIGEA. It is mainly up to the financial institutions to enforce the Act by banning transactions that they deem to be for the purposes of online gambling. They have claimed that the phrase "unlawful Internet gambling" is unclear, but it has not been clarified. These financial institutions have two choices – either they can ban all financial transactions that appear to be involved in any way with any form of gambling or they can attempt to discern which transactions are legal and which are not. This is not always consistent and leads to many frustrated customers. As a result, the banks are fairly frustrated with UIGEA themselves.
Due to the confusion surrounding UIGEA and exactly what is prohibited, many offshore online gambling operators stopped accepting US players to their sites. For those that continue to accept US players, there are more difficulties surrounding which payment options can be used by US players to fund their casino accounts. More acceptable payment options are being introduced all the time, but it is still a level of aggravation for the players and the online casinos alike. Another effect of UIGEA is that millions of dollars are being sent out of the country to offshore casinos resulting in huge losses of revenue for American online casino providers.