US: Banks are preparing for UIGEA implementation

“In compliance with the US Unlawful Internet Gambling Enforcement Act, we are required to notify you that you are prohibited from processing transactions derived from Internet bets or wagers where such bet or wager is unlawful under any applicable Federal or state law,” read an e-mail from Zions-owned Nevada State Bank.

Salt Lake City-based Zions is a holding company that oversees eight banks Nevada, California, Arizona, Texas, Oregon, Washington, Colorado and Utah. Another of its institutions, the California Bank And Trust, warned its customers that it would ‘not process transactions derived from Internet bets or wagers’ but did not distinguish between incoming or outgoing transactions.

The US Third Circuit Court Of Appeals in Philadelphia recently upheld the legality of UIGEA in its ruling on a suit brought by the Interactive Media Entertainment And Gaming Association (iMEGA). The Washington, DC-based trade association had challenged the legislation on behalf of the online gaming industry but the Court ruled that the legality of Internet gambling transactions depended on the state law governing the bettor and operator.

“The Court made it clear, gambling on the Internet is unlawful where state law says so,” said Jo Brennan Jr, Chairman for iMEGA. “They seem to be saying that if the state where the bet is placed says Internet gambling is illegal then processing that payment is illegal, meaning that it is not illegal if the state doesn't have a law saying Internet gambling is illegal. He concluded: “But, there are only a half-dozen states that have laws against Internet gambling, which leaves 44 states where it is potentially lawful.”