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  Thursday, June 26, 2008

  Narrow Vote Quashes Clarity on UIGEA

by Christopher A. Krafcik

The United States moved no closer to unequivocally defining "unlawful Internet gambling" as an amended bill requiring regulators to draft such a definition was defeated by the narrowest of margins Wednesday.

In its original form, HR 5767, the Payment Systems Protection Act, would have prevented the Treasury Department and Federal Reserve Board from completing regulations for the Unlawful Internet Gambling Enforcement Act, which requires financial institutions to block online gambling transactions.

However, Peter T. King, Republican of New York, proposed an amendment to the payment protection act that would have required the Fed and Treasury to draft a uniform definition for unlawful Internet gambling, a term whose meaning continues to elude regulators.

A 32-to-32 vote by members of the House Financial Services Committee, by whom the bill was under review, saw Mr. King's proposed amendment defeated.

The underlying bill, proposed by Ron Paul, Republican of Texas, and Barney Frank, the Massachusetts Democrat who chairs the committee, was then defeated in a voice vote.

To the surprise of some observers, Mr. King's strategy, that the bill be perceived as "a banking amendment," failed to rally the Republican vote.

"I think it's strange the Republicans would turn their backs on the credit institutions and banks at a time when the Federal Reserve and Department of the Treasury say the proposed rules for UIGEA are unworkable," Michael Waxman, a spokesman for the Safe and Secure Internet Gambling Initiative in Washington, D.C., told Interactive Gaming News in a telephone interview.

In all, 29 Democrats and three Republicans, including Mr. King, voted for the proposed amendment, while 28 Republicans and four Democrats voted against, said Mr. Waxman, whose group lobbies Internet gambling policy.

IGN understands that Alabama's Spencer Bachus, the ranking Republican member of the financial services committee, was influential in garnering his party's vote.

"After this long campaign by offshore gambling interests to block or repeal the law, what Congress needs to do now is urge the Treasury Department and Federal Reserve to swiftly finalize their proposed rules to implement UIGEA," Mr. Bachus said in a prepared statement. "The regulations are long overdue, and our young people need this protection now."

Despite airing concern that the gambling enforcement act's language was difficult to discern -- namely, its definition of unlawful Internet gambling -- the Treasury and Federal Reserve are now faced with the unenviable task of finalizing the proposed rules.

A spokesman for the Federal Reserve declined comment when asked by IGN how it would proceed, though Jennifer Zuccarelli, a spokeswoman for the Treasury, allowed:

"We're working to finalize the regulations as quickly as possible."

Without the prospect of protection by Mr. Frank's bill, United States banks -- which, under the gambling enforcement act, are deputized to enforce its regulations -- remain in procedural limbo.

"We'll continue to work with Congress and the regulators to ensure that regulations (for the gambling enforcement act) are not burdensome or unworkable," Peter E. Garuccio, a spokesman for the American Bankers Association in Washington, told IGN by telephone.

The association, one of the more outspoken critics of the gambling enforcement act, lobbies on behalf of banks nationwide.

Looking ahead, the next move by the United States Internet gambling lobby is far from certain. J. Daniel Walsh, director of government affairs at Greenberg Traurig in Washington, did not immediately return phone calls.

With the Congressional session set to wrap up early, and during an election year when politicians carefully hedge their political bets, it is unlikely that any new policy favorable to Internet gambling would be drafted or enacted.

"My colleague and I want to repeal the whole thing (gambling enforcement act)," Mr. Frank said during Wednesday's markup. "That may take one more presidential campaign, but we're getting there."

FROM THE EDITOR: Tell us what you want to read about in IGN.

About the Author
Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.


More Articles by Christopher A. Krafcik

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