The Unlawful Internet Gaming Enforcement Act provides that gambling businesses are prohibited from knowingly accepting payments from another individual’s participation in a wager. The act applies to these activities provided they are unlawful under any state or federal laws. The act requires the Treasury and the Federal Reserve board to establish regulations that ensure absolute prevention of gambling transactions (Federal Reserve, 2010). Participants in given payment systems that are potentially used for unlawful internet gambling are required to establish policies and regulations that aim at deterring gambling activities. These policies and regulations have the objective of the identification and blocking of unlawful transactions, hence preventing gambling activities (Federal Reserve, 2010).
The Unlawful Internet Gaming Enforcement Act restricts access of offshore companies to the United States market (OECD, 2011). Gambling enterprises are business ventures, which require access to markets like any other business. The Act's prohibition of online gambling has made significant gambling companies and enterprises to base themselves offshore, outside the boundaries of the United States. The illegality of online gambling in the US is a significant challenge to Gambling businesses. This has denied the gambling companies a lucrative market, which already spends millions of dollars in bets on cyberspace (The Economist, 2004).
Despite the restrictions posed by the Unlawful Internet Gambling Enforcement Act, the US has allowed other forms of legal gambling ventures like casinos and off track horse betting, which cannot be accessed by offshore gambling companies. Given the restrictions and penalties sanctioned by the act, significant gambling companies have opted to locate themselves in distant locations like Antigua, Costa Rica and Gibraltar (The Economist, 2004). The Act’s intention to prevent online gambling has, however, been met by criticism on its intention to infringe on other State's right to free trade. For instance, the loss of a case filed by Antigua against the United States to the World Trade Organization (WTO) is a definite indicator of the unfairness of the Unlawful Internet Gambling Act towards offshore gambling companies and firms.