Recently, four Congressmen wrote to U.S. Secretary of the Treasury Henry Paulson and Chairman of the Federal Reserve Paul Bernanke. Their goal was simple: Clarify the Unlawful Internet Gambling Enforcement Act as to what is legal and illegal under its jurisdiction. Because the law was hustled through Congress in the final moments of the 2006 Congressional session, the UIGEA is chalked-full of vague underlying language that has proven to be problematic in its implementation. It was never debated on the floor of the Senate. Instead, the measure was attached to an unrelated port security bill and passed by “unanimous consent.’ The four Congressmen all voted for the UIGEA itself when the bill was up for vote in the House of Representatives during the summer of 2006.
The letter formally asks Bernanke and Paulson to appoint legal counsel to “evaluate the various federal and state laws and determine precisely what constitutes ‘unlawful internet gambling’ as well as which financial transactions a regulated industry is required to block under UIGEA law.” The UIGEA states that what was illegal prior to its passage in 2006 remains illegal. Nevertheless, laws concerning internet gambling vary by state. There is also a question of what activities online are legal at the federal level as governed by the Wire Act of 1961 and other related legislation, including the Interstate Horseracing Act of 1978.
At a hearing in April, representatives from the Treasury and Federal Reserve testified that the UIGEA was anything but enforceable. The two organizations, along with major banks and other financial institutions, could not identify what was legal and what was not. This confusion spurned New York Congressman Peter King, a Republican, to introduce an amendment to Barney Frank and Ron Paul’s HR 5767 that would have required both groups to work together with the U.S. Department of Justice to formulate regulations. Instead, Alabama Congressman Spencer Bachus utilized dubious data to lead the charge against the amendment, ultimately leading to the bill’s defeat. Bachus claimed that a McGill University study showed one-third of college students who gambled online attempted suicide. No such study ever took place.
The letter also requests that the Treasury and Federal Reserve “undertake Regulatory Flexibility Analysis to clearly evaluate the regulatory burden that would be imposed on businesses of all sizes.” Under the UIGEA, the financial system is charged with both interpreting the law’s directives as well as policing the entire industry. No assistance or guidance is given from other branches of government. The timing could not be worse, as sky-high numbers of home foreclosures and other difficulties have plagued the financial sector in the United States.
Representatives Judy Riggert, Jim Gerloch, Christopher Shays, and Kevin McCarthy authored the letter, which is dated July 25th. All four are Republicans and voted for the UIGEA initially. According to it, they “have resisted legislative efforts which may have the effect of delaying… the implementation of UIGEA.”
Riggert represents the 13th District of Illinois, which includes the cities of Joliet, Naperville, and Lockport. Gerloch represents the 6th District of Pennsylvania, which includes Pottstown, Norristown, and Ardmore. Shays represents the 4th District of Connecticut, which encompasses Bridgeport, Greenwich, and Stamford. McCarthy represents the 22nd District of California, which includes Bakersfield, Templeton, and Lancaster.