Which side is right? It’s important to note that anyone who speculates about the ultimate impact of the compliance deadline is doing exactly that – speculating. The financial industry is a tremendously large and complicated entity made up of thousands of operators, each with their own systems and processes. Essentially, how one bank interprets and reacts to the UIGEA may be quite different that how the bank across the street does.

What we’re attempting to do with this article is address the most commonly asked questions regarding the UIGEA and lay out what appear to be the most likely scenarios for online poker in the immediate aftermath of the deadline. Where possible, we’ve provided links to sources for further reading; if you know of a resource that should be included or a question we’ve ommitted, feel free to contact us.

So What Exactly Happens on the day UIGEA compliance becomes mandatory
There’s a good deal of misinformation surrounding June 1st. The UIGEA has been in effect since January 1st, 2009. June 1st does not bring with it any new laws, per se’ – it is simply the deadline for banks (and other financial institutions) to be in compliance with UIGEA regulations (also referred to as the ‘Final Rule’ of the UIGEA) or face penalties. Online poker does not become illegal on June 1st, nor does cashing out or depositing money into an online poker room (unless any of the preceding was already illegal where you live).

The UIGEA Final Rule is simply the final draft of UIGEA regulations.

What Will My Bank Be Doing Differently?
The Final Rule of the UIGEA primarily directs banks to screen new commercial customers and reject applicants who plan to operate as an illegal gambling entity.

Banks are not required nor directed to review individual accounts (or existing commercial accounts). Nothing about the Final Rule of the UIGEA (for banks) suggests that transactions made by individual account holders will be subject to any additional scrutiny above the status quo. From the American Bankers Association’s UIGEA FAQ:

Your bank is not required to block ACH, wire, or check payments related to unlawful Internet gambling to be in compliance with the Final Rule. Your bank will be allowed to rely on the policies and procedures established by the card networks to block restricted debit and credit card transactions. In other words, if your customer is the gambler, you do not have to block gambling transactions except for debit and credit card transactions. In those cases, you may rely on the network policies and procedures and merchant codes [...] Banks will not be required to make blocking decisions on individual transactions.

Will My Bank Close My Account Because I Play Online Poker?
It’s important to note that each individual bank is likely to have their own policy regarding online gambling, and that an individual bank can choose to reject customers due to online gambling deposits (or for a number of unrelated reasons) regardless of whether or not a law requires it.

That said, absolutely nothing about the UIGEA requests or requires banks to identify non-commercial customers engaging in online gambling deposits or withdrawals or to penalize account holders found to be doing so. Again from the ABA FAQ:

Does my bank have to monitor my customers’ accounts to make sure that they are not gambling illegally on the Internet? No [...] Your bank is not required to monitor or determine whether its customer is a gambler except that it must ensure that unlawful credit and debit card transactions are blocked.

Will I Still Be Able to Deposit After Compliance With the UIGEA Becomes Mandatory?
It might be a bit hairy in the immediate aftermath, but once the kinks are worked out it seems reasonable to assume that card rooms will be able to continue to stay a step ahead of credit card company coding schemes and accept deposits with relative ease.

That fairly optimistic view is based on the following logic: that it’s difficult for a credit card company to be penalized by the US Government for not blocking deposit transactions, as the companies are generally only required to do so if they have direct knowledge that a transaction is for that purpose. As a result, companies will be fairly unmotivated to proactively squash such transactions, as it will require time, resources and money to do so and the penalty for doing nothing seems minor or nonexistent. Meanwhile, non-US processors will continue to provide a backbone of deposit support.

The Treasury Dept reached a similar conclusion:

The Agencies expect that a coding system to identify and block restricted transactions will be the method of choice for the vast majority of card system participants to comply with the Act. In addition, the Agencies note that most Internet gambling businesses that use card systems for funding do so through non-U.S. merchant acquirers that are not subject to the Act or the final rule and likely would not conduct due diligence regarding Internet gambling on their merchants [...] While card system operators may choose to create new codes for such transactions, the Agencies believe that the establishment of codes for particular merchant transactions is a business decision for the
card system operators and their participants. Accordingly, the final rule does not specify the establishment of such codes in the coding example for card systems.

