Online Gambling Bill Confuses The Feds And Frustrates The Banks - 04-03-08

April 3 - According to an Associated Press report, the current online gambling bill in force is seen as being too vague according the Federal Officials tasked with enforcement.  In a Hearing held this week, they admitted to struggling to understand how to enforce it.

The Head of the Federal Reserve's bank operations division told the hearing that the definition of unlawful Internet gambling lies at the core of the problem, and that federal interpretation of the law is difficult as there aren't clear definitions at Congress level. 

The bill was snuck past Congress in 2006 when Rep. Senator Bill Frist, attached it to a a port security bill to get it approved.

At the time, online gambling was already illegal in most states in the US, but that did not stop US residents from spending over $15 billion per year with off-shore gambling operators. 

The Frist bill, or UIGEA, aims to completely outlaw Internet gambling but clearly lacks substance in definition. It refers to often ambiguous and outdated state and federal laws and passes the buck to the financial institutions by prohibiting them from accepting payments intended to settle online wagers. It is no surprise that the  financial services industry is up in arms over the difficulty involved in determining where money is actually going. Online gambling companies can very easily disguise transactions.

A representative of the American Bankers Association said that  it "makes financial institutions the police, prosecutors, and judges in place of real law enforcement officers."

The UIGEA legislation targets the gambling business' bank more so than the players' bank. The banks are expected to pout processes in place to determine the nature of transactions and ensure that illegal online gambling transactions are rejected. A unanimous observation in the hearing was that the bill does not define illegal online gambling.

The bill has come in for huge criticism from all banks, poker players and industry observers. Poker Players claim the law does not apply to them and horse racing was exempted, although it is ambiguous when trying to determine of online horse wagering is by definition illegal.

House Financial Services Committee Chairman Barney Frank, D-Mass. calls the bill "A rather bizarre piece of legislation."

The bill has caused further ramifications including trade disputed with countries like Antigua and now the European Union.

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