Online Gambling Bank Regulations Would Not Apply to Payouts

Written by:
C Costigan
Published on:

The US Treasury Department on Wednesday published regulations pertaining to the Unlawful Internet Gambling Enforcement Act.  It does not stipulate which online gambling transactions are "legal" as opposed to "illegal" however.   Horse racing and fantasy sports league betting was exempt from the legislation. 

One of the more interesting aspects of the new regulations is that the Treasury Department appears to stipulate that banks are not required to monitor payouts associated with any online gambling business.  The regulations, in essence, only apply to deposits.  As things stand now, getting money to an Internet gambling website is quite difficult. 

Under the final rule, the term "restricted transaction" would not include funds going to a gambler, and would only include funds going to an Internet gambling business, only money going from bank to gambling business (as per page 23).

Also broadly talking about Western Union and MoneyGram, the regulations state that there is no method of blocking such transactions, and its not "an efficient tool for a gambling business on a scale that it would be useful due to their lack of brad lublic accessibility".  Western Union was at one time the most popular method employed by offshore sportsbooks.

The regulations also state that there is no way to code ACH transactions, and basically it's up to the NACHA to do their due diligence when a new ACH customer is signed up.

"Customers (gamblers) appear to be fine under these regulations," one analyst tells, citing the following.

Several commenters suggested that the final rule should clarify the Agencies'  intent that the non-exclusive examples provided in the proposed rule were focused on relationships with commercial customers and not with respect to consumer accounts.65 The Agencies recognize the problems with designing and implementing procedures focused on consumer accounts. For example, except for card systems, a participant would generally not know the purpose of a consumer transaction and often the payee information on a transaction, such as a check, is not in automated form. In response to the comments requesting clarification on this point, as a general matter, the non-exclusive examples in §___.6 have been revised to make it clear in each instance that the policies and procedures to be implemented to prevent restricted transactions are with respect to commercial customer accounts only.

There was also this:

If the commercial customer's description of its business or other factors cause the participant to suspect that it may present more than a minimal risk of engaging in an Internet gambling business (for example, the commercial customer offers games or contests over the Internet), the participant should ask for further documentation from the commercial customer. Certification from the commercial customer that it does not engage in an Internet gambling business would address factual questions

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