For Immediate Release
Contact: Michael Waxman
(202) 872-0010 or (202) 872-4860
Financial Services Chairman Moves to Protect Financial Service
Industry and Clarify Lawful Internet Gambling Activities
(Washington, D.C. – September 11, 2008) – House Committee on Financial Services
Chairman Barney Frank (D-Mass.) today introduced the Payments System Protection
Act of 2008, which would direct the Department of the Treasury and Federal Reserve
System, in consultation with the Attorney General, to create a formal process to define
what types of online gambling are unlawful to make it possible for the U.S. financial
services industry to comply with the current ban on Internet gambling, as required by the
Internet Gambling Enforcement Act of 2006, or UIGEA. In response to concerns raised
by the financial services industry about the burden and ambiguity in the proposed rules
to implement UIGEA, the bill would require federal regulators to appoint a special
Administrative Law Judge to define unlawful Internet gambling activities and conduct an
economic impact study on the costs for compliance.
“Chairman Frank is doing the right thing by saying it is unfair to burden U.S. financial
service companies with the job of the Internet gambling police at a time when their
undivided attention ought to be on the economy,” said Jeffrey Sandman, spokesperson
for the Safe and Secure Internet Gambling Initiative. “The reality is that UIGEA is
dangerous to the payments system and unlikely to stop anyone from using the Internet
to play poker, bet on horses, or engage in other types of wagering.”
Earlier this year, Reps. Frank and Ron Paul (R-Tex.) introduced the first version of the
Payments System Protection Act (H.R. 5767), which attempted to stop the U.S.
government from taking any further steps in developing regulations to implement
UIGEA. Ultimately, the bill, along with an amendment offered by Rep. Peter King (RN.
Y.), was defeated in the House Committee on Financial Services.
During the vote on the Payment System Protection Act on June 25, 2008, Rep. Frank
told his colleagues that Congress is putting the U.S. financial services industry at risk by
not clarifying the regulations to enforce UIGEA and defining unlawful Internet gambling
activities. “Hijacking the financial payment system at a time when it is under major
stress and giving them the job of carrying out an unclear mandate doesn’t make sense,”
he said.
Representatives of the U.S. financial services industry, including the Chamber of
Commerce, The Financial Services Roundtable, Credit Union National Association, and
National Association of Federal Credit Unions, pledged their support of the original
version of the Payments System Protection Act and King amendment in letters to Rep.
Frank and members of the Financial Services Committee.
“I wish to be clear that we do not support the notion that financial services companies
should be ‘deputized’ to police gambling activity in any form or function,” wrote Mr. Steve
Barlett, president and CEO of The Financial Services Roundtable on June 23, 2008.
“While we would support the passage of H.R. 5767 as introduced, I agree that the King
Amendment makes essential improvements to a deeply flawed law and therefore
support its inclusion.”
Concerns about the impact of UIGEA were also raised by the Americans for Tax Reform
and Competitive Enterprise Institute in a letter to members of the Committee on
Financial Services dated June 23, 2008, which said that “if implemented as proposed in
current regulations, UIGEA would have a number of serious, negative consequences for
the nation’s economy.”
Concerns about the proposed rules to implement UIGEA were previously raised at a
congressional hearing on April 2, 2008 (“Proposed UIGEA Regulations: Burden without
Benefit?”) and in hundreds of comments submitted to the Department of the Treasury
and Federal Reserve System. At the hearing, representatives of the Department of the
Treasury and Federal Reserve System acknowledged the challenges U.S. financial
institutions will face in attempting to comply with UIGEA.
The Internet Gambling Regulation and Enforcement Act of 2007 (H.R. 2046), introduced
by Rep. Frank, would establish an enforcement framework for licensed gambling
operators to accept bets and wagers from individuals in the U.S. It includes a number of
built-in consumer protections, including safeguards against compulsive and underage
gambling, money laundering, fraud and identity theft. A companion piece of legislation
that would ensure the collection of taxes on regulated Internet gambling activities, the
Internet Gambling Regulation and Tax Enforcement Act of 2008 (H.R. 5523) was
introduced by Congressman Jim McDermott (D-WA).
Additionally, Rep. McDermott introduced, the Investing in our Human Resources Act
(H.R.6051), which would direct new revenue generated by regulated Internet gambling
activities to be spent on job training for those in the declining sectors of the economy
and educational assistance for foster care youth. The bill also includes provisions to
encourage responsible Internet gambling behavior and an awareness of unsafe
practices, something which has been praised by problem gambling advocates.
About Safe and Secure Internet Gambling Initiative
The Safe and Secure Internet Gambling Initiative promotes the freedom of individuals to gamble online with the proper safeguards to protect consumers and ensure the integrity of financial transactions. For more information on the Initiative, please visit www.safeandsecureig.org. The Web site provides a means by which individuals can register support for regulated Internet gambling with their elected representatives.
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