May.8, 2010

The Department of Justice has recently announced that the U.S. District Court in Boston has indicted the first person to be charged under the Unlawful Internet Gambling Enforcement Act of 2006, or the UIGEA. Prior to this indictment the Wire Act had been used to drop the hammer on Internet gambling operators.

Todd Lyons, 36, has been charged with 36 counts of racketeering, operating an illegal gambling business, money laundering, filing false tax returns, interstate travel in aid of racketeering, and similar charges correlating to the business of illegal gambling.

The UIGEA, passed in 2006 on the back of the Safe Port Act, had made it illegal for online gambling sites to operate in the United States. The UIGEA, which outlaws financial transactions between banks and online gambling sites, was set for total compliance by December 1st, 2009. A sixth month delay had pushed the date back to June 1st, 2010.

Lyons has been charged under the UIGEA for accepting checks from Massachusetts gamblers through the online betting site Sports Offshore. The indictment also alleges that he had sent cash from Massachusetts to Antigua, the location where Sports Offshore had reportedly been operating.

Lyons faces up to twenty years in prison for money laundering and racketeering, should he be found guilty, and up to ten years or more on the other charges listed on the docket. Supervised release and six figure fines also await his being found guilty.

Legislation is currently in the works that would overturn the UIGEA, which has yet to even be a required enforcement. The Internet Gambling Regulation, Consumer Protection, and Enforcement Act, sponsored by Representative Barney Frank, would establish a regulatory body and a series of taxes for the USA online gambling industry.