Hoping to be seen to be “doing something” about the perceived problem of Internet gambling, Congress approved the Unlawful Internet Gambling Enforcement Act (UIGEA) in October of 2006. The Act, however, seems unlikely to stop Internet gambling and could even threaten the stable, smooth operation of America’s banking system. UIGEA and its currently proposed enabling regulations will undermine the financial privacy of all Americans and reduce the security of their bank accounts. In short, UIGEA makes almost no financial, social, or economic sense. It deserves reexamination.

To that end, this paper’s first section gives an overview of UIGEA’s provisions and the regulations proposed to implement them, the second describes the law’s likely and perverse consequences, and its conclusion outlines some principles for reforming or eliminating this harmful law.