On Thursday, major news rippled across the internet gambling industry. House Financial Services Committee Chairman Barney Frank (D-MA) introduced HR 6870, the Payments System Protection Act. The bill ensures “that implementation of proposed regulations under subchapter IV of chapter 53 of title 31, United States Code, does not cause harm to the payments system, and for other purposes.” The new bill instructs the U.S. Treasury and Federal Reserve to work together with the Attorney General’s office to establish what is acceptable under the provisions of the Unlawful Internet Gambling Enforcement Act (UIGEA). The bill is expected to be marked up on Tuesday and is already on the schedule posted on the House Financial Services Committee website.

HR 6870 states, “The Secretary of the Treasury and Board of Governors of the Federal Reserve System may not propose, prescribe, or implement any regulation [of the UIGEA]… except to the extent as any such regulation pertains to wagering of the type that is prohibited under [the Wire Act] (relating to professional and amateur sports protection).” The UIGEA regulations that have been developed would immediately be suspended, except those related to online sports betting under the Wire Act of 1961.

The bill continues, stating that the Treasury and Federal Reserve “shall jointly develop and implement regulations (which the Secretary and the Board jointly determine to be appropriate), on the record after opportunity for an agency hearing involving an administrative law judge or similar official.” HR 6870 calls for a formal definition of “unlawful internet gambling” as well as a full economic impact study of the proposed regulations. It was proposed with just several weeks remaining in the 2008 Congressional session.

Steven Adamske, Press Secretary for Congressman Frank, told PocketFives.com, "By marking up the bill and getting a good vote in Committee, we will send a message to regulators that we’re going to deal with the UIGEA. Hopefully, we can delay the regulations until Congress has time to address them."

During a mark-up hearing of HR 5767 in the House Financial Services Committee in June, Congressman Peter King (R-NY) introduced an amendment that required the Treasury and Federal Reserve to work hand in hand with the U.S. Department of Justice to establish what is legal under the UIGEA. A vote was split 32-32, mainly along party lines, leading to the amendment’s defeat. That vote was followed up by an oral vote on HR 5767, without the amendment. The “Ayes” were outnumbered by the “Nays” and the bill was ultimately defeated. HR 5767 would have also suspended the regulations of the UIGEA.

Upon introduction, HR 6870 has one original co-sponsor, Congressman King. Frank has been adamant about passing legislation which absolves the financial services industry from becoming the de facto police of the internet gambling industry. At a hearing in April entitled “Proposed UIGEA Regulations: Burden without Benefit,” representatives from the Federal Reserve, U.S. Treasury, Wells Fargo, and the American Bankers Association stated that enforcing the UIGEA was all but impossible. No indication of which activities were permitted was given in the UIGEA’s text, forcing each financial institution either to examine each transaction scrupulously or forbid transactions that remotely look like internet gambling.

Poker Players Alliance Executive Director John Pappas told PocketFives.com, “The Poker Players Alliance believes HR 6870 is a strong compromise bill that will provide much-needed clarity to the UIGEA through a formal rulemaking process, while immediately enforcing existing gambling laws that ban online sports betting. Chairman Frank has been and continues to be a leader in this area and we look forward to a successful markup in the Financial Services Committee next week.”

“Chairman Frank is doing the right thing by saying it is unfair to burden U.S. financial service companies with the job of the Internet gambling police at a time when their undivided attention ought to be on the economy,” said Jeffrey Sandman, spokesperson for the Safe and Secure Internet Gambling Initiative, in a press release distributed on Thursday. “The reality is that UIGEA is dangerous to the payments system and unlikely to stop anyone from using the Internet to play poker, bet on horses, or engage in other types of wagering.”

We’ll have the latest news as it breaks right here on PocketFives.com. Visit the Poker Players Alliance website for more information on the online poker industry’s main lobbying group.