O-Poker

It looks like some Republicans may have gotten on board with poker being a skill game. Hopefully, they can get the UIGEA clarified and have poker carved out as a skill game.

Link to Pokernews article:


Four Republican Congressman call for UIGEA 'Unlawful Internet Gambling' Clarification

An open letter written by four Republican Congressman to the heads of the Federal Reserve Board and U.S. Treasury calls for a more "deliberative" approach for crafting regulations for the implementation of the Unlawful Internet Gambling Enforcement Act (UIGEA) and strongly urges that a formal definition of "unlawful internet gambling" itself be finalized before the law's required rules are placed into effect.

In the July 25th letter, addressed to Henry M. Paulson, Secretary of the Treasury, and Ben S. Bernanke, Chairman of the Board of Governors of the Federal Reserve System, the four Republican Congressman -- Judy Biggert (R-IL), Jim Gerlach (R-PA), Christopher Shays (R-CT) and Kevin McCarthyR-CA) – proclaim their continuing support for UIGEA but assail the bill's "vague language" and undue regulatory burden on affected industries, especially small businesses. Along with asking for a formal definition of "unlawful internet gambling," the four ask for two additional steps in the UIGEA process: to transition the current rulemaking endeavor to a formal process headed by an Administrative Law Judge; and to conduct Regulatory Flexibility Analysis on the UIGEA's true financial burden upon affected businesses. The initial fiscal numbers quoted by UIGEA's backers regarding the true cost of implementation and regulation have been shown to have little connection to the bill's projected impact on the banking industry and other business sectors.

The letter also represents the first open Republican split regarding implementation of the UIGEA. Previous efforts to overturn or undo the UIGEA's language had, with only minimal exceptions, been driven by Democratic interests. Votes on these measures, including the bill championed by Barney Frank, had produced splits largely along party lines.

The body of the letter by the four Congressmen follows:


Dear Secretary Paulson and Chairman Bernanke,

We are writing to request that you bring clarity to the Federal Reserve Board's (Board) and U.S. Department of the Treasury's (Treasury) proposed regulations to implement the Unlawful Internet Gambling Enforcement Act (UIGEA).

As proposed, these regulations do not provide clear guidance to the public, in particular those that engage in online skill games, or regulated industries regarding what constitutes "unlawful internet gambling." We believe that implementing such vague law and regulations, while holding the public and regulated industries liable for noncompliance, is an abdication of the federal government's responsibility to both the public and unregulated industries. In addition, vague UIGEA law and regulations could be unnecessarily burdensome and costly to the public and particularly small businesses.

Therefore, we urge the Board and Treasury to, before finalizing UIGEA regulations, clarify the specific activity that constitutes "unlawful internet gambling," providing guidance to both the public and the regulated industries that are tasked with blocking financial transactions related to "unlawful internet gambling." It is our understanding that the UIGEA intended to uphold state and federal laws regarding "unlawful internet gambling" that existed prior to UIGEA's date of enactment. Nevertheless, we encourage the Board and Treasury to confirm our understanding in its UIGEA regulations. To accomplish this, we request that you take the following actions.

First, transition the current rulemaking process to a formal rulemaking process involving an Administrative Law Judge (ALJ) or a similar official who can provide legal advice. This official should examine the various federal and state laws and determine precisely what constitutes "unlawful internet gambling" as well as which financial institutions a regulated industry is required to block under UIGEA law and regulations.

Second, we request that undertake Regulatory Flexibility Analysis to clearly evaluate the regulatory burden that would be imposed on businesses of all sizes but especially small businesses.

Simply put, we believe that it is possible that if UIGEA law and regulations are implemented with the vague language we described above, a judge may be eventually required to answer the question of "what is unlawful internet gambling." It makes fiscal sense to resolve this question before saddling the public, regulated industries, small businesses, and courts with uncertain UIGEA law and regulation.

We voted for UIGEA and support it now. As such, we have resisted legislative efforts which may have the effect of delaying interminably the implementation of UIGEA and its regulations. However, we are concerned about the legal and operational viability of a rule that leaves so much to interpretation and, accordingly, urge the Board and Treasury to take a more deliberative path to a workable rule as we have outlined in this letter.

Thank you for your consideration of our request. We look forward to your response.

Sincerely,

Judy Biggert
Jim Gerlach
Christopher Shays
Kevin McCarthy

I've been pretty busy lately and haven't had a chance to post much. I'm hoping things slow down towards the end of the week and I can get back to posting more.

For now, I wanted to share a pretty cool video that I found through a link on Nat Arem's blog.

Be Careful. They're coming for you!!!

Link to Press Release

Barney Frank is introducing a bill today that would regulate online gambling. I'm not sure how well it will be received, but it is a great start.

Below is the a copy of the press release:

Frank Introduces Internet Gambling Regulation and Enforcement Act of 2007


Washington, DC - Rep. Barney Frank (D-MA) today introduced the Internet Gambling Regulation and Enforcement Act of 2007 that would create an exemption to the ban on online gambling for properly licensed operators, allowing Americans to lawfully bet online.

The Act establishes a federal regulatory and enforcement framework to license companies to accept bets and wagers online from individuals in the U.S., to the extent permitted by individual states, Indian tribes and sport leagues. All such licenses would include protections against underage gambling, compulsive gambling, money laundering and fraud.

“The existing legislation is an inappropriate interference on the personal freedom of Americans and this interference should be undone,” said. Rep. Frank.