Will I Still Be Able to Cash Out?
It’s important to note that online poker rooms are not banks, so you don’t have any ironclad guarantee of access to your funds at any point. That said, the Final Rule of the UIGEA does not require banks to screen existing commercial customers, only to screen new applicants. It also does not request or require banks to monitor individual consumer transactions (i.e. you depositing a check from a poker room). Basically, nothing about compliance with this law on the part of banks, on face, should prevent you from cashing out. From the Treasury Dept regarding the UIGEA Final Rule:

Under the final rule, the term “restricted transaction” would not include funds going to a gambler, and would only include funds going to an Internet gambling business.

It cannot be overstressed that different banks will approach compliance in different ways, with some being far more aggressive when dealing with any gambling-related transactions than others. Your best bet is to keep an eye on conversations in poker forums regarding individual player experiences with banks after June 1st and to use that information to help you decide how to handle your personal banking choices.

I Heard Banks Were Sending Out Notices About the UIGEA. What’s That About?
Banks are required by the regulation to notify all commercial customers that restricted transactions are prohibited.

Is it Illegal to Play Online Poker After the UIGEA Final Rule Becomes Mandatory?
Not because of the UIGEA Final Rule. Nothing about the UIGEA makes any type of gambling legal or illegal. From the Treasury Department regarding what the UIGEA thinks “unlawful internet gambling” is:

After consulting with the Department of Justice and representatives from the offices of several State attorneys general regarding this issue, the Agencies have determined that a single, regulatory definition of “unlawful Internet gambling” would not be practical. The Act’s definition of “unlawful Internet gambling” relies on underlying Federal and State gambling laws. The States have taken different approaches to the regulation of gambling within their jurisdictions and the structure of State gambling law varies widely, as do the activities that are permitted in each State. Accordingly, the underlying patchwork legal framework does not lend itself to a single regulatory definition of “unlawful Internet gambling.”

Shorthand: If you could gamble before the UIGEA legally, you’ll still be able to after compliance becomes mandatory.

Who Does The UIGEA Final Rule Impact?
The primary target of the UIGEA Final Rule is undoubtedly the casino operator and not the individual player. The first line of the UIGEA Final Rule makes that focus quite clear:

The Act prohibits any person engaged in the business of betting or wagering (as defined in the Act) from knowingly accepting payments in connection with the participation of another person in unlawful Internet gambling

Is Anything Being Done to Stop or Delay This Deadline?
Yes, visit the Poker Player’s Alliance webpage for updates and action items.

How Will Online Poker Rooms Be Impacted?
It’s hard to say. Most assessments seem to agree that payment processing will become an even trickier business, so the real question is exactly how much trickier it will become. An optimist could argue that with the amount of money at stake, poker rooms and payment processors will have a significant enough incentive to develop creative methods for keeping the flow of money in and out of rooms relatively undisturbed. A pessimist could make the case that getting funds to / from players, already a lengthy and expensive process for many rooms, could become prohibitively so for rooms and force them from the US market sooner than later.

Who’s right? Considering the aggressiveness of the DOJ in pursuing online gambling payment processors over the last year, it does seem as if the UIGEA Final Rule will have some teeth and as a result make it more difficult (perhaps effectively impossible) for payment processors to set up shop financially in the US. The likely impact for poker rooms is a higher tab for payment processing. The costs could be significant enough that some sort of charge on cash outs could become standard operating procedure in the industry, although larger rooms might absorb the additional cost as a way to secure player loyalty (and rake).

How Will Online Poker Players Be Impacted?
Online poker players aren’t directly impacted, but will almost certainly see some indirect impacts. It seems quite possible that cash outs and deposits will both be very unreliable in the weeks immediately following the deadline as poker rooms and their processing partners fully asses and absorb the impact of financial institution compliance with the UIGEA Final Rule.

