UIGEA Rules Amended, Language Unknown

11 November 2008

IGamingNews learned today that the proposed regulations for the UIGEA were amended and cleared by the Office of Management and Budget, though to what extent the rules were changed remains unclear.

"The changes have to be implemented by Treasury," a Washington insider told IGN by telephone. "Subsequently, the Fed, which is not under O.M.B. review, has to review them as well."

John Pappas, executive director of the Poker Players Alliance, told IGN that his organization, too, was unclear as to what changes had been introduced.

"What those changes are, we don't know," Mr. Pappas said by telephone. "Unfortunately, this whole process is not as transparent as one would think it should be.

"We don't know if those changes are substantive, or it's a dotting of an i or crossing of a t," he continued. "We hope that the Fed will be resistant to signing off on these regulations, as they've been in the past, although the political pressures have been intense and we're hopeful the Fed will not be susceptible to that kind of influence."

Because today was a federal holiday, neither the Fed nor the Treasury could be reached for comment.

With regard to influence peddling, Representative Steve Cohen, Democrat of Tennessee, last week accused William B. Wichterman, a top presidential adviser and former lobbyist, of helping speed the regulations through to finalization in the interests of his former client, the National Football League.

Both Mr. Pappas and the insider said that to their knowledge, Fred F. Fielding, the White House's chief attorney to whom Mr. Cohen's letter was addressed, has yet to begin a formal investigation into Mr. Wictherman's alleged involvement with the UIGEA.

IGN also understands that Senator Jon Kyl, the Arizona Republican and one of I-gaming's longest-running opponents, has been active in pressuring the Treasury to finalize and implement the proposed regulations.

Representative Barney Frank, meanwhile, has called for the heads of the Treasury and Fed to delay implementation of the proposed UIGEA regulations.

In a letter to Treasury Secretary Henry M. Paulson Jr., Mr. Frank wrote that he was "deeply disappointed" to learn that the Treasury "is proceeding with what I consider to be unseemly haste in issuing regulations implementing the Unlawful Internet Gambling Enforcement Act."

Mr. Frank's letter, a copy of which was sent to Fed Chairman Ben S. Bernanke, drew attention to the definition of "unlawful Internet gambling" -- considered ambiguous -- and the possibility that banks would be forced to block transactions that aren't for Internet gambling.

Should the regulations finally be enacted, one I-gaming lobbyist thinks President-elect Barack Obama's administration is unlikely to take an active role in reversing them.

"I don't think the incoming Obama administration will risk any political capital on weighing in on reversing any such regulations, because those regs, as well as UIGEA, are great examples of bad law, from drafting, intent and implementation perspectives," Conway A. Downing Jr., head of the Washington Gaming Group, told IGN by e-mail.

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