Barney Frank Introduces New Online Gambling Bill

Written by:
C Costigan
Published on:
Sep/12/2008

House Committee on Financial Services Chairman Barney Frank (D-Mass.) on Thursday proposed yet another measure that would look to repeal a law making most forms of online gambling illegal.

The Unlawful Internet Gaming Enforcement Act (UIGEA) requires that financial institutions monitor transactions related to online gambling, however, not all forms of the activity are illegal and the UIGEA is quite ambiguous when it comes to defining what is and what is not legal.

The Payments System Protection Act of 2008, introduced by Congressman Frank on Thursday, would direct the Department of the Treasury and Federal Reserve System, in consultation with the Attorney General, to create a formal process to define what types of online gambling are unlawful to make it possible for the U.S. financial services industry to comply with the current ban on Internet gambling, as required by the Internet Gambling Enforcement Act of 2006, or UIGEA.

Chairman Frank is doing the right thing by saying it is unfair to burden U.S. financial service companies with the job of the Internet gambling police at a time when their undivided attention ought to be on the economy," said Jeffrey Sandman, spokesperson for the Safe and Secure Internet Gambling Initiative. "The reality is that UIGEA is dangerous to the payments system and unlikely to stop anyone from using the Internet to play poker, bet on horses, or engage in other types of wagering."

Earlier this year, Reps. Frank and Ron Paul (R-Tex.) introduced the first version of the Payments System Protection Act (H.R. 5767), which attempted to stop the U.S. government from taking any further steps in developing regulations to implement UIGEA. Ultimately, the bill, along with an amendment offered by Rep. Peter King (R-N.Y.), was defeated in the House Committee on Financial Services.

Frank told his colleagues that Congress is putting the U.S. financial services industry at risk by not clarifying the regulations to enforce UIGEA and defining unlawful Internet gambling activities. "Hijacking the financial payment system at a time when it is under major stress and giving them the job of carrying out an unclear mandate doesn't make sense," he said.

Representatives of the U.S. financial services industry, including the Chamber of Commerce, The Financial Services Roundtable, Credit Union National Association, and National Association of Federal Credit Unions, pledged their support of the original version of the Payments System Protection Act and King amendment in letters to Rep. Frank and members of the Financial Services Committee.

"I wish to be clear that we do not support the notion that financial services companies should be 'deputized' to police gambling activity in any form or function," wrote Mr. Steve Barlett, president and CEO of The Financial Services Roundtable on June 23, 2008. "While we would support the passage of H.R. 5767 as introduced, I agree that the King Amendment makes essential improvements to a deeply flawed law and therefore support its inclusion."

Frank's new bill is being introduced at a time when The Interactive Media Entertainment & Gaming Association, a trade organization representing the Internet gaming interests, is in the midst of challenging the UIGEA in the US 3rd Circuit Court of Appeals. iMEGA recently brought on board Stephen A. Saltzburg, professor of law at George Washington University, and one of Washington DC's most accomplished attorneys.

The introduction of Saltzburg is significant in that is a former deputy assistant attorney general in the Criminal Division of the U.S. Department of Justice, and chairman of the ABA Criminal Justice Section from 2007 to 2008.

"We always had a strong team representing us," said Joe Brennan, Jr., founder of iMEGA. "The addition of Prof. Saltzburg to our line-up demonstrates that iMEGA is serious about meeting the US Department of Justice on equal terms in court, and that we have strong advocates making a compelling argument as to why the court should overturn this troubling law."

Brennan, Jr. has warned that - while Barney Frank is an important ally to the online gambling industry - The US Justice Department has no plans to sit around and wait for a bunch of politicians to fumble around Congress then next three years. The big fear right now is that the US Government has its eyes on the so-called "super affiliates" - those who act as "partners and facilitators" within the United States on behalf of Internet gambling businesses operating offshore, receiving a revenue cut.

"Rather than just be another voice in the crowd, we're focusing our resources on our litigation instead of lobbying," Brennan, Jr. stated.

iMEGA has growing support within the online gambling industry, through Brennan, Jr. admits there is still much more work to get accomplished.

"Right now these online gambling affiliates are at the highest risk," Brennan, Jr. contends. 

The US Government has, in the past, subpoenaed some affiliates and a public relations firm with ties to BetonSports.com, once the largest sports betting company operating offshore. 

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Christopher Costigan, Gambling911.com Publisher

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