The Bush Administration is working to finalize regulations to enforce a ban on Internet gambling despite concerns raised by banks calling the regulations ambiguous, burdensome and unlikely to stop Americans from gambling online.
House Financial Services Committee Chairman Barney Frank (D-MA) wrote to Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernake asking them to delay implanting regulations concerning the Unlawful Internet Gambling Enforcement Act (UIGEA).
“I am deeply disappointed to hear that your agency is proceeding with what I consider to be unseemly haste in issuing regulations implementing the Unlawful Internet Gambling Enforcement Act,” Frank wrote.
“This midnight rulemaking will tie the hands of the new Administration, burden the financial services industry at a time of economic crisis, and contradict the stated intent of the Financial Services Committee”
It is expected that the regulations, issued to implement the UIGEA of 2006 will be finalized before the next administration is able to review them.
A flaw in the proposed regulations to enforce UIGEA is that they leave banks to interpret state and Federal gambling laws, which do not make clear the difference between legal and illegal Internet gambling activities.
Representatives of the Department of the Treasury and Federal Reserve acknowledged the challenges banks will face in trying to comply with UIGEA in testimony before Congress in April. Most payment systems are not designed to comply with this law, “it will be very difficult to shut off payment systems for use of Internet gambling transactions,” said Louise Roseman, Director, Division of Federal Reserve Bank Operations and Payment Systems.
“The UIGEA and the Proposed Rule do not provide a rational path towards halting unlawful Internet gambling,” said Wayne Abernathy, American Bankers Association’s executive vice president of financial institutions policy and regulatory affairs.
Online gambling advocates have also been critical of UIGEA. “The reality is that UIGEA is unclear, burdensome and doomed to fail,” said Jeffrey Sandman, spokesman for the Safe and Secure Internet Gambling Initiative.”It simply does not make sense to impose more costs and burdens on financial companies, while the activity they are expected to stop flourishes in an unregulated, uncontrolled and underground marketplace.
“Congress should look to regulate Internet gambling in order to protect consumers and collect billions of dollars that are being lost to offshore Internet gambling operators.”
