Wed, 01/12/2011 – 00:12 – PokerPages Staff

The draconian effects of the notorious 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) were felt acutely in Washington State over the last few days, when federal law enforcement officials seized online poker bankroll funds in Washington State totaling $8 million.  This development follows hot on the heels of another major blow dealt to the online poker industry by the iniquitous UIGEA, when eWalletXpress was forced last month to shut down its US operations.

The UIGEA does not actually directly prohibit online gambling.  It prohibits banks from handling or processing any financial transactions which are connected with internet gambling instead – a measure which effectively chokes the lifeblood out of the industry.  Pro-poker lobbyists have argued convincingly that the game should be exempt from the legislation because it is a game of skill rather than a game of chance (the definition of gambling).  However, there has been much confusion amongst legislators about this issue, with the result that online poker is fully included in the terms of the statute.

As the UIGEA has now been fully implemented in law, law enforcement agencies are opting to “go after” the U.S. online poker business, with the predictable result that many Washington players are left reeling from the shock of discovering that their bankrolls have turned to Scotch mist.

According to the popular financial monthly Forbes Magazine, the icy tentacles of the UIGEA are now being felt everywhere, with cash sitting in the accounts of poker players being seized from a range of major banks and financial institutions.  The magazine mentions Wells Fargo, JP Morgan, Chase, SunTrust, and Bank of America, with the latter being most severely hit.  It is estimated that the bank of America alone has suffered the seizure of $5.1 million in poker players’ funds.  In addition, that has only to date; the signs are that enforcement and seizure will continue apace.

In particular, federal agents are targeting banks, which have received payments from a number of prominent payment processors.  These include Blue Lake Logistics, Etegrity Processing, Secure Money, Anaya Trading Solutions, and Arrow Checks.  Any American player whose favorite online poker site uses any of these companies to process withdrawals and deposits will be at risk of finding their money disappearing into federal coffers.

The clampdown started in the summer after a federal task force came across an individual who revealed that his online poker winnings had come in the form of a payment from Arrow Checks.  That was in June; in January 2011, a number of major online poker sites are under federal scrutiny.  Whilst the investigations so far appear to have been confined to Washington State, there is nothing to suggest that the feds new “seizure fever” will not spread to other States.  Sites whose financial transactions are being investigated include PokerStars, Full Tilt, UB, and Absolute Poker.

With the failure of both Senator Barney Frank’s and Harry Reid’s efforts to bring a federal online poker licensing and regulation act into being, the excessively punitive UIGEA is the only federal law affecting online poker.  It has as well to remember that it found its way onto the statute book not through popular endorsement, but by political chicanery, when it was surreptitiously tagged onto the back of the SAFE Port Act.  There was very little democratic scrutiny as a result, with the consequence that today a badly formulated law is depriving millions of law-abiding Americans of a harmless and enjoyable pastime.  American poker pros are likely to be driven away from online poker in the U.S. if this continues unabated.

Is this morality?  If so, it is morality of a curious sort – seizing funds under this law is like shooting fish in a barrel for law enforcement officials, a way of getting relatively easy, risk-free “results” to make “crime-fighting” statistics look impressive.  There are plenty of unpleasant crimes marring the lives of ordinary Americans; it is unfortunate that police resources are being diverted into the pursuit of shutting down a harmless game of skill rather than tracking down drugs gangsters and armed robbers.