The UIGEA: 10 Years Ago Today

Ten years? Ten? Hmm... can we even remember that far back?

A couple of weeks’ worth of dread preceded the president signing the bill into law. There’d been a few months of less specific fretting, too, as I recall, although few seemed genuinely concerned.

In July 2006 this blog was only three months old. A lot of my posts to that point had been about playing poker -- online poker, that is. Not unlike many of the other hundreds of poker blogs at the time. Occasionally I’d write about other things -- hard-boiled novels, for instance -- as well as other poker-related topics emanating from “the rumble.”

I did notice that month the passage of a bill in the U.S. House, something called the “Unlawful Internet Gambling Enforcement Act,” and wrote a post here at the time about it titled “Raising a Glass to the Return of Prohibition.” I can’t honestly say that when writing that post I was all that concerned about my ability to play online poker being curbed at all, though.

One reason why I wasn’t so worried was the fact that the bill the House had passed wasn’t the much harsher seeming “Internet Gambling Prohibition Act,” the one certain legislators had been working over for the previous decade or so. Rather the “UIGEA” -- the acronym some of us would become very familiar with (and others consistently screw up) -- was only focused on credit card companies and financial transaction providers, meaning playing online poker wasn’t a problem. And, well, getting money to and from the sites didn’t seem like it would be a problem, either, or at least all that seemed too abstract at the time to bother us.

Besides, the sucker still had be passed by the Senate, then signed by the president. And pretty much everyone in the poker world who’d actually been following these attempts at legislating online gambling were predicting that wouldn’t happen.

We made it to the end of September 2006, then woke up one Saturday morning to realize the unthinkable had happened. The UIGEA had been snuck onto another piece of legislation and passed through the Senate with hardly any resistance at all. I wrote a post that morning titled “Deals in the Dead of Night” remarking on the event, still naively occupying a position of only moderate concern.

I noted at the time how it was already a given that then-president George W. Bush would sign the bill into law, but could only muster the opinion that “then things should get more interesting” once he did.

I’m remembering the following two weeks. It was that Monday, October 2nd, that PartyPoker (now styled “partypoker”) announced it would be cutting off the Americans. Somewhere mid-week I remember having a phone conversation with Party support and having it confirmed that yes, indeed, I would have to withdraw my funds as I wouldn’t be able to play on the site once the bill became law.

Like everyone else I began to wonder if all the other sites would follow suit, but both PokerStars and Full Tilt Poker were quick to confirm they wouldn’t be pulling out of the U.S. It all seemed a lot more uncertain, then, as we got the news that week that the UIGEA would be signed by Bush the following Friday the 13th, a suitably ominous-seeming day for the event.

We got to October 13, 2006, and while sitting at a desk with a banner reading “Securing the Homeland” Bush indeed signed the “SAFE Port Act” into law. In his comments Bush spoke of how the law “will make this nation more prepared, more prosperous, and more secure.” He went on to thank various legislators, reiterate the importance of protecting Americans from terrorism and making our borders and seaports secure, and winning the “war on terror.”

In his comments Bush didn’t mention the internet at all, nor the UIGEA which had been sneakily appended to the bill before its passage. It seemed almost like he might not even be aware of it.

Some of us were aware of it, though. And gradually more and more of us would become aware of it, especially four-and-a-half years later when Black Friday suddenly occurred as a kind of a belated next step in the UIGEA’s “long game.”

And now, exactly one decade after the UIGEA was signed into law, all of us here in the United States who’d like to play poker online (as they do in much of the rest of the world) are necessarily aware of its consequences -- even if we don’t know the reason why.

Photo: georgewbush-whitehouse.archives.gov

Positions and Juxtapositions: Nine Years Later, the UIGEA Then and Now

I’m just going to juxtapose a few items here today, inspired both by an anniversary and some items I’ve read and heard this week.

