Kyl Confronts New U.S. Attorney General over UIGEA

In Friday’s confirmation hearing of Eric Holder, the nominee for Attorney General of the United States, Arizona Senator Jon Kyl, a proponent of the Unlawful Internet Gambling Enforcement Act (UIGEA), asked the candidate about his stance on internet gambling in the United States. Holder alluded to the fact that he would continue to pursue those who remain in the industry.

In the transcript of the hearing, which originally appeared in the New York Times newspaper, Kyl inquires of Holder, “The question that I’d ask and wanted just to get confirmed for the record is that you indicated that under your leadership, the Department of Justice would continue to aggressively enforce the law against the forms of internet gambling that DOJ considers illegal.” Holder responded affirmatively.

The question then becomes what the U.S. Department of Justice considers to be illegal. An e-mail sent to Poker News Daily by the Interactive Media Entertainment and Gaming Association (iMEGA) noted that the U.S. Department of Justice “has testified that it considers all internet gambling, even on horse racing, illegal.” In a mark-up hearing held during the 2008 calendar year, House Financial Services Committee Chairman Barney Frank (D-MA) claimed that whether wagering on horse racing online was legal “depended on what department you asked.”

Kyl then acknowledged the recent approval of the UIGEA’s regulations and asked Holder if he would “continue to be vigilant in enforcing those regulations to shut off the flow of cash from this illegal activity.” Holder replied, “Yes, that is my position. That’s what I will do.” The final regulations of the UIGEA were approved as part of midnight rulemaking by the outgoing Bush Administration. They are slated to go into effect on Monday, January 19th, one day prior to the swear-in ceremony of incoming President-elect Barack Obama. That is, unless Congressman Jerrold Nadler (D-NY) is able to push HR 34, the Midnight Rule Act, successfully into law. More than likely, the bill will need to be acted upon swiftly in order to be relevant. All midnight rules adopted after October 22nd, 2008 would be fair game for the new administration to dispute. That time frame includes the UIGEA’s regulations.

Joe Brennan, iMEGA’s Chairman, told Poker News Daily, “We’re concerned that the new Attorney General would commit the Department of Justice to staying the course on internet gambling. Throughout the industry, there’s been a great deal of hope that an Obama Administration would be more reasonable about the course of internet gaming.” The UIGEA was pushed through Congress at the end of 2006 by outgoing Senate Majority Leader Bill Frist (R-TN), who successfully attached the bill to the SAFE Port Act. Kyl was instrumental in ushering it through the Senate, where it was passed by unanimous consent.

The definition of the term “unlawful internet gambling” in the UIGEA has caused consternation from the financial services industry, online poker players, and nearly every opponent of the law. The definition of the term as it appears in the SAFE Port Act is as follows: “The term ‘unlawful internet gambling’ means to place, receive, or otherwise knowingly transmit a bet or wager by any means which involves the use, at least in part, of the internet where such bet or wager is unlawful under any applicable Federal or State law in the State or Tribal lands.” Frank introduced HR 6870, the second version of the Payment Systems Protection Act, in order to clarify what exactly was acceptable. Although the bill was passed out of Committee in September, it was not acted upon in 2008.

Brennan commented on what Holder’s comments may have signaled: “We’ll have to hope that Holder was simply placating Kyl during a confirmation hearing, rather than signaling his intention to aggressively enforce the UIGEA.”

Read the full text of the Senate Confirmation Hearing of Eric Holder.

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