Before Markup, U.S. Bill Draws Strong Criticism

20 June 2008

A United States bill targeting the Unlawful Internet Gambling Enforcement Act is scheduled to be amended by the House Financial Services Committee next Tuesday, a process which has already drawn criticism from professional sports leagues and religious conservatives.

Representative Barney Frank, the Massachusetts Democrat who leads the committee, and Representative Ron Paul, the libertarian Texas Republican, jointly introduced HR 5767, now called the Payment Systems Protection Act, on April 11, 2008.

In its current form, the bill would prohibit the Treasury Department and Federal Reserve from "proposing, prescribing or implementing" any regulations under the gambling enforcement act, which requires financial institutions to block online gambling transactions.

The gambling enforcement act, which took effect in October 2006, was scrutinized at a financial services subcommittee hearing on April 2, where Treasury and Fed officials argued the act's intended objective was difficult to discern.

The gambling enforcement act has also drawn criticism from the American Bankers Association in Washington, D.C., which has called its proposed rules "unworkable and overburdensome."

"It (the act) just really puts us in a position of having to play police or law enforcement to such a degree that we don't have the resources to devote to that kind thing," Peter E. Garuccio, a spokesman for the association, told Interactive Gaming News in April.

However, strong support among the sports leagues and religious right remains for the gambling enforcement act.

"Though we think the proposed regulations (for the gambling enforcement act) could be improved, we believe they are on the right track and strongly disagree with insinuations that they are unworkable because of a theoretical possibility of blocking some legal transactions with Internet gambling operators," Thomas E. McClusky, vice president of government affairs for the Family Research Council, wrote in a letter to financial services committee members dated June 23, 2008.

The National Football League, one of Internet gambling's staunchest opponents, has also expressed pointed criticism that the payment protection act would abet the erosion of laws against sports betting.

"By passing UIGEA, Congress sent a strong signal that it was unwilling to tolerate sports betting and other gambling on the Internet," Gene A. Washington, director of football operations for the N.F.L., wrote in a letter to committee members dated June 18, 2008. "I am therefore gravely concerned that the Committee on Financial Services may act on legislation that would interdict prompt implementation of UIGEA regulations."

Because the payment protection act is 9th out of 10 bills on the committee's markup agenda, it may not be addressed until Wednesday.

IGN has yet to determine how the payment protection act will be amended.

IGN's Take

The bill's title, Payment Systems Protection Act, is telling.

Mr. Frank's previous bill, the Internet Gambling and Regulation and Enforcement Act, addressed the Internet gambling industry directly, though it would seem a change in strategy has occurred.

Could the banks, which the payment protection act likely seeks to shelter, be a new and stronger ally in the lobbying battle over the legislative headache that has become the gambling enforcement act?

Click here to view the June 18 letter by Mr. Washington of the N.F.L.

Click here to view the June 23 letter by Mr. McClusky of the Family Research Council.

Click here to view a June 19 letter to members of the financial services committee, signed by representatives of the National Basketball Association, the National Collegiate Athletic Association, the National Hockey League, Major League Baseball and the N.F.L.

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