A Race to the Finish

24 April 2008

Visibly, U.S. lawmakers this month have beefed up legislative activity with respect to Internet gambling. As the coming election stands to cut the 110th Congress short, legislators are working feverishly to wrap up their I-gaming agendas before adjourning in late September.

In early April, Representatives Barney Frank, Democrat of Massachusetts, and Ron Paul, Republican of Texas, jointly introduced H.R. 5767, a bill that would prevent the implementation of the Unlawful Internet Gambling and Enforcement Act regulations.

As a follow-up to the bill, the two sent letters on Monday to Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry J. Paulson Jr., urging them to consider delaying the regulation-writing process for the UIGEA.

In an interview with Interactive Gaming News, Dan Walsh, director of governmental affairs at Washington, D.C-based lobbying firm Greenberg Traurig, suggested that Mr. Frank was likely motivated by the level of UIGEA-directed skepticism expressed at an April 2 House subcommittee hearing to draft the bill.

Pointedly, Louise Roseman, director of the Fed's operational division, at the hearing admitted having difficulty drafting the rules -- owing, she said, to the UIGEA's lack of clarity in defining "unlawful Internet gambling."

In response to the Frank-Paul push, Representative Spencer Bachus, Republican of Alabama, and Senator Jon Kyl, Republican of Arizona, on Wednesday sent a jointly-written letter to members of Congress urging them to oppose a rollback of the UIGEA.

Mr. Kyl has been the driving force behind the prohibition of Internet gambling in the United States, and Mr. Bachus has long been an outspoken I-gaming opponent.

"The Frank-Paul bill's prohibition on issuing Internet gambling regulations would eliminate the most effective enforcement tool available for stopping illegal online gambling," the Bachus-Kyl letter read.

A source in Washington with connections to the Fed and Treasury said individuals in these institutions would be pleased if Congress were to pass a law prohibiting them from drafting the rules.

"But short of that (enacting the Frank-Paul bill), they (Fed, Treasury) can't just decide, as Chairman Frank suggested in his letter, not to do a rule," the source said. "They probably don't have the authority to ignore statutes. So unless Congress passes another law, I think they're going to push forward."

Following the subcommittee hearing, Ms. Roseman said regulators hoped to issue a final rule before December 2008.

But Mr. Walsh does not foresee the regulations being finalized before the end of the session.

"The reality is Congress is out of here by the end of September and I don't think we'll have a final rule before that," he said.

Meanwhile, Representative Shelley Berkley, Democrat of Nevada, has also sent a letter to members of Congress in an effort to drum up support for her own bill, Internet Gambling Study Act, which proposes a one-year National Research Council study of the online gaming industry.

Ms. Berkley, a co-sponsor of Mr. Frank's Internet Gambling Regulation and Enforcement Act, has stated that she opposes the UIGEA and recently told Las Vegas Review-Journal that she supported Mr. Frank's efforts to stop the regulations.

"The UIGEA is a product of Congress rushing to legislate without seeking any independent, unbiased research on the impact of Internet gaming," Ms. Berkley said in the letter.

David Cherry, Ms. Berkley's director of communications, told IGN the I-gaming study bill's appeal lies in its neutrality.

"The selling point on the study is that it's the one vehicle that the gaming folks themselves are lined up behind, so much that the industry does have a lot of support on the Hill," Mr. Cherry said.

"I don't see much happening this year outside of the study bill," he went on. "So, we're still trying to get people convinced that this is the way to go and that's why we keep sending the 'Dear Colleague' (letters) around. It's as much to inform folks as to keep gaining co-sponsors."

Click here to view a copy of the Bachus-Kyl letter to members of Congress.

Click here to view a copy of Ms. Berkley's letter to members of Congress.

Emily Swoboda is the senior staff writer at IGamingNews. She lives in St. Louis, Mo.