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Emily D. Swoboda
 

UIGEA Rules Nearing Overdue Terminus

7 November 2008

It took over a year-and-a-half more than the prescribed time to complete them, but the regulations for the Unlawful Internet Gambling Enforcement Act may be implemented by the end of President George W. Bush's second term.

The proposed regulations, introduced jointly by the Department of Treasury and the Federal Reserve Board on Oct. 1, 2007, will disrupt Internet gambling in the United States by requiring banks and payment processors to block transactions between online gambling sites and residents. The final rules were submitted by the Treasury to the Office of Management and Budget on Oct. 21, 2008.

The budget office is responsible for devising and submitting the president's annual budget proposal to Congress and sets a Nov. 1 deadline for the upcoming year for all proposals affecting the budget.

Two major problems plaguing the regulations have prevented them from being implemented on time: the lack of a clear definition for "unlawful Internet gambling" in the UIGEA and the threat of banks being forced to block transactions that aren't for Internet gambling.

A Washington, D.C., insider close to the situation told IGamingNews that the final regulations have not been made public, but he understands that there are no surprises in them.

No effort, therefore, has been made to address either the UIGEA's ambiguous definition of "unlawful Internet gambling" or the threat of overblocking -- or both.

John Pappas, president of the Poker Players Alliance, a Washington player advocacy and lobbying group, told IGN via telephone that at a meeting with the budget office today, officials declined to answer questions about whether mechanisms had been put in place to prevent overblocking.

Legislative efforts have been underway in Congress this year in an attempt to block the regulations from being implemented. Representative Barney Frank, a Massachusetts Democrat, most recently introduced the third version of his Payment Systems Protection Act, which seeks to have the Treasury and Fed devise a formal process for defining Internet gambling.

The first version of Mr. Frank's bill sought to prohibit the rules from being proposed, prescribed or implemented, but he amended it to seek a definition of Internet gambling.

His final bill, which sought a definition of all forms of gambling except sports betting -- to which there is already applicable case law under the federal Wire Wager Act of 1961 -- was approved by the House Financial Services Committee on Sept. 16, 2008, by a 30-to-19 vote. Its next step would be a hearing and vote before the full House of Representatives.

Other bills relating to online gambling have not yet been successful, but some in the industry are hopeful that with the newly elected administration comes better chances for legalization and regulation of Internet gambling in the United States.

Before the budget office can publish the rules, according to Mr. Pappas, they must be signed off by both the Fed and Treasury.

And a Federal Reserve spokesperson confirmed to IGN that both departments must sign the Federal Register, which is the United States government's official daily publication for rules, proposed rules, and notices of federal agencies and organizations

The spokesperson could not comment, however, on whether the Fed had in fact approved the rules and the Treasury did not return phone calls.

UIGEA Rules Nearing Overdue Terminus is republished from iGamingNews.com.
Emily D. Swoboda
Emily D. Swoboda