Once again, last minute actions were taken regarding the Unlawful Internet Gambling Enforcement Act (UIGEA). In the waning moments of the 2006 Congressional session, the UIGEA was attached to the SAFE Port Act, an unrelated port security bill, and passed by unanimous consent in the Senate. On Wednesday, the regulations of the UIGEA were finalized as part of so-called midnight rule-making by the Bush Administration and will be implemented on January 19, 2009, one day before Barack Obama is sworn in as the 44th President of the United States.
Banks and other financial institutions have until December 1st, 2009 to comply with the UIGEA rules. However, its regulations still do not spell out what is illegal and legal under the law, instead deferring to existing state and federal statutes. The rules read, “Creating such a list [of what is legal and what is not] would require the Agencies to formally interpret those laws that are written and enforced by other entities… The Agencies believe that appropriate due diligence conducted by participants opening accounts would be the most effective method for preventing unlawful internet gambling businesses from gaining access to the payment system.” You can view the full UIGEA regulations by visiting the website of the Poker Players Alliance (PPA).
The UIGEA defines a bet as “the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game subject to chance.” Fantasy sports receive an exemption in the following language: “Participation in any fantasy or simulation sports game or educational game” is allowed, subject to certain restrictions which the fantasy sports industry has had to adopt. These include up-front prize declarations and rosters not being composed of every player from a certain team.
The definition that the poker and political worlds have been talking about is that of “unlawful internet gambling.” The UIGEA states that the term refers to a “bet or wager [that is] unlawful under any applicable Federal or State law in the State or Tribal lands in which the bet or wager is initiated, received, or otherwise made.” Any bets allowed under the Interstate Horseracing Act of 1978 are allowed, although Congressman Barney Frank, the Chairman of the House Financial Services Committee, stated in a mark-up hearing that online horse racing’s legality ultimately “depended on which department you asked.”
The lack of clarity as to what is allowed under the UIGEA is noted multiple times in the final regulations. HR 6870, the second version of the Payments System Protection Act, sought to develop a list of what is permissible under the law. In September, the bill passed by a 30-19 vote in the House Financial Services Committee. With a lame duck session potentially beginning next week, the attention of Congress will most likely center on the faltering economy. If HR 6870 is not acted upon prior to the adjournment for 2008, it must be reintroduced in 2009.
An article that appeared on Politico outlined some hope for the online poker industry. The piece described the significance of the Congressional Review Act of 1996: “The law contains a clause determining that any regulation finalized within 60 legislative days of congressional adjournment is considered to have been legally finalized on the 15th legislative day of the new Congress, likely sometime in February.” Therefore, it’s conceivable that when Obama takes office, he will look to overturn some of the last-minute rulemaking of the Bush Administration.
Poker News Daily learned last week that the regulations of the UIGEA were sent from the U.S. Treasury to the Office of Management and Budget (OMB) on October 21st. The Bush Administration had a target date of November 19th to pass the rules initially in order to have a 60 day review period expire before Obama took office.
We’ll have more for you on this breaking story right here on Poker News Daily.
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