Obama Administration Delays Internet Gambling Ban Implementation

online-gambling1Department of the Treasury Secretary Timothy F. Geithner and Federal Reserve Chairman Ben S. Bernanke today announced agreement to delay for six months, until June 1, 2010, required compliance with the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). The move blocks regulations to implement the legislation which requires the financial services sector to comply with ambiguous and burdensome rules in an attempt to prevent unlawful Internet gambling transactions. House Financial Services Committee Chairman Barney Frank (D-MA) has scheduled a House Financial Services Committee hearing for December 3 to discuss Internet gambling legislation and the opportunity to effectively regulate the industry.

“We see this move by the Obama Administration as a decision to halt implementation of UIGEA in order to give Congress time to enact an alternative approach of regulating Internet gambling instead of prohibiting it,” said Michael Waxman, spokesperson of the Safe and Secure Internet Gambling Initiative. “This decision is the latest evidence that momentum is building for a shift in policy and a rewrite of U.S. Internet gambling laws to provide for regulation and taxation instead of prohibition. Over the next six months, Congress should act to create a framework that regulates Internet gambling to protect consumers and collect billions in much-needed revenue for critical federal and state government programs.”

Representatives of the financial services industry, including the Chamber of Commerce and Financial Services Roundtable, have stated publicly that rules to implement UIGEA are ambiguous, burdensome and unlikely to stop Americans from gambling online. In testimony before Congress in April 2008, Department of the Treasury and Federal Reserve System representatives acknowledged the challenges U.S. financial institutions will face in attempting to comply with UIGEA, especially given the chance of multiple interpretations of what may or may not be illegal Internet gambling activity. Recognizing the danger UIGEA posed to the U.S. banking system, the House Financial Services Committee voted in 2008 to suspend UIGEA implementation.

The Internet Gambling Regulation, Consumer Protection and Enforcement Act of 2009 (H.R. 2267), legislation introduced by Chairman Frank in May 2009, would establish a framework to permit licensed gambling operators to accept wagers from individuals in the U.S. The legislation, which has attracted a bipartisan group of more than 60 co-sponsors, mandates a number of significant consumer protections including safeguards against compulsive and underage gambling, money laundering, fraud and identity theft. Additional provisions in the legislation reinforce the rights of each state to determine whether to allow Internet gambling activity for people accessing the Internet within the state and to apply other restrictions on the activity as determined necessary.

The Internet Gambling Regulation and Tax Enforcement Act (H.R. 2268), introduced by Rep. Jim McDermott (D-WA) as a companion to Chairman Frank’s bill, is anticipated to generate nearly $42 billion over 10 years for the U.S. Treasury primarily through ensuring that applicable individual and corporate taxes and license fees on regulated Internet gambling activities are collected.

About Safe and Secure Internet Gambling Initiative

The Safe and Secure Internet Gambling Initiative promotes the freedom of individuals to gamble online with the proper safeguards to protect consumers and ensure the integrity of financial transactions. For more information on the Initiative, please visit www.safeandsecureig.org. The Web site provides a means by which individuals can register support for regulated Internet gambling with their elected representatives.