Internet Gambling Ban Won't Work, Say Regulators

Kudos to Cindy Skrzycki of the Washington Post for writing a splendid article on recently past Internet gambling legislation (the Unlawful Internet Gambling Enforcement Act) and why it probably won't work.

Officials at the Treasury Department and the Federal Reserve found that out after sifting through more than 200 comments from banks, gamblers, church groups and members of Congress on recommendations for the Unlawful Internet Gambling Enforcement Act of 2006. The basic sentiment was that their Oct. 4 proposal, which depends on financial institution enforcement, won't work.

This is pretty much the sentiment that was expressed that late night hour as Senate Majority Leader, Bill Frist, helped push through the measure as part of an attachment to none other than a Port Security Bill.  The rationale behind the move was that the majority of Congressmen and women would be voting for the Port Security Bill, and by default, the UIGEA would be passed.

Of course, this left a number of angry politicians on Capital Hill.  Among them: Shelley Berkley, Representative from Nevada whose Congressional district covers Las Vegas.

An irate Berkley told Gambling911.com at the time "This legislation has a loophole big enough to drive a truck through that was designed solely to protect betting on horse racing and lotteries over the Internet. The fact that this bill was included in the GOP’s “Values Agenda” proves it is nothing more than an election-year ploy to satisfy Republicans on the far right who want to outlaw adults from gambling in Nevada or anywhere else.

"I continue to be amazed by the members of this body who constantly rail against an intrusive federal government, and yet, when it comes to gaming, they are the first to call for more government intrusion,” Berkley said. “A man’s home is his castle unless he chooses to participate in online gaming. Then his home becomes the province of the federal government.

"The vast majority of states allow gaming and regulate it, whether it be lotteries, racing, card rooms, or casinos. This bill would make a legal activity illegal in those same states solely because it is done online rather than in a casino. In reality the intent of this bill is to attack and undermine legal gaming in our nation.”

Berkley was not alone in her condemnation.  Since the passage of the UIGEA, several other politicians have jumped on the bandwagon supporting legislation that would regulate online gambling.

Just last week, Chairman of the House Democratic Policy Committee and the House Education and Labor Committee, George Miller was the latest to offer his support.   Miller is now a co-sponsor of the Internet Gambling Regulation and Enforcement Act, introduced last year by Congressman Barney Frank.

As a member of the Democratic Leadership and chairman of the House Democratic Policy Committee, Congressman Miller is responsible for helping Democrats to develop and articulate a wide range of policies of benefit to all Americans. He has a long record of important legislative achievements and is a leading advocate in Congress on education, labor, the economy, and the environment.

“The endorsement of this key legislation by Congressman Miller, one of the most influential leaders on Capitol Hill, further demonstrates the growing support for regulated Internet gambling,” said Jeffrey Sandman, spokesperson for the Safe and Secure Internet Gambling Initiative. “We expect continuing momentum in Congress as more people realize that the current approach to prohibit Internet gambling is a failure. Rather than leave consumers vulnerable in an underground, uncontrolled marketplace, regulation of Internet gambling would protect consumers and generate billions in revenue needed for critical government programs.”

Among those most critical of the Internet prohibition have been the banks themselves.

"If the federal agencies themselves cannot agree on the law, what hope is there that banks can resolve these confounding legal issues?" the American Bankers Association told the Post in commenting on a conflict between the Treasury and Justice departments on the legality of betting on horses.

From the Washington Post Cindy Skrzycki:

The Washington trade group said the suggested rules are more likely to catch its members in a compliance trap than stop profits from illegal gambling from escaping offshore.

The proposal says generally that it covers the making of bets on the Internet that already are illegal under state or federal law. It just doesn't spell out those games of chance.

Banks and other financial institutions would have to make a reasonable effort to stop payments to Internet gambling sites through credit cards, checks or electronic funds transfer.

The final rule is overdue, as regulators review the flood of comments.

So far, there has been little action on the UIGEA front, with policy enforcement long overdue.  The Interactive Media Entertainment & Gaming Association  is also awaiting the result of a challenge of the UIGEA's "Constitutionality" it filed in the Superior Court this past fall.  That decision, too, is long overdue. 

"This is an issue that there is so much interest in that we don't want to rush," said Jennifer Zuccarelli, a spokeswoman for the Treasury Department. "We are just trying to hear from everyone."

Be sure to read the Washington Post article in its entirety here

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

Originally published March 4, 2008 9:35 am EST
 

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