Long-term, players should probably anticipate some sort of fee being placed on cash outs at some, if not all poker rooms. Players should also anticipate occasional ‘hiccups’ in processing similar the check cashing issues experienced by Stars and FTP in the summer and should prepare for a world where cash outs are more restricted in terms of size and frequency than they are in the status quo, and are possibly subject to longer holds at their bank upon deposit.

Where Can I Get Additional Information?

Here are some useful links:

- ABA’s FAQ for Banks on UIGEA Compliance (PDF, 4 pages)

- Full Text of Final Rule of UIGEA (PDF, 121 Pages)

- Poker Player’s Alliance Home Page

The date to mark: December 3rd, 10 AM EST. That’s the time when the House Financial Services Committee will be holding a hearing on H.R. 2267, Internet Gambling Regulation, Consumer Protection, and Enforcement Act.

IGRCPE (catchy) is Barney Frank’s bill that seeks to create a regulatory environment for online skill games, such as poker. If passed into law, the bill would go a long way toward clarifying the legal status of online poker in the US and allowing for the development of a domestic market where powerhouses such as Harrah’s would be free to develop and operate US-facing poker rooms online.

Lobbying group The Poker Player’s Alliance is urging poker players to contact their representatives prior to this hearing and to stress the importance this issue has for them. The PPA suggests three basic courses of action: phone, email and Twitter. The PPA has tools that allows you to easily find your rep’s contact information and also provides some basic templates and talking points to make communicating your position easier. Details on that here.

What does the hearing mean for poker players? Nothing in the short term – many are doubtful that Frank’s bill will get to a vote any time soon, if ever, and even those who think it will get to a vote concede that passage is far from a sure thing. However, this hearing isn’t just an empty victory, for a number of reasons. First, it confirms that Frank is actively supporting and advancing the issue. He’s a busy guy, and the calendar for that committee isn’t teeming with open spaces, so the fact that it’s happening at all indicates at least some legislative momentum. Second, it suggests that the PPA is developing more and more of a presence in D.C.. While this bill is largely Frank’s doing, it seems unlikely that he’d be pushing it as hard as he is if he didn’t feel there was a strong enough lobbying foundation to capitalize on the momentum his work provides.

PPA Head Alfonse D’Amato drove that point home in his statement on the hearing: “Taking action today is the most important thing that a dedicated and concerned poker player like you can do to support online poker in the US. The Poker Players Alliance (PPA) can’t do this alone. Please take action today! A successful hearing on Thursday will hopefully lead to a Committee vote in support of poker, so we need your help today!”

To watch the hearing live, check out this link. Remember, the hearing takes place December 3rd at 10 AM EST.

One of the most anticipated dates in the online poker community – December 1st, 2009 – may end up being just another box on the calendar.

That was to be the date that banks and other financial institutions were to be required to be in full compliance with the ‘final rule’ of the Unlawful Internet Gambling Enforcement Act (UIGEA). Several groups, including the Poker Player’s Alliance, various horse racing interests and members of the financial industry, have been petitioning the Federal Reserve and the Treasury Department (the federal agencies in charge of policing the rule) to delay implementation based on a wide array of concerns.

It appears their efforts may bear some fruit. According to a post on 2+2 from PPA Board Member Rich Muny, a temporary reprieve seems to have been won. There’s no official word from anyone yet, but Muny sounds optimistic. Excerpt:

“I’m hearing we’ll get a six month extension on UIGEA, but I don’t yet have final confirmation. You all know I wouldn’t post it unless I were reasonably sure of my information. I’ll post info as it becomes available.”

Whole thread here.

If you’re unsure of what the UIGEA final rule is and how it might impact online poker players, we’ve got a December 1st / UIGEA frequently asked questions document here.

If Muny’s right, the delay would represent a significant win for poker advocates (although having the muscle of complaints from the financial industry certainly bolstered the PPA’s ability to impact this issue). However, it’s important to remember that a delay is just that – not a reversal, but a temporary stay. Therefore, it’s critical that poker players of all stripes serve as advocates for the game.

