The United States government has postponed the enforcement of new regulations targeting online gambling activity, giving the financial sector additional time to adjust. The US Treasury Department and the Federal Reserve Board jointly announced a six-month delay, extending the deadline for financial institutions to comply with the Unlawful Internet Gambling Enforcement Act (UIGEA) to June 1, 2010. The rules were originally set to take effect on December 1, 2009.
What the UIGEA Is Designed to Do
Purpose of the Law
The Unlawful Internet Gambling Enforcement Act, passed in 2006 under former President George W. Bush, was created to stop US residents from placing online wagers through offshore gambling operators. The act does not directly criminalize online gambling by individuals. Instead, it targets the payment processing infrastructure, prohibiting US-based:
- Banks
- Credit card companies
- Electronic payment systems
- Financial processors
…from knowingly accepting or releasing funds linked to online gambling.
Enforcement Challenges
From the moment it was introduced, the law has faced criticism. Financial institutions argued that enforcing UIGEA requirements would be complex, costly, and nearly impossible — especially due to the difficulty in identifying which transactions relate to prohibited gambling activity. With thousands of gaming websites worldwide, tracking every payment was labeled by many as an “enforcement nightmare.”
International Impact and Trade Concerns
The UIGEA was intended to strengthen an already existing de facto ban on Americans gambling with operators based in Canada, Britain, Gibraltar, Antigua, and other international jurisdictions. However, industry experts and foreign governments claimed the restrictions amounted to unfair trade practices. As a result, the ban has been challenged at the World Trade Organization (WTO), opening debate on whether US policy violates free-trade agreements.
Political Pushback and Calls for Reform
Legislation to Overturn the Ban
In Congress, efforts are underway to reverse the UIGEA. Representative Barney Frank, a Democratic Congressman from Massachusetts, has been one of the most vocal critics. Frank has proposed legislation that would allow and regulate online gambling rather than restrict it, arguing that a controlled environment is safer for consumers and more beneficial for the economy.
Reaction to the Delay
Frank welcomed the announcement by the Treasury and Federal Reserve, stating that federal regulators deserved credit for suspending what he called “midnight regulations” pushed through by the previous administration. He added that the delay gives lawmakers time to reconsider what he considers regulatory overreach and to work on new legislation that supports consumer freedom and financial system efficiency.
What Happens Next?
Financial institutions now have until June 1, 2010, before penalties and compliance rules become mandatory. For banks, payment processors, and online gambling companies, this pause offers time to:
- Update filtering and monitoring systems
- Clarify what counts as “unlawful” gambling activity
- Prepare for future US legislative changes
Meanwhile, gamblers remain in a grey regulatory zone — online wagering is neither fully legal nor completely shut down.
Bottom Line
The delayed enforcement of UIGEA highlights ongoing tension between consumer choice, financial-system burden, and global trade concerns. Whether the United States maintains its restrictive stance or
