3 Crazy Conspiracy Theories About the UIGEA

The UIGEA was passed in 2006 and made it harder for U.S. players to deposit money on poker sites. But how and why was it pushed through Congress so quickly (and sneakily)? Put on your tin foil hats — here are 3 crazy conspiracy theories.

Conspiracy Theory #1: U.S. based casinos pushed through the UIGEA legislation.

Consider these facts:

• In 2000, Harrah’s Entertainment was the 37th largest contributor to Bill Frist’s re-election campaign.
• In 2002, Harrah’s Entertainment was the 18th largest contributor.
• In 2006, Frist pushes through the UIGEA legislation.

Harrah’s wanted to push out international competitors. It would be too hard dislodging PartyPoker, PokerStars and FullTilt from their dominant positions. Harrah’s figured the UIGEA would be repealed in a year and two and that would give them enough time to develop their software. Unfortunately, they miscalculated and the legislation is lasting far longer than they anticipated.

Conspiracy Theory #2: Credit card companies pushed through UIGEA.

Back in the day, you could send money via FTP or Stars to buy PokerTracker. Transferring money via poker rooms provided a way for consumers to bypass credit card fees. The credit card companies were worried that peer-to-peer transfers would catch on for regular consumers. Anyone could pay for anything without any fees (and kill their profits)! Even if the chances are small that P2P money transfers would take off, the potential consequences for credit cards are enormous. Therefore, pushing through UIGEA might have been a +EV move.

The credit card industry is worth hundreds of billions of dollars. They definitely have the resources and connections to get it done.

Conspiracy Theory #3: The UIGEA was pushed through to stop money laundering.

Let’s say you want to transfer your friend $10,000. If you give him a check, that automatically triggers your bank to send an alert to the U.S. government.

But now, let’s say you transfer $10,000 to your friend on Full Tilt. The U.S. government has no idea that happened. The only way it would know is if you reported it on your tax returns. Guess what? Criminal enterprises aren’t gonna be honest on their tax returns. There’s only a tiny, tiny percentage of people that are using poker rooms for money laundering or other illegal purposes, but unfortunately, that tiny percentage is enough to ruin it for everyone else. The U.S. government doesn’t wanna give criminal enterprises free reign. The UIGEA was passed to stop money laundering.

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These conspiracy theories may be a little far-fetched, but they’re definitely thought-provoking :)