UIGEA Deadline Is Looming

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Treasury and AG's office have to come up with banking regulations soon

Card Player magazine issued a timely reminder this week that the regulations backing the US Unlawful Internet Gambling Enforcement Act fall due in two month's time.

The UIGEA was rammed through Congress in the last quarter of 2006 in some late night pre-recess maneuvering which saw Senator Bill Frist attach the Bill to a must-pass Safe Ports Act. President Bush subsequently signed the Bill into law, precipitating large scale international disruption and corporate losses.

Under the Act, the US Treasury and the US Attorney General's offices are tasked with framing, within 270 days, a set of regulations for US banks to apply in order to further the objective of the Act - to prevent or disrupt online financial transactions to online gambling companies.

Barry Shulman of Card Player Magazine succinctly described some of the problems that the US financial system might encounter in trying to do this: "Basically, the Department of Justice was given 270 days to come up with a set of rules for banks to use as guidelines. That 270-day period ends on July 9.

"The making of those rules and guidelines falls under the purview of Attorney General Alberto Gonzales' responsibility. However, Gonzales has been under fire for many months now. On Thursday, April 19, senators of both parties challenged Gonzales' candor about the dismissal of eight U.S. attorneys and questioned his fitness to remain in office.

"During the inquiry, Senator Jon Kyl (R-AZ), one of the original co-sponsors of the UIGEA, closely questioned Gonzales on how the Justice Department plans to implement the regulations needed to carry out the UIGEA."

"Expert impressions of Gonzalez's reaction to Mr. Kyl was one of indifference.  On one hand you had an Attorney General who wanted to appease the Arizona Senator.  On the other hand, you had an Attorney General who didn't seem to place Internet gambling as a top priority.  And why should he?  Gonzalez is fighting for his life.  And quite frankly, Kyl's law serves as a perfect example of what is wrong with the current administration."

To recap from previous reports on the firing of 8 US attorneys and the subsequent appearance before a Senate enquiry of the AG, the respected gaming lawyer Lawrence Walters of GamblingAttorneys.com summarised the interrogation of Gonzalez by Kyl thus:

"It appears as though Sen. Kyl is meeting some resistance from the Attorney General’s Office in developing the kind of regulations he envisions as most effective in implementing the UIGEA. The Attorney General obviously has a lot on his mind these days, and online gambling may not be the most important issue on his plate.

"However, Gonzales has significant motivation to keep the Senators happy – particularly those on the Oversight Committee. But the practical reality involved in identifying and blocking specific accounts known to be used for online gambling transactions is rearing its ugly head, forcing the Attorney General to wrestle with the real world implications of this effort."