Lawmakers failed to agree on setting a clear definition of illegal Internet gambling to go along with a ban on online betting passed in 2006. The Federal Reserve and the Treasury Department have been unable to finalize rules to implement the ban because Congress didn’t clearly define online gambling when it passed legislation less than two years ago.
The House Financial Services Committee rejected a bill Wednesday that would have prohibited the Treasury Department and the Federal Reserve from proposing and implementing regulations to enforce the Unlawful Internet Gambling Enforcement Act.
In its mark-up session, the Committee adopted an amendment proposed by Representative Peter King that would not only stop the implementation of any UIGEA regulations, but would also force the Treasury Department, the Justice Department and the Federal Reserve to sit down and define unlawful Internet gambling.
The King amendment was defeated by the full committee with a vote of 32 for and 32 against. The original bill proposed by Representatives Barney Frank and Ron Paul was defeated in a voice vote.
The defeat is a blow to both the online gambling industry, which has been looking for ways to repeal the UIGEA, and the banking industry, which wants no part in trying to regulate the online gaming industry.
Senate Republicans, pushed by then-Majority Leader Bill Frist of Tennessee, had attached the online gambling ban to an unrelated port security bill in a rush of year-end legislation in 2006.
Banks and other financial institutions have complained that they are being forced into a law enforcement role because the Internet gambling ban prohibits them from accepting payments to settle online wagers without giving them a clear set of rules.
„The financial institutions are in the position of being told not process bets, but it’s not clear what is legal and what is illegal,“ said Representative Barney Frank, the committee’s chairman. He said financial institutions had been given „a job that is undoable.“
The committee’s top Republican, Representative Spencer Bachus of Alabama, argued that gambling is the fastest-growing addiction in the United States and having it online makes it accessible to children. „The banks have decided that this is a financial burden,“ Bachus said. „We have decided, on the other hand, that our children are worth protecting.“
„The PPA is surprised that the Financial Services Committee today failed to clarify what constitutes ’unlawful Internet gambling’ under the Unlawful Internet Gambling Enforcement Act (UIGEA),“ said Alfonse D’Amato, chairman of the Poker Players Alliance. „The King Amendment would have required a separate formal rulemaking with an administrative law judge to determine the definition of unlawful Internet gambling.“
„The Federal Reserve, Department of Treasury and the banking industry have all testified before Congress that the lack of a definition of ’unlawful Internet gambling’ makes it extremely difficult if not impossible to enforce this law and would result in a broader review and denial of financial transactions because they could possibly be deemed unlawful under UIGEA,“ D’Amato added.
Internet gambling already was considered mostly illegal in the U.S., but the games are played by many U.S. residents on sites hosted overseas in a business worth more than USD 15.5 billion a year. U.S. bettors have been estimated to provide at least half that revenue.
The 2006 congressional ban sought to outlaw Internet gambling by blocking payment methods for it, but didn’t offer a clear definition everyone could agree on, instead referring to existing federal and state laws which themselves provoke differing interpretations.