On this date nine years ago -- just a few months after I started the Hard-Boiled Poker blog -- I wrote a post here called “Deals in the Dead of Night” noting how the night before, after midnight in fact, a federal bill had passed through both houses that thereafter change the course of online poker in the United States once it was signed into law by then-president George W. Bush a couple of weeks later.

As it happened, that same bill -- the Unlawful Internet Gambling Enforcement Act of 2006 -- helped pave the way for the birth of a new online industry, fantasty sports.

1. “Senate Passes Bill on Building Border Fence” (The New York Times, Sept. 29, 2006)

“At the urging of conservative groups and the National Football League, among other interests, the port security measure carried legislation cracking down on Internet gambling by prohibiting credit card companies and other financial institutions from processing the exchange of money between bettors and Web sites. The prohibition, which exempts some horse-racing operations, has previously passed the House and Senate at different times but has never cleared Congress.”

2. “Frist Statement on Passage of Internet Gambling Legislation” (Sept. 29, 2006)

“U.S. Senate Majority Leader Bill Frist, M.D., (R-Tenn.) made the following statement after the Senate passed the Unlawful Internet Gambling Enforcement Act:

‘Gambling is a serious addiction that undermines the family, dashes dreams, and frays the fabric of society. Congress has grappled with this issue for 10 years, and during that time we’ve watched this shadow industry explode. For me as majority leader, the bottom line is simple: Internet gambling is illegal. Although we can’t monitor every online gambler or regulate offshore gambling, we can police the financial institutions that disregard our laws.’”

3. “Unlawful Internet Gambling Enforcement Act of 2006” (Oct. 13, 2006)

“The term ‘bet or wager’... does not include... participation in any fantasy or simulation sports game or educational game or contest in which (if the game or contest involves a team or teams) no fantasy or simulation sports team is based on the current membership of an actual team that is a member of an amateur or professional sports organization....”

4. “NFLPA Adds DraftKings to Partnership Lineup” (Sept. 25, 2015)

“The NFL Players Association (NFLPA), via its licensing and marketing arm NFL Players Inc., and DraftKings, a leading destination for daily fantasy sports (DFS), today announced a group licensing partnership that will allow some of the NFL’s top-rated players to participate in DraftKings’ marketing efforts this season.... The NFLPA licensing partnership will provide DraftKings the right to employ active NFL players for in-product and promotional campaigns across broadcast, print, social media, digital and mobile properties, as well as via experiential, memorabilia and content activations....

As the popularity of fantasy sports continues to grow with more than 56 million players in 2015, a nearly 40-percent year-to-year increase according to global market research company Ipsos, the deal provides DraftKings with a new degree of connectivity by directly involving a group of active NFL players in the marketing and promotion of its daily fantasy sports experience to fans.”

5. “Fantasy Sports Sites DraftKings, FanDuel September Spend Tops $100 Million” (Advertising Age, Sept. 30, 2015).

“According to iSpot.tv estimates, DraftKings and FanDuel together have funneled $107 million into the networks' coffers since Sept. 1. Nearly half ($50.3 million) of that outlay was spent on national NFL broadcasts on CBS, Fox, NBC, ESPN and NFL Network....

DraftKings ads have aired a skull-clutching 16,259 times over the course of the month, which works out to 135 hours and 25 minutes of 30-second spots. That's more than five-and-a-half days, or a full work week, of commercial messaging that's been hammered out in the span of a 29-day period.... By iSpot's reckoning, FanDuel ads have aired 9,463 times since Sept. 1. That translates to nearly 79 hours of total airtime, or a little north of three days.”

6. Dan LeBatard and Jon Weiner (Stugotz), The Dan LeBatard Show with Stugotz (ESPN, Sept. 29, 2015)

LeBatard: “DraftKings is spilling money all over the place, and now they have made an allegiance with the NFL Players Union where they are able to put players in their advertising. And I’m trying to find exactly the right analogy here, because what DraftKings and FanDuel and what the fantasy phenomenon has captured here is, it’s not quite legalized cocaine... because cocaine has a stigma with it.... But we are in an area right now where DraftKings and FanDuel... and their ilk have found this place.... They’ve found a place where it’s gambling -- it’s obviously gambling -- [and] they’re able to spill and sponsor everything in sports and everyone is taking their money.... People want it.”

