Congressional Hearing Highlights Inherent Flaws of US Gaming Ban
April 4th, 2008
A Congressional hearing held this week to review the effectiveness of the proposed UIGEA implementation rules has once again highlighted the inherent shortcomings of the legislation, as well as an apparent lack of understanding of what ‘illegal’ online gambling actually is.
The House of Representatives Subcommittee on Domestic and International Monetary Policy, Trade and Technology heard unanimous expert testimony from the US Treasury, Federal Reserve, the American Bankers Association, Financial Services Roundtable, Wells Fargo & Co. and Credit Union National Association, all of whom opposed the proposed rules as unenforceable.
Much of the hearing centred on trying to define illegal online gambling. In his opening statement, Rep. Luis V. Gutierrez, Subcommittee Chairman, said: “The regulations have been widely criticised as being vague and costly for financial institutions to implement. One of the most common complaints is that the proposed rules fail to sufficiently define key terms, leaving financial institutions with significant compliance difficulties.”
Louise Roseman of the Board of Governors of the Federal Reserve System, pointed out that even amongst US lawmakers, conflicting interpretations exist as to which forms of remote gambling are illegal. According to Ms. Roseman’s testimony, the Department of Justice considers all forms of remote gambling to be illegal, whereas the Fifth Circuit has indicated that betting on Interstate horse racing is not. The UIGEA specifically exempts Interstate Horseracing from the provisions of the act.
Harriet May, testifying on behalf of the Credit Union National Association, said that the Association supports enforcement of reasonable laws to prohibit unlawful Internet gambling, but that the Act and proposed rules would inflict a set of unreasonable policing requirements which will undoubtedly prove difficult for financial institutions to meet. “With the current mortgage crisis and other economic pressures, we hope that Congress will reconsider whether this is an appropriate time to ask us to dedicate resources to try to comply with what we view as an unworkable law,” she said.
That sentiment was echoed by Wayne Abernathy of the American Bankers Association. “The UIGEA and the Proposed Rule do not provide a rational path towards halting unlawful Internet gambling,” he said. “The path leads to an increased cost and administrative burden to the banks and an erosion in the performance of the payments system, but it will not result in stopping illegal Internet gambling transactions.”
One clear conclusion to come out of the hearing yesterday was that those who sought to introduce this law have lost the moral argument for its existence by favouring some forms of gambling over others, a point that was humorously highlighted by Rep. Barney Frank. Another was the obvious fact that rather than protecting US consumers, the Act endangers gamblers by forcing them into the hands of unregulated operators, who will easily circumvent any financial restrictions.
The most succinct testimony came from former Presidential candidate, Congressman Ron Paul. “I stand opposed to the regulations being discussed today because I opposed the underlying bill upon which these regulations are based,” he said. “The ban on internet gambling infringes on two freedoms that are important to many Americans: the ability to do with their money as they see fit, and the freedom from government interference with the internet.”
“I urge my colleagues to oppose these new regulations and support Chairman Frank’s HR2046, of which I am a cosponsor,” he added. “The passage of HR2046 would restore the right of Americans to decide for themselves whether or not to gamble online.”
Chairman Gutierrez said prior to the subcommittees recess that he had never attended a hearing with so many concerns over a new regulation, and told regulators to be very careful with how they form the new regulation.
“There is so much betting going on in America, this is going to be a very difficult challenge for you,” he said.
Comments to this post
