On Oct. 13, 2006, President Bush signed The Internet Gambling Prohibition and Enforcement Act into law. The Act was actually tacked onto a piece of legislation intended to tighten security for the United States’ sea ports. The Internet Gambling legislation, originally a standalone bill, was attached as an amendment to the security legislation at the last minute. Although titled “The Internet Gambling Prohibition and Enforcement Act,” it is actually not an outright ban on online gambling. It is, however, a federal ban on banking institutions knowingly transferring funds to businesses or individuals that operate, conduct or are engaged in activities that are considered illegal under U.S. law. Thus, transactions involving the movement or transference of funds to businesses that are conducting gambling operations in states and areas where gambling is prohibited is now illegal.
The law requires financial institutions to develop and implement some type of transaction security system within the next nine months, so that fund transfers to institutions on a blacklist will automatically and electronically be blocked; presumably on the list will be those online gambling operators identified by the Department of Justice. That said, the Act is not specifically limited to gaming companies—although it appears that those are its initial focus and intended target. In the wake of passage of the Act, online gambling operators—many from the U.K., Malta and jurisdictions outside the United States—have already announced their withdrawal from the U.S. marketplace. Stay tuned as enforcement efforts start to make news.