LIVE BLOG of the U.S. House hearing on UIGEA regulations

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Roseman just told Rep. Marchant that banks will assume all internet gambling is unlawful.

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Roseman also says that if the transactions are cloaked as legitimate, then the banks will process them -- the Joe's T-shirt example.

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An interesting exhange:

Rep. Moore: Against backdrop of subprime crisis, should we would impose this additional burden on the banks.

Abend: The current market conditions number one priority, we are carrying forth as required by statute. just doing what we had to do as required by mandate.

Moore: We're also getting into a lot of discretionary decisions, especially when it comes to horse racing.

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Interesting line of questioning from King...He was wondering if we could just make sportsbetting transactions illegal. Roseman said the difficulty there is it can't be enforced payment side because many companies own more than just sportsbooks, so by the the time the payment entered the system, it would be unclear what that transaction is for.

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Bacus says the Justice Department should have been invited to answer some of these questions.

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Wexler is up now. Says regulators didn't pass awful law. The only responsible thing to do, Wexler says, is to repeal it.

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Says law already invades privacy, now regulations will be imposed that are inconsistent, not good.

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Wexler wondering about poker skill exemption. Roseman says they got a lot of comment from poker games.

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Roseman says the key as the act is written is subject to the rule "subject to chance." That forces poker to be included. DOJ believes poker unlawful under this law, that's all I can say.

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Wexler is wondering if each bank has to adopt their own policies.

Roseman says either that or adopt the policy of a payment system, like MasterCard or Visa.

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Wexler says this illuminates the fact that this asks for an totally inconsistent set of regulations.

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Asking if playing bridge for a $20 entry fee, is that a prohibited activity.

Roseman doesn't know.

Wexler says UIGEA makes bridge, mahjong and chess players criminals in the backdrop of a mortgage crisis.

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Rep. McHenry up now. Is it the construct of the legislation, or the intent of the legislation that is proving difficult in creating regulations. (A very fair question, btw)

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Roseman: It's a combination of both thing. The construct creates ambiguity between what is legal and illegal gambling. And the intent is for the payment system to be the enforcement mechanism. But the payment system is not well designed for this task.

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Roseman: There will be a proportion of gambling transactions that go through. The question is how much.

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Roseman: Is is very difficult (to enforce the regulation) without having more of a bright line on what is illegal. The second challenge is to figure out how to use the payment system to cut off the transactions.

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Ron Paul makes an appearance!!

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Paul says he doesn't endorse gambling, but people should make their own decisions, it's a personal choice.

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He also says the Internet needs to be protected from control.

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In economics, people should have economic transactions at their own risk.