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BGonline.org Forums
Deadline for Compliance with Internet Gambling Ban Delayed for Six Months (long)
Posted By: Alfred Mamlet In Response To: INTERNET GAMBLING BAN DELAYED SIX MONTHS (Perry Gartner)
Date: Monday, 30 November 2009, at 9:56 p.m.
Perry, thanks for the opportunity to clarify. In my haste I simply copied and pasted the headline from a Washington news service. I agree that a fuller explanation would be helpful.
In 2006, Congress passed the Unlawful Internet Gambling Enforcement Act of 2006 ("Act") pushed by some conservative ("moral majority") legislators. The Act required the Treasury Department and the Federal Reserve to enact regulations to implement the Act. The regulations would require banks, credit card companies and other financial institutions to take stops to identify and block "unlawful Internet gambling" transactions. Essentially, they were supposed to stop payments to or from unlawful Internet gaming sites.
In November 2008, the Treasury and Fed issued final regulations with a compliance date of December 1, 2009 (tomorrow). In September 2009, a Petition was filed by the Poker Players Alliance and 2 horse racing associations asking for a 12 month delay of the compliance date. They claimed that many institutions would not be able to meet the compliance date, in part because there was no clear definition of the key term, "unlawful Internet gambling." The Petition was supported by a number of banks and by members of Congress, including Senate Majority Leader Reid and House Financial Services Committee Chairman Barney Frank. One of the points made by the legislators is that they want to consider new legislation that would better define "unlawful Internet gambling." The agencies acknowledged that there is a challenge for financial services companies to define "unlawful Internet gaming" and agreed to a 6 month postponement of the compliance deadline.
It is not clear what will happen in six months. It is possible that Congress will clarify the situation in that time frame, but I wouldn't bet on it. It is also possible that there will be additional extensions. The final regulations said that a financial institution could rely on documentation provided by a commercial customer regarding the legality of Internet gambling activities.
The underlying federal law on what is "unlawful Internet gaming" is not clear. There are arguments that the federal statutes, like the Wire Act, do not apply to the Internet, only cover gambling on sports, or do not prohibit betting on games of skill (like backgammon and poker). These legal issues haven't been resolved because most cases have been resolved (plea bargains) before testing the limits of the current law.
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