The timing of Carruthers’ arrest was not at all random. In mid-2006, a new law was making its way through the U.S. legislature that would effectively prohibit Americans from gambling online. Arresting Carruthers helped gain the support needed to push the bill through the Senate in September. The very next month, on Friday the 13th, President George W. Bush signed the “Unlawful Internet Gambling Enforcement Act” (UIGEA) into law.
The UIGEA banned American financial institutions from processing any transaction with an online gambling operator. There were special exceptions for horseracing, state-run lotteries, and fantasy sports, but it forced many publicly traded online casinos, sportsbooks and poker sites to stop taking bets from American players.
Immediately hit hard were Party Poker (Party Gaming), Paradise Poker (Sporting Bet), Pacific Poker (888), and Pokerroom.com (BWIN). Then, NETeller, the online gambling industry’s most successful wire-transfer service, all but went out of business when its founders, Stephen Lawrence and John Lefebvre, were arrested in New York and charged with money laundering.
Antigua-Barbuda claimed it was being bullied by the U.S. and filed a $3.4 billion lawsuit with the World Trade Organization (WTO), citing unfair trade practices. The European Union (EU) filed a similar suit for $100 billion. U.S. President George W. Bush reacted by withdrawing the U.S. gambling sector from the WTO, which in time sided with the complainants. Antigua-Barbuda would eventually receive $21 million in reparations, although the EU has had no such satisfaction.
By 2007, more than eighty international jurisdictions were regulating online gambling in one form or another. While some countries embraced all sectors of the industry, others allowed only certain types of Internet betting. A few went so far as to license offshore online casinos, without allowing their own citizens to gamble online.
Turkey, China and Canada joined the anti-online gambling club. Germany banned outside operators, but not gaming. The vast majority of nations, however, decided to allow gambling online, and at least one industry leader—Realtime Gaming—signaled that it would defy the UIGEA ban.
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