Clarifying the US online gambling law

There has been a lot of propaganda about this new law passed and many rumors about its consequences. But, one of the main misunderstandings is the fact that the new online gambling law doesn't put online gambling industry in an illegal sphere any deeper than it was before.

The primary objective of the "Unlawful Internet Gambling Enforcement Act" is the enforcement of the existing internet gambling laws. The law creators (the Congress), have made it impossible for financial institutions to accept money from sites that are in contravention with the US laws (on internet gambling).

Therefore, this law only applies to the mechanism and process of funding any online gaming which has already been considered to be against the law. Let me explain that last statement! All that the act does is enforce the existing legislation by informing financial institutions that they are to blame if the money they handle comes from a site that broke US laws in the first place.

The major problem is that internet gambling is prohibited (to some level) in 11 states, so now the banks have to make sure that they don't pay sites that accepted unlawful money. Sports-betting was banned way back in 1961 by the Wire Act, but internet gambling is not.

Another important disadvantage of the online gambling law is the jurisdiction, the US congress doesn't have jurisdiction to establish regulations for a company that resides offshore. Furthermore, the US doesn't have the power to command an offshore company to turn over records. In this situation, how can they tell where the money comes from and how can the financial institutions know if the money comes from an illegal activity (in the US), or not.

That last point clarifies the panic from some financial institutions, which assume that if they cannot tell where the money comes from (for various reason), then they might be charged with some crime at a later stage.