Congressional Letter Asks for Clarity on UIGEALetter Takes Treasury Department Federal Reserve Board to Taskby Bob Pajich | Published: Jul 30, 2008 | |
 
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Four members of Congress signed a letter sent to both the Treasury Department and the Federal Reserve System requesting the departments give members of Congress more clarity on the rules and regulations that will be used to implement the Unlawful Internet Gambling Enforcement Act (UIGEA).
“As proposed, these regulations do not provide clear guidance to the public, in particular those who engage in online skill games, or regulated industries regarding what constitutes ‘unlawful Internet gambling’” the letter said. “We believe that implementing such vague law and regulations, while holding the public and regulated industries liable for noncompliance, is an abdication of federal government’s responsibility to both the public and regulated industries. In addition, vague UIGEA law and regulations could be unnecessarily burdensome and costly to public and particularly small businesses.”
Signed by Representatives Judy Biggert (R-Ill.), Christopher Shays (R-Conn.), Jim Gerlach (R-Penn.), and Kevin McCarthy (R-Calif.), the politicians go on to request that the two departments responsible for writing the rules and regulations that will be used to implement the UIGEA — the first draft of which was presented in December 2007 — define exactly what “unlawful Internet gambling” is.
The UIGEA calls for banks to stop transactions between its customers and companies that provide “unlawful Internet gambling.” The bill, as passed by Congress in 2006 by being attached to the “Safe port Act of 2006” in a last-minute maneuver mounted by former Republican Congressman Bill Frist and company, fails to define exactly what actually constitutes unlawful Internet gambling.
The UIGEA requires banks to monitor every online banking transaction done in the U.S. and to stop the ones they believe might be going to online gambling sites. Without a clear definition of what those sites are, the banks most likely will be overly cautious and stop all transactions they think could be illegal. Besides the obvious gambling sites, such as online sports books or slots parlors, transactions between perfectly legal sites and U.S. customers will be stopped.
This law is so far-reaching, confusing, and intrusive to the banking industry that banking officials have expressed their concerns about the UIGEA since conception. Simply put, banks say the current system cannot handle processing all of the information the UIGEA will require them to process. The lack of clarity on what exactly constitutes unlawful Internet gambling is the tallest hurdle on a track full of them that the federal government has to navigate before the rules of the UIGEA are in place.
The authors of the letter, Biggert, Shays, Gerlach, and McCarthy, say they voted for the UIGEA and support it, but go on to write: “However, we are concerned about the legality and operational viability of a rule that leaves so much to interpretation and, accordingly, urge the (Federal Reserve) Board and Treasury to take a deliberate path to a workable rule as we have outlined in this letter.”
But the oversight of not defining unlawful Internet gambling — or the purposeful ambiguity by the UIGEA’s main authors Reps. John Kyl and Bob Goodlatte — is giving members of the Treasury Department and Federal Reserve System serious problems as they draft the rules. They expressed their concerns during an April hearing when they told members of Congress that they doubted banks would be able to follow the law because of how unclearly it was written.
But the representatives of the Board and the Treasury Department told members of Congress during April's hearing that they had an extremely difficult time writing the UIGEA’s rules because of the lack of clarity. Without the actual law undergoing a revision, the two departments burdened with the task of coming up with the regulations for banks, as well as the banks themselves, will be flying blind as the federal government looks on.