By
Dan |
Published
Apr 02 2008, 02:16 PM
At 10:00am this morning, a crowd gathered at the Rayburn House Office Building for a hearing entitled, “Proposed UIGEA Regulations: Burden without Benefit?” Hosted by the House Financial Services Committee, of which Barney Frank is the Chair, the hearing explored the effects of the Unlawful Internet Gambling Enforcement Act on the financial services industry. Expert witnesses included representatives from the Federal Reserve, U.S. Department of the Treasury, the Credit Union National Association, American Bankers Association, The Financial Services Roundtable, and Wells Fargo. Congressman Luis V. Gutierrez (D-IL), chairman of the Subcommittee on Domestic and International Monetary Policy, served as the moderator for this important showdown for online poker. I watched the majority of the hearing and spoke with Poker Players Alliance Executive Director John Pappas moments after its conclusion.
“I think it’s been fantastic,” commented Pappas. “Even those members of the House Financial Services Committee who voted for the UIGEA originally are now questioning their vote.” The major theme running through the hearing was the lack of clarification as to what financial transactions under the UIGEA are lawful and which aren’t. Louise Roseman, Director, Division of Reserve Bank Operations and Payment Systems, Board of Governors of the Federal Reserve System, stated in her testimony, “The Act does not spell out which gambling activities are lawful and which are unlawful, but rather relies on the underlying substantive Federal and State laws.” Roseman went on to discuss the comments submitted on the UIGEA’s regulations (many by PPA members, including several on PocketFives.com).
Valerie Abend, Deputy Assistant Secretary for Critical Infrastructure Protection and Compliance Policy, U.S. Department of the Treasury spoke on the same panel as Roseman. She spoke on the submitted comments as well, echoing the concerns of her colleague at the Federal Reserve: “Some of the comments address the meaning of the statutory definitions provided by Congress, the applicability of requirements to specific portions of designated payment systems, and the impacts this proposed regulation could have in the event it were to be finalized as proposed.”
Questioning by the members of the House Financial Services Committee included candid pro-internet gambling comments by Chairman Barney Frank and the author of the Skill Game Protection Act, Congressman Robert Wexler (D-FL). Wexler specifically spoke about poker, bridge, and mah jong as being games of skill, defined in his legislation, H.R. 2610, as player versus player games (as opposed to player versus house contests). The focus on poker, specifically, during the first panel bodes well for the efforts of the PPA. Pappas comments, “It has a lot to do with our efforts to get poker players to contact Congressional officers of this committee and say I’m a voter and a member of your district. That’s part of it. It’s also because of the abundance of comments submitted to regulators.”
Pappas commented on Congressman Wexler’s energetic testimony as well: “He has been a long-time supporter of us and introduced the Skill Game Protection Act. We appreciate his insights on the issue and he brings a great perspective and passion.” Wexler was the leading voice on bringing poker into the spotlight today.
The second panel included four banking industry officials, each of whom had concerns with the UIGEA as written and the burden its enforcement would place on their operations. Ted Teruo Kitada, Senior Company Counsel, Legal Group, Wells Fargo & Co., commented, “Congress in effect has passed the obligation of identifying unlawful internet activities to the financial services industry… This industry is tasked with the unbelievable burden of determining if a business activity of a customer encroaches upon unlawful internet gambling activity.” He went on to state that Wells Fargo handles 11 million checks every day along with 25,000 to 30,000 wire transfers. In essence, it’s not practical for the company to be able to determine what transactions are legal and what transactions aren’t.
The tone of the hearing could be summed up by the testimony of Wayne A. Abernathy, Executive Vice President, Financial Institutions Policy and Regulatory Affairs, American Bankers Association: “During the Congressional consideration of the UIGEA, the ABA stated clearly that while we did not support the legislative proposal, if the Congress chose to proceed with legislation, care was needed to avoid applying burdensome unworkable regulation to insured depository institutions. Unfortunately, the statute as enacted and the regulations proposed are both burdensome and unworkable and are unlikely to result in stopping illegal internet gambling.”
It’s Pappas’ hope that the fallout from today’s Congressional hearing will mean eventual passage of one of the major internet gambling bills in Congress, including the Internet Gambling Regulation and Enforcement Act (HR 2046), which was mentioned several times today and authored by Congressman Frank. In a press release issued by the PPA moments after the hearing wrapped up around 1pm ET, Pappas commented, “We urge members of Congress to reconsider this legislation and move towards regulation of online poker that will protect children and problem gamblers, fight fraud and abuse and collect billions in federal and state tax revenue. We look forward to working with Chairman Barney Frank, the Financial Services Committee and all Members of Congress to address Internet gambling in a reasonable and responsible fashion.”
Stay tuned to PocketFives.com for more details and be sure to visit the Poker Legislation forum for the latest from Capitol Hill. Links to the prepared testimony and full text of the hearing are given below.
Resources
Visit the PPA Website
Read the full text of the testimonies on the House Financial Services Committee hearing landing page