In 2006, the House passed the Unlawful Internet Gambling Enforcement Act, restricting the handling of payments by U.S. financial institutions for unlawful forms of Internet gambling. That law prohibits the use of payment instruments by such institutions to handle the processing of any form of Internet gambling that is illegal under U.S. federal or state law.

Traditional forms of legalized gambling already exist in nearly every state. By continuing to prohibit Internet gambling in the U.S., the U.S. has left Americans who choose to gamble online without meaningful consumer protections. The proposed legislation would institute practical and enforceable standards to bring transparency to Internet gambling and provide consumers the protections they expect and deserve.

The Financial Services Committee will hold a hearing entitled, “Can Internet gambling be regulated to protect consumers and the payments system?” at a date to be determined in June, 2007.

Q&A About the Internet Gambling Regulation and Enforcement Act of 2007:

LICENSE REQUIREMENTS

How will the government ensure that the proper consumer protections are put in place?

No applicant would receive a license unless the following requirements with respect to any Internet bet or wager, at a minimum, are met:

• Safeguards to ensure the individual placing the bet or wager is 18 years of age or older

• Safeguards to combat fraud and money laundering and compulsive gambling

• Mechanisms to ensure all appropriate taxes and fees are collected from individuals and the licensees

• Safeguards to ensure that the individual placing the bet or wager is physically located in a jurisdiction that permits that form of Internet gambling

What safeguards would be implemented to ensure that licenses are granted only to qualified Internet gambling operators?

Applicants for a license would be required to provide comprehensive financial statements and corporate structure documents, and to agree to be subject to U.S. jurisdiction and all applicable laws related to Internet gambling. No license would be granted to any applicant convicted of a criminal violation of any law relating to gambling, money laundering, fraud or other financial laws. Licensing would be handled by the U.S. Treasury through its anti-money laundering agency, the Financial Crimes Enforcement Network (FinCEN).

CONSUMER SAFETY

How does the bill protect consumers?

The framework set forth in the bill would for the first time effectively regulate Internet gambling, thus making it possible to address underage and compulsive gambling, neither of which are prevented under prohibition regimes. Regulation combined with proven technology would establish a system of effective controls to block children and compulsive gamblers from gambling.

How can restrictions against underage Internet gambling be enforced?

Existing technology can enforce requirements that licensed Internet gambling operators restrict minors’ access to Internet gambling. For example, when registering at a gambling site, the customer would be required to provide a range of information including name, address, date of birth, telephone number and details of an identity document, such as a driver’s license or social security number. This information would then be passed on to the Payment Service Provider (PSP) and run through the Know Your Customer (KYC) system to confirm that the data being provided matches against several separate sources of information and is in fact accurate. The operators may also have KYC systems in place.

Operators could also request a physical copy of documentation, such as a utility bill and/or a copy of the customer’s identity document, for further verification.

Is it possible to identify and enforce restrictions on compulsive gambling?

There are a number of techniques that can be used, from systems that limit the total amount of funds that may be wagered based on credit limits, to the use of public databases that include details used to identify persons who have chosen to exclude themselves from online gambling. Customers could be added to this list at their own request.

Additionally, limits can be placed on the number of transactions a customer can put through on a daily, weekly and monthly basis, by the operator acting alone, by the credit card company, by the PSP, or by all three. In the event that an unusual spending pattern is noticed, these transactions could automatically be put on hold for further investigation.

FINANCIAL INTEGRITY OF INTERNET GAMBLING TRANSACTIONS

How will a license and regulation framework protect against money laundering and fraud?

Funds entering a gambling operator’s system are already resident in the banking network somewhere. That is, the funds have previously been deposited into a bank account at some stage, subjected to stringent KYC requirements, and which greatly increases the traceability of any funds entering the system. All transactions can also be checked at the time of authorization against a number of anti-fraud, money laundering and terrorism databases.

What additional security measures could be put in place to protect the consumer from merchant fraud?
Payment Service Providers could set-up escrow accounts for each licensee in which money is set aside for a period of time to ensure that when a financial transaction is successfully contested the operator immediately refunds the consumer. Therefore, any claim regarding the use of an unauthorized credit card could automatically result in a full repayment to the principal credit card holder.

STATES AND INDIAN TRIBES

Would individual states and Indian tribes have the option to opt-out of legalized Internet gambling?

To protect States’ and Indian tribes’ rights to control gambling activities within their respective geographic borders, the Act permits States and Indian tribes either to prohibit Internet gambling activities or impose limits on various types of Internet gambling activities.

Is it possible for restrictions to be enforced if individual states decide to “opt-out” from permitting persons in their states from Internet gambling?

Yes. In using the Internet, a customer’s IP address is broadcast to the operator, which can then be used to identify the state in which a customer resides with a 99 percent level of accuracy. This information is also made available and compared to the customer’s registration information. In the event the information differs, the transaction is not approved and the customer is prevented from engaging in Internet gambling.

SPORTS BETTING

If professional sports leagues and college associations decide to opt-out from allowing bets and wagers on their sporting activities, could that be enforced?

Yes. Under the proposed legislation, all licensed Internet gambling operators would be prohibited from accepting bets or wagers on sports leagues or associations that have opted-out. In the event of a violation, the operator’s license could be withdrawn and the operator may be prohibited from applying for a new license. As part of its contract with the Internet gambling operator, the PSP would be required to enforce these requirements throughout the collection and payment process.