Positive Hearing on U.S. Internet Gambling Regulation

22 July 2010

In three months the Unlawful Internet Gambling Enforcement Act (UIGEA) will turn 4 years old. The regulations put in place to govern how to enforce this law just came into effect in June and now, finally, Barney Frank and his bill HR 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act is moving forward to try and change it.

Wednesday, a hearing was held by the House Financial Services Committee that allowed financial institutions (who currently carry the burden of enforcing most of the UIGEA policy), representatives of law enforcement as well as gamblers themselves to all testify in an attempt to change the internet gambling laws in the U.S. Most viewed the hearing as a step, albeit a small one towards changing the US views on online gambling but the hearing also showed there is still strong opposition as there where at times tense moments and a lot of heated debates.

Speaking for the Credit Union National Association, Ed Williams, President and Chief Executive Officer for the Discovery Federal Credit Union talked about being for some sort of online gambling regulation stating the current law is to ambiguous to fully be affective,

“In short, the law (UIGEA) makes credit unions and other financial institutions liable if transactions with illegal Internet gambling providers are approved,” said Williams, “but it does not provide us with a definition of ‘unlawful Internet gambling,’ much less a list of illegal Internet gambling providers.”

One of the heated exchanges during the meeting came from Rep. Joe Baca (D-CA) who is against the regulation being set forth by Barney Frank when he spoke about the Indian Nations in America. He claimed that Native Americans would, “de facto be giving up their sovereignty if they agreed to a 2% tax to the federal government on online gambling profits.”

This raised the eyebrows of Lynn Malerba of the Mohegan Tribe of Connecticut who will soon become the chief of the tribe . Malerba strongly disagreed with Rep. Baca and told the congressman that she would welcome a 2% tax on such things as the tribes slot revenue because currently it is around 25%.

The tensest part of the day was during the Poker Players Alliance representative Annie Duke and the panel, particularly, when Rep. Spencer Bacchus (R-AL) brought up the scandal that involved UltimateBet and noted the affiliation of Duke and the site.

Duke turned the tables on the Congressman however saying that the scandal was precisely the reason the federal government should be involved in online gambling,

“The site self-regulated and refunded all the money to its customers. I would prefer to have something like HR 2267 so that the government could oversee that regulation. I think that the customers of that site were lucky that they were playing under a site with new management that behaved in an honest way and refunded them,” said Duke. “The one individual who perpetrated the crime and breached the software has not been prosecuted because unfortunately there is no jurisdiction to do so.”

Most claim that despite some of these exchanges that the meeting was positive and though there may be some changes to the original writing of the bill, Barney Frank is expected to bring the bill back to the committee for a mark-up and vote in the next couple of weeks. If he garners enough votes in committee, this legislation can then be slated to go to the full House of Representatives for debate.

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