Bush signs tough internet gambling bill angering US bettors, foreign companies

[JURIST] US President Bush on Friday signed the Unlawful Internet Gambling Enforcement Act of 2006 [HR 4411 summary; JURIST report], a bill attached to a larger port security measure [Reuters report] late last month by Congress, making it illegal for banks or credit card companies to process transactions involving Internet gambling. Internet gambling is an estimated $12 billion dollar a year business worldwide. Approximately half of that comes from US bettors, despite lingering questions about its legality [Duke Law backgrounder] and efforts by Congress to stamp it out. The law gives the government 270 days to draft regulations for enforcement. Reuters has more.

Upset gamblers [Chicago Tribune report] argue that the law will only push gambling underground, making it easier for disreputable websites to scam players. Others say the law is poorly written and difficult to enforce [Kansas City Star column], and argue that poker websites should be exempt as a game of skill, not chance.

Reaction from gambling site operators has been sharply divided. PokerStars, the second-largest poker website in the world, said in a statement that the ban "[does] not alter the U.S. legal situation with respect to online poker" [Reuters report], and also argued that poker is outside the scope of the law as a game of chance. However, other companies have promised to close up shop in US once the ban goes into effect [BBC report; Reuters report]. Regardless of their positions, companies have been forced to re-evaluate profit expectations and reconsider market strategies. Barclay's and Royal Bank of Scotland said they would take action to comply with the new law [Gambling 911 report]; NetTeller is taking a wait-and-see approach before announcing a position.

Opposition from the World Trade Organization may complicate matters. The small island nation of Antigua and Barbuda, which receives income and jobs from hosting gambling sites, have complained since 2003 that such restrictions on Internet gambling are illegal trade restrictions. In April 2005, a WTO board ruled [WTO case materials] that some restrictions did violate agreements [CNET report], but the complex ruling did not clearly rule in favor of one side or the other. Antigua is set to continue pursuing the matter along with some now-displaced British gambling sites [Guardian report], arguing that the ban is veiled protectionism disguised with moral outrage [Las Vegas Review-Journal editorial].

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