US Fed, Treasury Target of New Bil

U.S. Representatives Barney Frank and Ron Paul have jointly introduced a bill that would prohibit the Treasury and Federal Reserve from "proposing, prescribing or implementing" any regulations under the Unlawful Internet Gambling Enforcement Act.

The text of the bill, H.R. 5767, has been released, and its import is clear.

"If enacted, the bill would strip the UIGEA of any practical effect," said a source in Washington, D.C., who is closely acquainted with the new legislation.

The source suggested Mr. Frank could be using this bill as a vehicle to harness the momentum gathering in the wake of last week's "burden without benefit" hearing before a financial services subcommittee, during which Treasury and Fed officials forcefully indicated the UIGEA's intended objective has been difficult to discern.

"You could tell from the regulators' testimony and body language, especially Louise Roseman's, that the Fed thinks this (UIGEA rule writing) is a crock," the source said.

"This bill, H.R. 5767, sends a signal to the regulators that Congress is definitely not pushing them to hurry and wrap up this regulation."

Indeed, Ms. Roseman, director of the Fed's bank operations division, argued before the subcommittee that the rule-writing process has been "challenging" given that Congress itself is unclear on the law -- the express definition of unlawful Internet gambling, in particular.

"I think it is very difficult without having more of a bright line about what is intended to be unlawful Internet gambling," she said.

Looking ahead, the Frank-Paul bill is expected to encounter stiff resistance from professional sports leagues and religious conservatives, though support from the banks -- the UIGEA's intended enforcement mechanism -- could lend needed support to the bill.

"I'd put the banks up against the sports leagues anytime," the source said, "but on the other hand, it's a lot easier to stop a bill than to advance it."

However, the Frank-Paul bill has already gained traction with Representative Shelley Berkley, the Nevada Democrat, whose own bill calls for a one-year study of Internet gambling by the National Research Council of the National Academy of Sciences.

"I opposed this unfair law when it was passed, and I fully support Chairman Frank's legislation to stop these burdensome regulations before they ever go into effect," Las Vegas Review-Journal quoted Ms. Berkley as saying.

Mr. Frank, the Massachusetts Democrat, and Mr. Paul, the former presidential candidate, are noted libertarians and have argued openly that the UIGEA threatens undue government interference with Internet commerce.

Mr. Frank in April 2007 introduced the Internet Gambling Regulation and Enforcement Act, a bill which would establish a licensing and regulatory regime for I-gaming in the United States.

Ms. Berkley is one of 48 co-sponsors of the IGREA.

Martin Gold, a lobbyist at Washington-based Covington & Burling who represents the National Football league; Wayne Abernathy, executive vice president of the American Bankers Association; Tom Minnery, executive vice president of Focus on the Family; the Federal Reserve; and Mr. Frank could not be reached for comment.