When the long-awaited regulations of the Unlawful Internet Gambling Enforcement Act (UIGEA) were released last week, many questioned what impact they would have on the industry, if any. The regulations still fail to define that the term “unlawful internet gambling” means, instead reiterating that previous Federal and State statutes should be the focal points to determining what is allowed under the law.

Professor I. Nelson Rose, perhaps the leading legal expert in the internet gambling industry, told Poker News Daily that the regulations focus on banks building relationships with their merchants in order to ensure that money funneling in and out of accounts is not being used for illegal internet gambling: “If a bank sets up a relationship with a new commercial customer, they have to make sure they’re not doing unlawful internet gambling. To me, the whole thing seems silly and a tremendous waste of time.”

The text of the rules is chalk full of comments stating that the term “unlawful internet gambling” is not defined by the UIGEA. The regulations include the following analysis: “The Act does not set out the precise activities that are covered by the term… Creating such a list would require the Agencies to formally interpret those laws that are written and enforced by other entities, such as State legislature and law enforcement agencies.” Instead, the text explains that due diligence will be paramount in the UIGEA’s enforcement.

Rose described his perception of the UIGEA’s effectiveness given the new rules: “I don’t think it’s going to make much difference. Publicly trading companies have stopped taking bets from the U.S. If other companies in the industry were violating American law before the regulations came out, then they’re still violating it. If they weren’t violating American law, then they still aren’t.” Rose added that individual transactions will not be scrutinized.

Joe Brennan, President of the Interactive Media Entertainment and Gaming Association (iMEGA), stated in a press release, “It is not possible for our banks and credit card companies to reconcile so many differing state and federal laws on what is considered legal and illegal forms of gambling.” Rose added that the vagueness of the law may have been a result of the authors of the regulations simply giving up.

Poker News Daily asked Rose if he would have advised online poker rooms like Party Poker and Pacific Poker to pull out of the market back when the UIGEA was pushed through Congress by former Senate Majority Leader Bill Frist in 2006. The passage of the UIGEA changed the poker landscape entirely, pushing PokerStars and Full Tilt Poker, who continued to accept customers from the United States, into the front of the industry. Rose commented, “Back when it happened, I certainly would not have advised pulling out immediately the way that Party Poker did. They withdrew before the bill was signed into law. I don’t think that the UIGEA changed anything. Now, the regulations under the UIGEA don’t change anything. But, that’s not to say that what they were doing was legal.”

Part of the reason that Party Poker and Pacific Poker pulled out of the United States was because both publicly traded companies deferred to their shareholders’ interests. Party Gaming and 888 Holdings, the parent companies of Party and Pacific, respectively, are both traded on the London Stock Exchange. Share prices for each of these companies are given at the top of Poker News Daily.

An article that appeared on Politico stated that newly-elected President Barack Obama may try to undo some of the last-minute actions of the Bush Administration, including the implementation of the UIGEA regulations, which are set to go into effect on January 19th. Compliance by financial institutions is not required until December 1st, 2009.

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