Stugotz: “I agree with you about the stigma, but wasn’t online poker... didn’t they ban that?”

LeBatard: “Yes... but online poker is a little sketchier, not nearly as popular as this is....”

Stugotz: “I agree, but I’m just trying to figure out the difference between the two.”

LeBatard: “Oh, there is no difference. One’s legal and one’s not.... One is legal because it’s a game of skill, the other is illegal because, poker players will tell you, it, too, is a game of skill, but it’s the same thing.... It’s amazing to watch the arbitrary moralities that we have with this.”

LeBatard: “I just think it’s weird that we are always applying arbitrary moralities, and in this case we are doing it with our legal system and we’re doing it with our government. It doesn’t make any sense to me that this is legal and online poker isn’t.”

Anti-UIGEA Bills & the Presidential Veto

Been catching up on podcasts here lately. Speaking of, the second episode of the Hard-Boiled Poker Radio Show is in the works. Should see the light of day before too long. By the way, you can now subscribe via iTunes.

A couple of days ago I listened to the Pocket Fives podcast from last week (the April 10 episode) featuring a brief interview with Rep. Barney Frank (D-MA). Wanted to share a little of what he said there as it relates to H.R. 5767, the new bill he and Rep. Ron Paul (R-TX) proposed late last week “to prohibit the Secretary of the Treasury and the Board of Governors of the Federal Reserve System from proposing, prescribing, or implementing any regulation” pertaining to the Unlawful Internet Gambling Enforcement Act of 2006.

When asked about the April 2nd hearing before the House Judiciary Committee, Frank said he thought “hearing was very helpful” insofar as it illustrated quite comprehensively how the various entities comprising the American payments system do not see the UIGEA as workable. Thus, no matter one’s views on gambling per se, the fact that the banks, credit unions, and other financial transaction providers don’t see the UIGEA as practically enforceable itself constitutes “a good argument for getting rid of that part of the bill.”

Frank was then asked about the current status of his bill, the Internet Gambling Regulation and Enforcement Act (H.R. 2046), which he introduced just about one year ago. The interview was clearly conducted prior to Frank and Paul introducing H.R. 5767, and thus no references were made to the new legislation. I do think, however, Frank had this new UIGEA-blocking bill in mind when answering David Huber’s questions.

In response to a question about whether or not our being in an election year might hurt the chances of his IGREA from moving forward this year, Frank answered that “it does hurt our chances . . . not so much because of the politics, but particularly because of the time factor.” Since it is a presidential election year, Frank explained, Congress will be taking a couple of weeks off toward the end of the summer for the party conventions, and with the campaigning that will surely follow, he doesn’t believe they’ll even be in session after October 1.

“On the other hand, while I wasn’t too optimistic about some of the votes [for the IGREA], that hearing was very helpful. The hearing was so critical of this approach that was taken and so many members joined in the criticism, that I now think something might be possible,” Frank continued.

He then addressed the question I had posed last weekend about whether or not an anti-UIGEA bill would make it beyond the president’s desk. As Schoolhouse Rock taught us, any bill that makes through the House and Senate must also be signed by the president before it becomes a law.

“I doubt that we’ll get it all the way through and I think President Bush frankly has promised the right-wing . . . religious coalition that is so important to him that he would veto any change. But I think we can move. We can make some progress here so that next year we’ll be closer to being able to do it fairly quickly.”

Like I say, Frank is ostensibly referring to his IGREA here, but I think his words might also apply to the new H.R. 5767. The new bill may well have a chance, but only if it is not passed through the House and Senate before January 20, 2009.

And even then, the fate of H.R. 5767 will depend a lot who is sitting in that chair in the Oval Office.