Barney Frank, Ron Paul Work to Block Online Gambling Prohibitions

Long praised by Gambling911.com, Presidential candidate and Republican Texas Congressman, Ron Paul, has joined forces with outspoken workhorse democratic chairmanship of the House Financial Services Committee, Barney Frank, in an effort to rid the US of an online gambling prohibition.

Regulations to enforce an Internet gambling ban would be blocked under a bill introduced this week by the two.

Paul and Frank have been long spoken advocates of freedom of the Internet, with both focusing on legislation passed in October 2006 that would essentially ban some forms of online gambling while allowing others, such as horse racing.  The Unlawful Internet Gambling Enforcement Act would hold banks responsible for enforcement of the new regulations.  But last week the banking sector spoke before a hearing held by Barney Frank, suggesting the UIGEA is "an unfunded mandate" that will cost the banks billions of dollars.

Federal Reserve and Treasury officials gave evidence that they were struggling to craft the UIGEA rules because federal law is unclear about what type of gambling is illegal online.

"That is something we're really struggling with," Louise Roseman, the Fed's director of reserve bank operations and payment systems, said.

"The challenge we have is interpreting ... federal laws that Congress itself isn't sure what they mean," Roseman said, adding that one company that processes illegal Internet gambling transactions may also transact legitimate transfers which should not be blocked, thus making it almost impossible, or at least very difficult, to determine how to block illegal online gambling transactions.

"It will be very difficult to shut off payment systems for use of Internet gambling transactions. The implementing statute will not be iron clad at all," she concluded.

Part of the problem is that the UIGEA allows for some forms of Internet gambling such as horse racing.  Likewise, there is some debate as to whether online poker can be considered a "game of chance" (gambling) verses a "game of skill".  Skill gaming is not explicitly prohibited under UIGEA guidelines.

Ron Paul and Barney Frank both understand in these hard financial times that the online gambling industry can generate billions of dollars for the US economy.

Ron Paul is the co-sponsor of Frank's bill, which would prohibit the Department of Treasury and the Federal Reserve from proposing regulations to enforce the Internet gambling ban enacted in 2006.

“I  believe strongly that the internet should not be regulated by the federal government and believes even more strongly that people should be free to engage in the activities they wish, as long as they are willing to take responsibility for their actions," Ron Paul told Gambling911.com.

The committee has not yet scheduled a hearing on the bill.

Another bill Frank introduced in April 2007 would repeal the current ban.  That bill has 48 co-sponsors. 

Thus far, the UIGEA has wreaked havoc on the Internet gambling sector, forcing all publicly traded European betting companies out of the United States while others were driven underground.  These companies have been left with no choice but to utilize unfamiliar and often risky payment processors such as ePassporte, which announced Friday they are shutting off online gambling activity from the States.

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Christopher Costigan, Gambling911.com Publisher CCostigan@CostiganMedia.com

Originally published April 14, 2008 11:23 pm EST