For a complete suite of resources that will allow you to locate your federal representatives and provide you with material to send that will let them know how you feel about the current attack on personal freedoms that the UIGEA represents, visit the PPA Action Center here.

The latest is this video released by the PPA to try to educate online U.S. poker players on the UIGEA and the Dec. 1 deadline. The PPA has announced it is partnering with national horse and dog racing associations in opposition to implementation of the UIGEA. The video also notes that 50 members of Congress have voiced their wariness of the rules going into effect with the Department of the Treasury.

It’s still not 100% clear what the Dec. 1 deadline will mean for online poker in the U.S. The UIGEA forces banks to block certain transactions, but the type of transactions that should be blocked are far from clear. And some banks and financial institutions have already put policies in place to try to make sure that they are in compliance with the UIGEA.

The PPA and some members of Congress are arguing that implementation should be delayed for logistical reasons, claiming that the amount of institutions that would be unable to comply with the rules would essentially render them ineffective.

More on the UIGEA as that Dec. 1 deadline nears.

The UIGEA shouldn’t stop you from getting rakeback. Sign for Cake Poker with rakeback here.

The parties (the Commonwealth of Kentucky and the Interactive Media Entertainment & Gaming Association) presented their case in front of the Kentucky Supreme Court. The drama began in the fall of last year, when Kenucky first tried to seize control of about 140 domains, some of them poker-related. An appellate court said Kentucky could not do this, and the case has been in the legal system ever since, with Thursday’s Supreme Court hearing the most important step yet.

The case could have wide-ranging effects. If the court finds for Kentucky, then the domains would be closed for the entire world, since Kentucky would take control of the domains and shut them down.

Kentucky’s case: It says gambling over the internet is illegal, and they have the right to take action to stop it from happening within its borders. That includes seizing of domains. “They have been using these [sites] to violate the law in Kentucky. They are subject to forfeiture,” said Eric Lycan, an attorney for Kentucky, during the hearing on Thursday. Kentucky is citing a law that allows seizure of gambling devices. However, the law has only ever been applied to physical devices like slot machines and casino tables.

Obviously, iMEGA and the affected online operations disagree with Kentucky’s stance, saying the commonwealth is overstepping its bounds. They contended that seizing domains under the same law that allows seizure of slot machines is ridiculous. “What the Commonwealth and what the Secretary are doing is really unheard of,” said Jon Fleischaker, an iMEGA attorney. “They have taken a statute that has been repealed… and have tried to make it a hybrid with a criminal process for forfeiture. That is really wrong.”

While it would be difficult to read much from the proceedings, there were several comments from the court that could be interpreted as siding with iMEGA and the sites.

– “I’m really, really concerned about the nature of this proceeding,” Justice Will T. Scott said..

– Justice Lisabeth Abramson asked, “Aren’t you just trying to use a 30-year-old statute that talks about tangible property to get to Internet gambling?”

– Abramson again, question the efficacy of taking action by the commonwealth. “If they just adopt a new domain name under the same (Internet provider) address, then what? Do you start all over?”

A decision could be handed down within weeks, but it could take up to four months for a decision. More on the case as details become available.

The background: In September 2008, Kentucky asked the courts to give it control of over 140 gambling-related domains in an attempt to block Kentucky residents from accessing the sites. A number of poker-related domains were named in the request.

The first judge in the matter agreed with the Commonwealth, saying the sites named had to block access to their properties by Kentucky residents within 30 days or forfeit ownership of the domains. A quick and successful appeal stayed the order, leading to the current hearing in front of the State Supreme Court.

That hearing will take place 11 a.m. on Thursday October 22. Each side will have 15 minutes to present oral arguments to The Court. Appealing is the Commonwealth of Kentucky; defending is the Interactive Media Entertainment & Gaming Association (iMEGA) and the Interactive Gaming Council.

