Obama brings hope, but the UIGEA is here to stay for now

In the opening days of the Obama administration, there has been a flurry of activity, including a halt on all pending regulations. But one thing that is not likely to be reopened for debate is the UIGEA regulations.

While President Barack Obama can easily halt all pending regulations from being implemented, which he did on Tuesday, reversing rules that went into effect prior to his inauguration -- like the UIGEA -- is much more difficult.

Once a rule (which is essentially a set of regulations) is announced and in the books for 60 days, it becomes law. And by finalizing and announcing the UIGEA regulations in early November, the Bush administration easily beat the deadline. That means the regulations that went into effect January 19 can not be overturned easily.

There are essentially three ways to overturn the UIGEA regulations. The first is for Obama to ask the Treasury Department and Federal Reserve for a new rule to govern the UIGEA. That would initiate a lengthy rulemaking process, similar to how the first set of UIGEA regulations was crafted. But with the U.S. economy in the tank, it is unlikely that either department will want to tackle this issue in 2009.

The remaining two methods for preventing the UIGEA from being enforced involve legislative solutions. Congress could pass legislation that delayed the implementation of the UIGEA until the definition of online gambling was clarified. A measure, sponsored by Rep. Barney Frank (D-Mass.), was passed by the House Financial Services Committee in September.
It's likely that Frank will reintroduce a version of this bill this year. But as we saw in 2008, getting this legislation through Committee was very tricky. And whether the full House or Senate would approve the measure is anybody's guess.

Congress could also choose to pass the Midnight Rule Act, which would delay the implementation of agency rules adopted within the final 90 days of a president's term and give incoming agency heads a chance to approve them. But the measure, introduced by Rep. Jerrold Nadler (D-NY), doesn't have any cosponsors and no hearing has been scheduled on the issue.

So will the UIGEA regulations as they stand right now last through the year? Probably. That's not to say that change can't happen this year. Momentum is building toward it, so it can happen. And I hope it does. But the reality is the Obama administration and Congress will be focused on other problems in 2009, and that federal progress on online gambling in the U.S. might have to wait for another year.