Press Coverage
Lawmakers Prod Justice Department On Online Gambling Rules
CongressDaily
December 20, 2007
Sixteen House Republicans have criticized the Treasury Department and Federal Reserve for issuing vague rules for banks and credit card companies under a 2006 law that banned most forms of Internet gambling. In a letter to both agencies, the lawmakers wrote that they feared the proposed rule implementing the law could have major unintended consequences, especially for banks and credit card companies that are required to block such transactions. Under the law, banks and credit card companies are prohibited from processing payments for online bets. Businesses that accept credit cards, wire transfers or any other bank instrument to process those payments could be prosecuted. The House GOP members wrote in a Dec. 12 letter that the proposed rules would impose a legal and financial burden on lending institutions and credit card companies. "The proposed rule governing this area of law is overly broad and does not provide the regulated industry with sufficiently clear and consistent guidance," wrote the members, led by Rep. Pete Sessions, R-Texas. Given such little guidance from regulators, the lawmakers wrote, many banks have been overly restrictive in allowing credit payments for fear of violating the law, prohibiting some online skill games that might be legal under the 2006 law. Banking groups also have been vocal in their opposition to the proposed rules. Credit Union National Association President Dan Mica recently wrote House Financial Services Chairman Frank asking for a moratorium on the law's implementation until "a more reasonable approach can be considered by Congress and the regulators." Frank has been a critic of the law and has sponsored legislation that would permit online gambling in the United States through a federal framework to license providers. Frank has said the gambling lobby, which has been divided on the issue of Internet gaming, would have to generate support for the measure to move it through Congress. Other lawmakers weighed in with their thoughts to the Federal Reserve and Treasury before the comment period ended last week. House Judiciary Chairman Conyers and Reps. Shelley Berkley, D-Nev., and Robert Wexler, D-Fla., wrote that the Justice Department has taken the position that all forms of Internet gambling are illegal under the 1961 Wire Act, but the 2006 law contained carve-outs for horse racing, state lotteries and Indian tribes. On the other side, a group of eight House and Senate Republicans in support of the law urged the agencies to finalize a strict rule, asking the federal government to develop an information-sharing list to help law enforcement and banks monitor Web sites and offshore companies that are in violation of the law. The group, led by House Financial Services ranking member Spencer Bachus, R-Ala., and Senate Minority Whip Kyl, also wrote that the agencies should detail the penalties that banks can take against businesses that try to process illegal bets under the law. The proposed regulations allow banks to impose fines, deny service and terminate business with firms that transmit Internet gambling. "There is no further guidance about the nature of these penalties or how many infractions would trigger such penalties ... the regulations should apply a penalty or probationary status for the first offense," they wrote.