“We’ve been waiting for this for a long time, and we’re going to win again,” said Joe Brennan Jr., iMEGA’s chairman. “From the beginning, Kentucky law has clearly supported our position, and a win in the State Supreme Court will put the final emphasis on that.”

Look for complete information regarding the decision to be available on iMEGA’s website.

The latest salvo from the pro-poker side: A letter from Barney Frank (D-MA) to Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke, co-signed by 18 Congressmen, requesting that their agencies delay implementation of the proposed UIGEA rules.

Frank’s letter follows a similar letter issued by a broad coalition of groups opposed to the UIGEA, including the Poker Players Alliance and American Greyhound Track Operators Association. That letter argued that implementation should be delayed for logistical reasons, claiming that the amount of institutions that would be unable to comply with the rules would essentially render them ineffective.

Frank’s letter makes a similar point, and goes on to argue that the current economic crisis makes supplementation of the rules uniquely inadvisable. With financial institutions already facing challenges, Frank posits, subjecting them to the additional burden compliance with UIGEA represents will drain resources that need to be focused elsewhere.

What’s the issue for banks? Basically, the UIGEA forces them to block certain transactions, but the type of transactions that should be blocked are far from clear. Banks have to sort through a complex web of laws and a dynamic industry that will constantly be searching for ways to circumvent the regulations.

Frank’s letter doesn’t represent anything binding, but it does place pressure on Treasury to ensure that compliance with the rules is not only feasible, but also won’t result in any unnecessary economic harm.

Visit Barney Franks website here.

Visit the PPA here.

A group of Democrats and Republicans from the U.S. House of Representatives wrote a letter to the federal authorities that oversee the UIGEA, asking that implementation of the rules of the law, scheduled to take effect on Dec. 1, be postponed for a year.

The letter said the UIGEA is “flawed,” and that “this is an unreasonable burden on regulators and the financial-services industry at a time of economic crisis.”

Frank and others are still pursuing the legislation in Congress that would overturn the UIGEA completely, but they opened a new front in case the legislation doesn’t come to a vote before the regulations go into effect.

More on the battle against UIGEA as details emerge.

Sen. Ron Wyden (D-Ore.) had offered the amendment on Tuesday, but it was quickly withdrawn as it promised to create more problems for the already controversial health-care debate in the United States.

“The last thing Sen. Wyden wants to do is make it more difficult to expand subsidies for working families by introducing a new contentious issue to the debate,” Jennifer Hoelzer, Wyden’s communications director told The Hill, a newspaper covering Congress in Washington, D.C.. “So when he offers the amendment, he will do it with other funding mechanisms.”

Some Democrats had come out in support of taxing online gambling and poker to support the health-care bill. But because Republicans are already against the bill without the online gambling tax provision, Democrats did not want to give the other side of the aisle more ammunition to attack the legislation.

There are currently pieces of legislation in the U.S. Congress that would legalize online poker by repealing the Unlawful Internet Gambling Enforcement Act, and that would regulate and tax online wagering.

In his decision, Circuit Judge R. Markley Dennis Jr. relied on the skill aspect of holdem to distinguish it from games of chance, which are illegal under South Carolina law.

“When faced with the issue, it is my opinion that the S.C. Supreme Court will likely adopt the ‘dominate factor test,’” Dennis wrote. “Under the dominate factor test, Texas Hold ‘em is not gaming or gambling,” he said.

Markley’s decision has yet to be formally published.

While Dennis’ decision is certainly better than the alternative, he’s unlikely to have the last word in the matter as it’s widely expected that an appeal will be filed. Ira Grossman, prosecutor for the town of Mount Pleasant where the men were arrested, told The Sun News that: “Everyone involved in this case assumed that it would reach the highest courts in the state.”

The outcome of this case will not have immediate repercussions on US Federal law regarding gambling. That said, the more states that define poker as a skill game the better, as recent federal decisions seem to suggest that the states will end up holding the ultimate word on legalized, regulated poker, especially online.