PokerWorks

When the Unlawful Internet Gambling Enforcement Act of 2006 was passed, no one could have predicted how or when the law would be used, especially since financial institutions have not been mandated to enforce UIGEA provisions, which is not scheduled to happen until June 1, 2010. But the May 6th arrest of Todd Lyons under the UIGEA was a stark reminder that the law can be enforced now.

The story was reported by the Boston Globe on May 8. Lyons, a 36-year old man from Beverly, Massachusetts, was arrested on May 6, 2010, on an indictment that contained 36 counts, ranging from racketeering and money laundering to operating an illegal gambling business, filing false tax returns, interstate travel in aid of racketeering, and numerous comparable charges. But most significantly, the man connected with a sports betting online site was charged with violating the UIGEA.

According to the U.S. Department of Justice, Lyons was the primary agent for Sports Offshore, which was licensed in Antigua but accepted U.S. customers. The indictment contends that the operation was being run from the United States and had been since 1997, during which time Lyons collected more than $22 million by accepting checks from bettors based in Massachusetts through the online site. He then sent funds to Antigua to avoid U.S. gambling and tax laws.

Boston.com reported that US Attorney Carmen Ortiz spoke about the arrest, saying in a statement, “The conduct alleged in this case reveals a blatant effort to circumvent gaming and tax laws. The notion that the type of activity alleged here is legal because it is conducted over the internet from offshore is pure fiction.” She also noted that this was one of the first arrests made under the UIGEA.

After Lyons’ arrest, he was released on a $200,000 secured bond and must appear in the U.S. District Court on June 21 to face a judge. He faces a maximum sentence of 20 years in prison per each of the most serious charges, and ten each for the lesser charges, as well as hundreds of thousands of dollars in fines.

The Department of Justice has been angling to use the UIGEA for quite some time, as previous prosecutions of sports betting company executives and the like have been done under the Wire Act, an outdated and arguably inadequate law for prosecuting internet gambling violations. Though banks and other financial institutions are not required to police the system themselves until June 1, the U.S. government may use the UIGEA to indict people said to be associated with allegedly illegal gambling practices.