Chance, skill and the law

Ladies and gentlemen, we'd like you to give a big hand to the US Unlawful Internet Gambling Enforcement Act of 2006, which is back with us once again as a special, and rather unexpected guest. You see, while the UIGEA initially kicked around in 2006, the actual regulations that will implement it are just about to kick off.

Today, the House Financial Services Committee will be holding an emergency mark-up of some of this legislation. Why is it an emergency? Well, because while the whole thing is technically about 'gambling', the wording of the UIGEA isn't at all clear about what it actually is making unlawful, and when it comes to legislation and regulations, the words are everything. Words that are getting decided today.

While you might already be under the impression that the UIGEA was already active, the fact is that businesses have just been jumping the gun and attempting to regulate based on some rather fuzzy wording what they might not be permitted to do.

Online games of chance? Well, sure. What about online games of skill? That's where you use your knowledge and abilities to make a profit in an online activity. That's where we get to the sticking point, because virtual environment economies may yet fall into that yawning abyss between words.

	Are you a part of the most widely-known collaborative virtual environment or keeping a close eye on it? Massively's Second Life coverage keeps you in the loop.

Rather than directly try to block websites and online services, the UIGEA penalizes payment processors who allow customers of such services to pay the providers of the service.

The regulations target two primary areas. Games of chance, as you're already aware. Indeed, as a result of reported pressure from card companies and/or other payment processors, Linden Lab had to implement a ban in Second Life against such games and things which closely resembled them. The Lab left games of skill alone, but much of the planned regulations implementing the UIGEA apparently will not.

Most obviously affected are some fantasy sports activities, and assorted fictional stock-exchanges, various other online games (backgammon, bridge, and poker -- ostensibly primarily a game of skill), and quite possibly any number of otherwise legitimate business activities in virtual environments from land speculation and rentals, to the manufacture and sale of clothing.

It all depends on exactly what the wording says. Certainly it is causing a stir among some Second Life and Entropia Universe users who are concerned that this will break their respective digital economies.

After all, this is all contingent on a House Committee making logical, reasonable, considerate, precise and exacting constructions of words with an eye for both modern technology, and future trends. Regardless of the politics, the results are often less than ideal.

Some alternative bills are on the table to attempt to ensure that games of skill are protected. One such is HR-6870, also known as the Payment Systems Protection Act. There's another, HR-2610, called the Skill Games Protection Act. Each of these tries, in its own way, to moderate the effect of various legislation so as not to cause the UIGEA to unreasonably impact on activities for which it was not intended. The actual passage of these ameliorating bills is by no means guaranteed.

The former, HR-6870 requires the UIGEA regulations to be blocked until an administrative judge can be appointed to work with Treasury and Federal Reserve to develop regulations that are workable and realistic.

The latter, HR-2610 seeks to exempt games of skill, notably insofar as the game of poker is concerned, from becoming a part of the final UIGEA regulations.

We're not here to tell you what bills you should be writing, calling or emailing your congressman to support. When it comes to politics you should be thinking for yourselves and choosing whether to act, and what action to take if you do. One way or another, some or all of this legislation is going to affect your activities online (even if you aren't a US citizen). Some of it already has, and it hasn't even been enacted yet. That, in itself, is quite a troublesome notion.

Think about it. Even without regulations and penalities in place the UIGEA has had enormous impact, particularly due to its lack of specificity. At present, that impact seems likely to increase, rather than to diminish.