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UIGEA Regulations Being Fast-Tracked to Finalization

NFL, Bush Administration Want UIGEA Rules Finished

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UIGEAAs the Bush administration comes to a close, government agencies are being pressured by the outgoing party to iron up the technicalities on several passed bills so that they will be in place before Barrack Obama is sworn in on Jan. 20.

The Unlawful Internet Gambling Enforcement Act (UIGEA) is one of those bills.

According to both the Poker Players Alliance and the Safe and Secure Internet Gambling Initiative, the UIGEA is being fast-tracked toward implementation before Bush leaves office.

The Safe and Secure Internet Gambling Initiative is an industry group that “promotes the freedom of individuals to gamble online with the proper safeguards to protect consumers and ensure the integrity of financial transactions,” according to its literature.

On Oct. 20, through pressure from White House officials, specifically a former lobbyist who used to work for the NFL, the Federal Reserve and the Department of the Treasury sent a draft of UIGEA rules to the Office of Management and Budget (OMB) for final review.

In order for the proposed rules to be implemented before Bush leaves office, the OMB must sign off on them by Nov. 19. That date is important because, by law, a 60-day Congressional review period must take place before they become official. Sixty days after Nov. 19 takes Bush right up to his last full day in office, ensuring that the UIGEA will undergo no more delays under Bush’s watch.

Congress members will be able to comment on the proposed rules during this time, and the OBM could send them back for more revisions, but in this case, John Pappas, Executive Director of the PPA, says chances are no changes will be made and the rules will make it through the OMB by the time Bush leaves office.

It’s a common maneuver by outgoing parties to fast-track rules needed for laws that were passed during its term, and the UIGEA is just one of a handful that are being hurried on through as Bush’s administration comes to a close.

“This Administration still seems dead-set on trying to build a legacy out of this issue,” Pappas said.

On Friday, Pappas and a regulatory attorney hired by the PPA met with officials from the OMB and the Treasury to express their concerns about the proposed rules, particularly that online poker will be “unintentionally swept into the UIGEA regulations because banks won’t be able to make determinations,” Pappas said.

A three-page letter drafted by the PPA outlining the concerns the poker organization has with the UIGEA was given to OBM officials, and he described his meeting this way:

“There was a lot of head-nodding, but no reaction one way or another that they are or they are not going to get these rules out before the key date of Nov. 19.”

The PPA’s letter, as well as all the letters submitted to the OMB concerning the UIGEA regulations, can be found by visiting www.whitehouse.gov/omb/oira/1505/meetings/816.html.


Call to Action

The PPA sent its members an “Action Alert” concerning this, and is asking members to call the Federal Reserve and tell them not to approve the UIGEA regulations. The numbers are: For consumer complaints, 888-851-1920 or public affairs, 202-452-2955.

The PPA is asking its members to outline several points:

  • The federal agencies responsible for our nation’s economy should not be focused on Internet poker regulations.
  • Finalization of the UIGEA rules will add additional burdens on our already crippled financial systems.
  • Internet poker is a game of skill and form of recreation for millions of Americans; it should be exempted from the UIGEA.
  • Please do not finalize the UIGEA regulations until their impact on our banking systems and average Americans has been fully studied.


A Long, Strange Trip

Employees of the Federal Reserve and the Department of the Treasury are already more than a year behind schedule in getting a finalized set of rules that the banks will follow to comply with the UIGEA to the OBM.

The two departments struggled writing the rules because the language of the UIGEA isn’t specific when defining exactly what transactions banks will be required to block once the regulations are finalized. Instead of defining exactly what kinds of transactions should be blocked, the authors of the UIGEA only demanded that all transactions used to fund “unlawful Internet gambling” must be blocked.

The problem is that besides the obvious gambling activities, like sports betting and online casino gambling, there are plenty of other activities that fall in a gray area, online poker being the biggest one. The laws that Treasury and Reserve officials were forced to reference when writing the UIGEA regulations have been on the books for decades. Most were written to stop bookies from collection on sports bets over phone lines across state borders, and none specifically address Internet gambling.

The first draft of the proposed rules was released to the public in December 2007 for a 90-day review and comment period. A Congressional hearing then took place where representatives of several banking organizations, including the American Banking Association and Independent Community Bankers of America, joined officials from the Reserve and Treasury departments to express concern about the vague language and lack of clarity of the rules when defining exactly what kind of Internet transactions must be blocked.

The UIGEA was passed as an attachment to the Safe Port Act of 2006 in October that year. A majority of Congress members didn’t even know the UIGEA was part of the sweeping “must-pass” bill that funded an increased security presence at the nation’s ports.

Versions of the UIGEA have been proposed within the last 10 years, but always stalled in Congressional committees. The conservative proponents of the UIGEA used the last-minute maneuver, which came in the 11th hour during the final Congressional session on a Friday before legislators broke for a planned election-year recess, by piggy-backing the bill on the Safe Port Act.


Playing Football

Besides the conservative authors of the UIGEA, the NFL is pushing for it to go into affect as soon as possible.

According to the Safe and Secure Internet Gambling Initiative, a Bush official who once worked as a lobbyist for the National Football League is behind the push to rush the regulations through before Bush leaves office.

The NFL has voiced its support for the UIGEA because it will snuff out illegal sports wagering that it thinks could threaten the integrity of the game. According to the Safe and Secure Internet Gambling Initiative, Rep. Steve Cohen (D-Tenn.) asked the White House what role Deputy Director of Public Liaison William Wichterman had in encouraging the Treasury to send over the final draft of the regulations.

Cohen was told through a letter authored by White House Counsel Fred Fielding that Wichterman “has been a source of considerable political pressure to speed this regulation through” and that “the NFL has been among the most vocal advocates for the proposed rule and the underlying law. I am sure you will agree that, at a minimum, the appearance of a conflict of interest is undeniable.”

Wichterman had been a paid lobbyist for the NFL as late of March 2008 and is a recent addition to Bush’s staff.

 
 
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