UIGEA Strikes Again
The initial push to get the Unlawful Internet Gambling and Enforcement Act through on a port security bill happened back in 2006—Friday the 13th of October, to be exact. And while today isn’t Friday or October, it is the 13th and is symbolic once again as the Treasury Department and the Federal Reserve just issued new rules that will be implemented one day before President-elect Barack Obama moves into the White House.
These new rules essentially put the onus of financial institutions to ban the processing of payments from most gambling websites, rather than on the operators themselves. Credit-card transactions, electronic transfers and checks related to online gambling are also affected.
This essentially eliminates any ambiguity of the Act and effectively makes online gambling illegal. And the rules outlined today gives banks and other financial houses until December 1, 2009, to comply with the ban, which is estimated to cost $100 million the first year and over one million resource hours.
When the move was made, House Financial Services Chairman and outspoken UIGEA opponent Barney Frank (D., Mass.) has always called for the federal government to regulate online gambling instead of banning it. He and other democratic lawmakers, bankers and internet gaming moguls have all opposed the move. And Mr. Frank sent a letter earlier this week to Treasury Secretary Henry Paulson to urge a delay of the new rules until Congress and the Obama administration had a chance to review it next year.
Frank called the new situation "a disaster" and said his work to overturn it would continue.
In spite of its far-reaching scope, there are some exemptions including online betting on horse racing, interstate lotteries and fantasy sports. Little consolation, however, for poker and casino fans.