Bill proposed to halt UIGEA regulations

[The Buzz]

It looks like Congressmen Barney Frank and Ron Paul have introduced a bill that "prohibit the Secretary of the Treasury and the Board of Governors of the Federal Reserve System from proposing, prescribing, or implementing any regulation" regarding the UIGEA. As of now, only the title of the legislation is available. When the full text is posted to the Congressional Web site, Buzzy suspects vinism will chime in with some analysis. In the mean time, here's a press release from the The Safe and Secure Internet Gambling Initiative with some more details.

Congress Moves to Suspend Internet Gambling Ban


Current law unduly burdens U.S. financial services institutions

WASHINGTON, April 11 /PRNewswire-USNewswire/ -- The Safe and Secure Internet Gambling Initiative (SSIGI) announced its support for new legislation, H.R.5767, that would prohibit the Department of the Treasury and Federal Reserve System from proposing, prescribing or implementing any regulations related to the current ban on Internet gambling, as required by the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). The bill was introduced yesterday by Reps. Barney Frank (D-Mass.) and Ron Paul (R-Texas).

"The Frank-Paul bill would stop the U.S. government from taking any further steps on regulations that would require all of the country's financial institutions to block Internet Gambling payments," said SSIGI spokesman Jeff Sandman. "It's a bold move, but a necessary one, in light of the warnings from the Treasury and Federal Reserve that they did not know how to write regulations to solve the problems created by UIGEA. Further, witnesses representing a broad spectrum of the financial services community unanimously stated that the current ban on Internet gambling is dangerous to the payments system and ineffective in stopping people from using the Internet to play poker, make bets on horses, or engage in other types of wagering."

The current Internet gambling ban creates significant additional burdens for U.S. financial institutions, which say that it is unfair to turn them into the Internet gambling police at a time when their undivided attention ought to be on the economy.

Testimony before Congress last week offered proof that financial services institutions would face serious regulatory burdens in attempting to enforce UIGEA and related regulations, which is unlikely to stop millions of Americans from gambling online.

Representatives from the Credit Union National Association, Financial Services Roundtable, American Bankers Association and Wells Fargo & Co. testified about the burden they would unnecessarily face before the House Committee on Financial Service's Subcommittee on Domestic and International Monetary Policy, Trade, and Technology on April 2. The current UIGEA law is ambiguous and allows for multiple interpretations of what may or may not be illegal activities.

Their comments reflect the concerns echoed in the more than 200 comments submitted to the Department of the Treasury and Federal Reserve System.

Frank introduced legislation last year, the Internet Gambling Regulation and Enforcement Act (H.R. 2046), that would regulate Internet gambling. The bill would require licensed Internet gambling operators to put in place safeguards to protect against underage and compulsive gambling and ensure the integrity of financial transactions.

A companion piece of legislation to the Frank bill introduced by Rep. Jim McDermott (D-WA), the Internet Gambling Regulation and Tax Enforcement Act of 2008 (H.R. 5523), would ensure the collection of taxes on regulated Internet gambling activities. According to a tax revenue analysis prepared by PricewaterhouseCoopers, taxation of regulated Internet gambling is expected to generate between $8.7 billion to $42.8 billion in federal revenues over its first 10 years.

About Safe and Secure Internet Gambling Initiative

The Safe and Secure Internet Gambling Initiative promotes the freedom of individuals to gamble online with the proper safeguards to protect consumers and ensure the integrity of financial transactions. For more information on the Initiative, please visit http://www.safeandsecureig.org. The Web site provides a means by which individuals can register support for regulated Internet gambling with their elected representatives.

[The Buzz]

The Las Vegas Review-Journal's story on the legislation, which already has 48 cosponsors ...

http://www.lvrj.com/business/17575559.html

[The Buzz]

Banking lobbyists appear to like the Frank approach ... from The Hill ...

http://thehill.com/business--lobby/b...008-04-14.html

“I don’t know what can be done or will be done legislatively, but we certainly appreciate the interest,” said the top lobbyist for the American Bankers Association , Floyd Stoner, of the Frank-Paul legislation.

...

“The banking system is just not set up to sort out whether one payment is a legal payment and one payment is not,” said the director of congressional affairs for the Independent Community Bankers of America , Steve Verdier. “We think the [Frank-Paul] bill would give everyone the chance to take a breath.”

Charles Rothfeld, a lawyer at Mayer Brown who has argued several cases before the U.S. Supreme Court, said that the Frank-Paul legislation is not likely to pose any constitutional problems. “Congress gets to say the way in which its legislation is implemented. If it wants to issue legislation to preclude the promulgation of regulation, it can do that,” he argued.