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US Ban on Online Gambling Threatened?

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The United States House Financial Services Committee Tuesday will hold a markup of legislation aimed at halting regulations which prevent banks from accepting payments from Internet gambling companies. The move comes as part of two-part strategy by Rep. Barney Frank, D-Ma., chairman of the panel, to regulate rather than ban outright internet-based gambling.

He is trying to put a hold on the 2006 law (UIGEA) that instructs the Treasury Department and the Federal Reserve to draft regulations preventing financial institutions from processing payments from online gambling sites. The measure has been opposed by the gambling industry, which argues there is no reason for the federal government to ban outright online gambling.

It has also been opposed by banks and credit unions, as well as their regulators — the Treasury and Federal Reserve — which say the current law is too vague.

“We want to make sure the regulations are not overly burdensome and are workable,” said Floyd Stoner, chief lobbyist at the American Bankers Association. “At present they are both.”

For John Pappas, executive director of the Poker Players' Alliance, winning congressional backing for a suspension of the law already on the books would be an important first step.

“The bill that passed in 2006 was tremendously failed public policy,” said Pappas. “The reality is Internet poker is not going away, so the question is what is the responsible role of government in licensing and regulating online poker.”

The Poker Players' Alliance was founded in 2005, but after the 2006 law was passed by Congress, its membership surged from around 100,000 to over 1 million people, said Pappas.

Even this first step may not be simple. Despite the widespread disquiet about the language of the 2006 legislation, Senate Minority Whip Jon Kyl, R-Ariz., would oppose any effort to “water down” its intent, said a spokesman. Kyl has fought for banning online gambling since the mid-1990s.

Ultimately, Frank wants to replace the 2006 law entirely, with a new law that would regulate rather than ban online gambling. He is supported in this by Rep. Ron Paul, R-Tex., a Republican lawmaker and former presidential candidate, who is seen as being the standard bearer for the libertarian movement in Congress.

At this stage, it is unclear whether is sufficient support in Congress for doing so.

gamblingplanet.org

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