6 Month Reprieve on UIGEA Implementation
30 November 2009, Staff writer
Back in 2006 when the Bush Administration passed the Unlawful Internet
Gambling Enforcement Act ("UIGEA"), the deadline set for implementation
of its relevant operative provisions was 1 December 2009.
The law requires that banks and financial institutions block all
transactions between US residents and online gambling operators deemed
related to 'unlawful internet gambling'.
The date has since become somewhat of a D-Day for
stakeholders in the industry, and more particularly those charged with the
onerous responsibility of blocking online gambling payments...the banks.
Banks and payment processors have made no secret of the fact that they will have
difficulties in correctly identifying and blocking payments in accordance with
UIGEA. Financial services industry organizations have publically described
UIGEA's implementation rules as ambiguous, burdensome and unlikely to prevent
Americans from gambling online.
One of the major concerns is that while UIGEA requires that
banks block all payments connected with 'unlawful internet gambling', nowhere in
the Act does it define what exactly this is. In a slightly farcical
situation, the banks are required to make this determination, even when legal
experts across the country are divided as to what does or doesn't constitute
unlawful internet gambling. A flow on effect from the expected confusion
on implementation is the likely blocking of clearly legal online gambling
related transactions such as lottery ticket and horse race bets purchased in
certain States.
Back in early October Financial Services Committee Chairman
Barney Frank and various other parties in support of a push to repeal UIGEA and
replace it with laws to legalize and regulate online gambling penned a request
to the powers that be to delay UIGEA's implementation. That request was
heard and yesterday Treasury Secretary Tim Geithner and Chairman of the
Federal Reserve Ben Bernanke agreed to push the date back 6 months to 1 June
2010.
The reprieve is a significant one as it relieves banking
sector of an administrative burden they really didn't need right now, as well as
allowing various local lottery and wagering operators to avoid lost business
from mistaken payment blocks. But some industry observers see the move as
far more significant than this.
There is a push in Washington to have UIGEA repealed.
Frank introduced H.R. 2267 earlier in the year - a bill designed to replace
UIGEA with measures to license, regulate and (combined with H.R. 2268) tax
online gambling operators. The bill now has over 60 co-sponsors and has
won the support of key lobbying interests previously opposed to a regulated
online gambling industry (in particular the
American Gaming Association and key
members like Harrahs).
Those optimistic about the prospects of these proposed new
laws believe that the implementation delay is a recognition from the Obama
Administration that a workable alternative to UIGEA is welcomed.
Particularly if such an alternative can raise anywhere near the $42 billion
(over 10 years) that Treasury forecast it will.
In any case, Barney and his friends have at least 6 more
months to push their cause, and the banks can breath a sigh of relief.
For a discussion of the current online casino legislative environment in the
US, click here
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