US Legislators Move to Defer UIGEA

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Anticipating a delay in the processing of Barney Frank's the Internet Gambling Regulation, Consumer Protection, and Enforcement Act of 2009, nineteen members of the Congress have called on the authorities to put on hold the implementation of the regulations of the UIGEA. These regulations were passed last year in the dying moments of the Bush administration and go into effect from December 1, 2009.

These Congressmen and women are largely Democrats though they include three Republicans, namely Ron Paul of Texas, Judy Biggert of Illinois and Peter King of New York. They have written to U.S. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke stating, “We are writing to strongly urge you to extend the date of compliance for the final regulations implementing the Unlawful Internet Gambling Enforcement Act by one year.”

They have given their reasons for the need to defer the implementation of the UIGEA. In the first instance they point out that the economic crisis is far from over. The UIGEA rules will place an additional burden not only on the financial services industry but also on the regulatory mechanism and neither are in a position to take on this burden at this time. An example has been cited of certain financial services organizations stopping the processing of online payments to state lotteries because it is not clear whether state lotteries are covered under the UIGEA or not.

These legislators also point out that there are several bills in the House and in the Senate that are aimed at repealing the UIGEA. These bills have considerable support. For example Barney Frank's proposed bill, HR 2267, has already 61 sponsors and the numbers are growing by the week. The only reason that these bills have not been debated is because the economic issues need to be given priority. Therefore it is only fitting that the UIGEA be delayed by a year so that these bills are able to generate the required debate in the Congress. The legislators have also added that the UIGEA regulations are essentially flawed and that they were passed in abnormal hurry by an administration on its way out.

Finally, the passing of the UIGEA has led to the exit of major European online gaming operators from the American market. This not only caused losses that have been estimated at billions of dollars to the American economy but have also put the United States in the dock for violating World Trade Organization norms.

Though the U.S. Treasury confirmed receipt of the letter it has not yet responded to it. Despite widespread condemnation the Department of Justice is going ahead with its seizure of funds related to online gambling. Meanwhile, the US 3rd Circuit Court of Appeals held that the UIGEA is not bad in law but is not applicable across the United States. It is valid only in those states where online gambling is explicitly illegal.

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