Key Congressional Committee Votes to Clarify Internet Gambling Ban

Legislation would ease burden for U.S. financial services institutions

(Washington, D.C. – September 16, 2008) – A bill that would relieve a significant burden
on U.S. financial services companies forced to implement a ban on Internet gambling
passed a critical hurdle in Congress today. The Payments System Protection Act (H.R.
6870), approved today by the House Committee on Financial Services, would direct the
Department of the Treasury and Federal Reserve System, in consultation with the
Attorney General, to appoint a special Administrative Law Judge to define the types of
unlawful online gambling and conduct an economic impact study on the costs for
compliance. The enactment of the bill would have the practical impact of delaying
implementation of the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA)
regulations through a process designed to ensure that the regulations do not impair the
functioning of the U.S. payments system, or inappropriately prevent legal online
transactions.

The Committee also approved an amendment to the bill that requires federal regulators
to issue regulations to financial institutions within 60 days of enactment to block all
Internet gambling wagers on sports, except for those involving horse racing, dog racing
and jai-lai. Under the amendment, unlawful sports operators and sites would be
specified by the U.S. Treasury on a list that would be consulted by financial institutions
to implement the prohibition. The legislation and amendment were introduced by House
Financial Services Committee Chairman Barney Frank (D-Mass.).

“This important vote acknowledges that the previous attempt to prohibit Internet
gambling was overly burdensome and unworkable,” said Jeffrey Sandman,
spokesperson for the Safe and Secure Internet Gambling Initiative. “We hope this vote
indicates a willingness of Congress to develop a more sensible approach towards
Internet gambling. Rather than prohibit an activity millions of Americans enjoy in the
privacy of their homes, just as they can do in a casino, Congress should create a
framework to regulate Internet gambling as a way to protect consumers and collect
billions in much-needed federal revenue.”

Rep. Frank introduced the Payments System Protection Act in response to concerns
raised by the financial services industry that the proposed rules to implement UIGEA
forced banks and other payments services to determine for themselves what types of
online activity are lawful and what are not, when the federal government itself was
unable to specify the distinction between lawful and illegal online gambling activities.

Rep. Frank stated that once the bill is passed “at least the banks will know what is and
isn’t illegal.”

Rep. Frank listed representatives of the U.S. financial services industry, including the
Chamber of Commerce, The Financial Services Roundtable and the Credit Union
National Association, as all supporting the bill. Each had previously criticized the
proposed regulations implementing UIGEA, describing them as unworkable and
burdensome.

Sources present at the Committee mark-up of the bill stated that the language
exempting sports prohibitions from the further rule-making and mandating sports-only
regulations to go forward within sixty days from enactment appeared to have been
developed in consultation with the sports leagues. Accordingly, the last-minute objection
made by the leagues to the bill immediately before the committee vote came as a
surprise.

According to Sandman, at the mark-up Rep. Frank expressed his disappointment with
the sports leagues, stating that he was working to do “everything that they wanted.”
Sandman said, “Congressman Frank felt it was inappropriate for the sports leagues to
tell other people they can't do what they want to do."

During debate on the bill and amendment, Rep. William Lacy Clay (D-Mo.) stated his
view that the position of the sports leagues was disingenuous. Rep. Clay asked what
was different between wagering on sports via the Internet and wagering on sports in a
land-based casino in Las Vegas.

Additional Internet Gambling Legislation

The Internet Gambling Regulation and Enforcement Act of 2007 (H.R. 2046), introduced
last year 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).

Rep. McDermott also 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 youth in foster care. The bill also includes provisions to
encourage responsible Internet gambling behavior and an awareness of unsafe
practices, something problem gambling advocates praise.

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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