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Poker News | Gambling and the Law

Hearing Shows UIGEA is Burden Without Benefit

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A Congressional hearing was held on April 2 to examine the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006. More specifically, the purpose of the hearing was to allow a forum for affected organizations, along with members of Congress, to address the law and the numerous difficulties already encountered in attempting to enforce it. Thus, the title of the hearing: “Proposed UIGEA Regulations: Burden Without Benefit?”

The overwhelming outcome of the hearing, based on testimony voicing legitimate concerns about the ambiguity of the UIGEA, was that the law is a burden, which outweighs any benefit it was thought to have had. Numerous financial institutions weighed in, as did the U.S. Department of the Treasury and Federal Reserve System. The consensus was that attempts at enforcement of the law were not viable.

Louise Roseman, Director of Federal Reserve Bank Operations and Payment Systems, reported that most online banking systems are not designed to comply with the UIGEA. “It will be very difficult to shut off payment systems for use of internet gambling transactions,” she testified. “The implementing statute will not be iron clad at all.”

At the end of her testimony, as Ms. Roseman turned away from the microphone as the hearing went to a recess, she could be heard saying, “I hope they repeal this thing.”

Wayne Abernathy, executive vice president of financial institutions policy and regulatory affairs for the American Bankers Association, noted, “The UIGEA and the proposed rule do not provide a rational path towards halting unlawful internet gambling. The path leads to an increased cost and administrative burden to the banks and an erosion in the performance of the payments system, but it will not result in stopping illegal internet gambling transactions. Imposing this enormous unfunded law enforcement mandate on banks in place of the government’s law enforcement agencies is not likely to be a successfully public policy.”

Representatives from the Financial Services Roundtable, Wells Fargo & Co., and Credit Union National Association agreed that the burden placed on their institutions was unfair, expensive, and unclear. All expressed concerns about the impact of implementing of the UIGEA, in addition to requesting clarifications on the definitions of “unlawful internet gambling” and “restricted transactions.” Questions were raised about how Congress could enact such legislation without any specific plan or proposed funding for the institutions that are ultimately responsible for enforcing it.

Prior to the hearing, over 200 comments – from members of Congress and affected financial institutions – were submitted to the Department of the Treasury and Federal Reserve System regarding concerns about the UIGEA. The testimony at the April 2 hearing further supported that apprehension.

Upon the conclusion of the hearing, Jeffrey Sandman, a spokesman for the Safe and Secure Internet Gambling Initiative, said, “Testimony from the federal regulators and representatives of the financial services community made clear today that the prohibition on internet gambling isn’t working and will not work in the future. U.S. banks and credit card companies, along with every other type of U.S. company involved in payment systems, would be forced to spend substantial resources to comply with a ban on internet gambling that can be easily circumvented by anyone in the U.S. that wants to gamble online.”

Also speaking out after the hearing was former Senator Alfonse D’Amato, chairman of the Poker Players Alliance (PPA). “As many banks have commented, UIGEA is completely unworkable and puts undue strain on the financial industry’s relationship with its customers. Banks should not be deputized by the federal government to enforce unclear laws that prevent their customers from enjoying lawful internet poker. Even the Federal Reserve in its testimony aggress that the myriad of gambling laws are ‘not well-settled and can be subject to varying interpretations.’ If the regulators don’t know what an ‘unlawful internet gambling’ transaction is, how can the banks be expected to know?”

D’Amato added, “We look forward to working with Chairman Barney Frank, the Financial Services Committee and all members of Congress to address internet gambling in a reasonable and responsible fashion.”

Rep. Barney Frank
(D-MA) has been one of the most outspoken opponents of the UIGEA, as in 2007 he introduced his own bill – HR 2046 – to institute a regulatory and enforcement framework for licensed gambling operators to accept bets and wagers from individuals in the United States.

During the April 2 hearing, Frank pulled no punches when stating his concerns:

“You are setting the precedent of a federalization of the internet based on the moral views of the members of Congress. I understand that some people abuse online gambling. I understand that some people abuse video games. Some people abuse alcohol. Some people abuse a lot of things. The notion that a society prohibits most of the people from doing something, because a small percentage abuse it, I never thought to be the guiding principle.

“But then we get to the question of the regulations. Here, the argument appears to be that given the importance of the underlying objective, let’s not pay any attention to whether the regulations are burdensome or not…. Virtually every sector of the economy that is burdened by them has complained of them…

“Are we to say that, given the overriding importance of the moral objection many members [of Congress] have to gambling, that we will therefore go forward with regulations no matter how much they might intrude on the efficiency of the system? Well, that’s not a great precedent to set… I am of the view that the manner in which the Congress has chosen to outlaw gambling is the wrong one… I’m not for banning gambling. I did not come here to tell people what to do with their leisure time, but even those of you who do feel confident in your ability to supervise the leisure activities of other adults, ought to find a way to do it directly without drafting the financial system of this country and putting it in the service of your moral objections.”

It is important that the poker-playing public, along with all who support the rights of American citizens to make their own moral decisions without government interference, take a stand. There are numerous ways to contact members of Congress to thank them for their support, encourage support of Frank’s bill and others, and oppose the unfair implementation of the UIGEA.

Visit the website of the Safe and Secure Internet Gambling Initiative at www.SafeAndSecureIG.org for more information and an easy way to contact members of Congress.

Become a member of the Poker Players Alliance at www.PokerPlayersAlliance.org and use the numerous resources the organization has established to make the public’s voice heard.

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