On Monday, January 19th, the regulations of the Unlawful Internet Gambling Enforcement Act (UIGEA) will be enacted. The new rules were part of last-minute “midnight rule-making” by the outgoing Bush Administration. Midnight rules stretched across a broad spectrum of industries, which included internet gambling. Recently, Congressman Jerrold Nadler (D-NY) introduced the Midnight Rule Act to prohibit controversial agendas from being pushed through in the future.
In November, the U.S. Treasury and White House Office of Management and Budget approved the regulations of the UIGEA, which are set to go into effect one day before President-elect Barack Obama takes office in the United States on January 20th. HR 34 focuses on rules adopted in the final 90 days of an outgoing administration. The Act calls for a 90 day review period by incoming administration before rules actually take effect. If an agency head disagrees with any rule made, he or she can express their opinion on the Federal Register and then submit “a notice of disapproval to the congressional committees of jurisdiction.”
There are a few exceptions to the Midnight Rule Act. First, regulations that represent an “imminent threat to health or safety or other emergency” are not reviewable. Rules that are “necessary for the enforcement of criminal laws” are also not subject to the Act’s power. Rules relating to national security and international trade agreements will also immediately take effect and may not be scrutinized by an incoming administration. An outgoing President must issue an Executive Order to push these rules forward.
Poker players will want to take note that, if passed, the Act retroactively applies to all rules developed after October 22, 2008, which would include the regulations of the UIGEA. Whether the new administration would rescind the rules of the 2006 law is unknown. However, it has been well-publicized that the President-elect is a poker player.
Nadler officially introduced the bill on January 6th and it was referred to the House Committee on the Judiciary. According to the Library of Congress, no co-sponsors have signed onto it at the time of writing. Congressman Nadler’s Press Secretary, Ilan Kayatsky, told Poker News Daily, “This is important. No President should be able to slip anything in last-minute for which he’s not politically accountable.” Kayatsky noted that the American Civil Liberties Union (ACLU) and several women’s rights organization were among the many groups that have contacted the Congressman’s office about the Midnight Rule Act. Environmental groups have also been affected by the outgoing Bush Administration’s midnight rules.
The Congressional Review Act, which was passed in 1996, allows Congress to overturn rules and regulations. However, according to Kayatsky, “It’s a little more cumbersome to get things done. It requires Congressional action on each individual rule that is enforced.” Some have speculated that President-elect Obama may utilize this law to overturn several of the midnight rules slated to go into effect. Whether internet gambling is on his radar is unknown.
The UIGEA was passed in the final moments of the 2006 Congressional session, ushered through Congress by then-Senate Majority Leader Bill Frist (R-TN). In the end, the legislation was attached to the SAFE Port Act, an unrelated port security measure, and passed through the nation’s lawmaking body. Two years later, the regulations came to fruition. What effect they will have on the internet gambling industry remains to be seen. Compliance by the financial services industry is required by December 1st.
The rapidly deteriorating economy in the United States and around the world may also hinder the ability of the Midnight Rule Act to be addressed in the near future. On Thursday, Bank of America received $20 billion from the U.S. Government. Citigroup announced that it would divide into two separate entities and electronics retailer Circuit City stated that it will liquidate its entire inventory. Although governments at all levels are in dire straights for revenue, it remains to be seen when internet gambling or online poker legislation will see the light of day.
