By
Dan |
Published
Nov 13 2008, 08:14 PM
The regulations of the Unlawful Internet Gambling Enforcement Act (UIGEA) were finalized on Wednesday night and will go into effect on January 19, 2009. The next day, the world will wake up to a different President of the United States, as newly-elected Barack Obama will assume the role. The rules require compliance to the UIGEA by December 1st, 2009. Now that the industry has had a chance to absorb the news, several of its main organizations have fired back in response. At the forefront of the fight for legalized and regulated internet gambling, and more specifically online poker, is the Poker Players Alliance (PPA). The organization serves as the main lobbying group for the online poker world and issued an action alert to its members. Other organizations have reacted as well.
On Wednesday, the 1.2 million strong PPA issued a statement on its website authored by Chairman Alfonse D’Amato: “Despite the efforts of the poker community, the opposition of the banks, and the recent news exposing inappropriate influence by the White House, today the current administration finalized the UIGEA regulations… I have not lost my drive to correct this injustice and I call on you to join me and the million strong PPA to help continue our fight.” The PPA is urging its membership to call members of Congress and ask them to reverse the rules passed by the Office of Management and Budget (OMB) and support legislation to legalize the great American pastime. The PPA is also calling on its membership to e-mail the Obama Transition Team.
The new regulations continue to leave undetermined what the definition of “unlawful internet gambling” is. Moreover, exemptions for fantasy sports and horse racing persist in the UIGEA itself, leaving many wondering how the law will be enforced. An article that appeared on news site Politico cited a 1996 empowerment called the Congressional Review Act. D’Amato commented in a press release distributed on Wednesday, “Today’s action finalizes a truly bad public policy – one that even the banks and Federal regulators called unworkable in Congressional testimony. However, the PPA remains optimistic that the new Administration and the new Congress will recognize the failures of UIGEA and will act swiftly in the New Year to overturn this flawed policy.”
The final regulations reveal the complications behind the law as a whole: “The Act’s definition of unlawful internet gambling relies on underlying Federal and State laws. The States have taken different approaches to the regulation of gambling… Accordingly, the underlying patchwork legal framework does not lend itself to a single regulatory definition of unlawful internet gambling.” The rules rely on the relationships between banks and merchants to determine whether a company is operating an illegal gambling business. Click here to read the UIGEA regulations.
The industry must comply with the UIGEA regulations by December 1st, 2009. The rules specify that a coding system will likely be the choice of many financial institutions to enforce the UIGEA: “The Agencies expect that a coding system to identify and block restricted transactions will be the method of choice for the vast majority of card system participants to comply with the Act.” Again, “due diligence” by banks when working with commercial outlets is the key to flagging internet gambling businesses ahead of time. It remains to be seen what effect, if any, the regulations will have on the industry. On the PocketFives.com Podcast, PPA President John Pappas encouraged online poker players to remain calm.
Michael Waxman, spokesperson for the Safe and Secure Internet Gambling Initiative, told PocketFives.com in an e-mail, “The Bush Administration’s timing couldn’t be worse. Just when banks should be focusing their energy on surviving an economic downturn, the Administration is burdening them with the role of policing online gambling. It doesn’t help that the rules for enforcing the law are ambiguous, costly and not likely to stop Americans from gambling online.” Waxman reiterated the PPA’s call for change in the new Administration: “We call on President-elect Obama and Congress to relieve this burden on the financial service sector and regulate the industry.”
The Interactive Media Entertainment and Gaming Association (iMEGA), which itself is in the middle of a lawsuit to declare the UIGEA unconstitutional, stated on its website, “Congress declined to end all ambiguity by refusing to define ‘unlawful Internet gambling.’ Now banks and credit card companies are being told they have to police these transactions, that they have to guess correctly as to which are and which are not illegal, and - should they guess wrong - assume all of the liability in the form of sanctions. How can they possibly operate fairly under that kind of threat?”
Obama will take office on January 20th, 2009. Returning to Washington with Obama will be pro-online poker Congressmen Barney Frank and Robert Wexler. Senator Robert Menendez, who authored S 3616, the Internet Skill Game Licensing and Control Act, is in the middle of a six year term. Unfinished legislation such as the Skill Game Protection Act and Internet Gaming Regulation and Enforcement Act must be re-introduced when Congress resumes in 2009.
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