ONLINE GAMBLING FOE ACCUSED OF MISINFORMATION

27 June 2008

Has the UIGEA resulted in a decline in online gambling?


The American Banker published an op-ed article by Republican Congressman Spencer Bachus this week which contained misinformation regarding the Unlawful Internet Gambling Enforcement Act, according to the Safe and Secure Internet Gambling Initiative (SSIGI)

Bachus was pre-emptively arguing against HR5767, the proposed Payments System Protection Act introduced for markup in the House Financial Services Committee Tuesday by Representatives Barney Frank and Rob Paul. The proposal seeks to halt the implementation of supporting regulations for the UIGEA, which have been widely condemned for a lack of precision (see previous InfoPowa reports).

Jeffrey Sandman, a spokesman for the SSIGI commented: "It is unfortunate that Rep. Bachus is using scare tactics to argue for the continued prohibition of Internet gambling."

"The reality is that regulated Internet gambling, which is clearly working in the U.K. and other parts of the world, can utilise technology to offer strong consumer protections to combat underage and compulsive gambling in the U.S. Currently, prohibition leaves millions of Americans susceptible as they continue to gamble in an underground, uncontrolled marketplace without such guaranteed protections."

Sandman contradicts a statement by Bachus that since the UIGEA was passed, gamblers and businesses engaged in Internet gambling have been deterred by the fear it would be enforced.

"Publicly traded foreign online operators left the U.S. market - privately held companies did not," Sandman points out. "Global Betting and Gaming Consultants, a U.K. based organization that provides economic research on worldwide gambling activities, found that there was a short-term dip in Internet gambling in North America right after the law was passed due to the consequences of the regulated companies pulling out, leaving the market to unregulated ones.

"Over the past year, online gambling has increased by 10 percent. Millions of Americans continue to gamble online, despite the attempt to prohibit Internet gambling."

Sandman also takes issue with Bachus's statement that UIGEA passed with the support of a broad coalition that included.the American Bankers Association.

"Representatives from the American Bankers Association, Financial Services Roundtable, Wells Fargo & Co. and Credit Union National Association unanimously opposed regulations proposed to implement UIGEA in testimony to the House Committee on Financial Service's Subcommittee on Domestic and International Monetary Policy, Trade, and Technology on April 2, 2008," remarks Sandman. "They all questioned the fundamental approach taken by Congress in enacting legislation to force financial institutions to police online gambling."

Sandman quotes Wayne Abernathy, the American Bankers Association's executive vice president of financial institutions policy and regulatory affairs, who said: "The UIGEA and the Proposed Rule do not provide a rational path towards halting unlawful Internet gambling. The path leads to an increased cost and administrative burden to the banks and an erosion in the performance of the payments system, but it will not result in stopping illegal Internet gambling transactions.

"Imposing this enormous unfunded law enforcement mandate on banks in place of the government's law enforcement agencies is not likely to be a successful public policy."

Rep. Bachus's assertion that tens of thousands of young people are becoming compulsive, addicted gamblers as a result of Internet gambling is also questioned by the SSIGI.

Sandman says that a report released in September 2007 by the U.K. Gambling Commission, which regulates Internet gambling in Britain, reveals that the prevalence of problem gambling has not increased over the last eight years despite the advent of Internet gambling. The British Gambling Prevalence Survey 2007 found that the rates of problem gambling were 0.6 percent and 0.5 percent of the gambling population, the same percentage of problem gamblers as reported in the last gambling participation survey conducted in 1999.

Allegations by Bachus that the UIGEA was essential because enforcement tools were so inadequate are also tackled by Sandman, who points out that top experts have testified before Congress that a regulatory framework for Internet gambling would protect consumers and ensure the integrity of Internet gambling financial transactions.

"Leaders in the fields of internet payment processing, identity identification and online safety [have] described how existing systems and technology have proven successful in combating underage and compulsive gambling and protecting against money laundering, fraud and identity theft," he adds.

Sandman closes his attack on the Bachus misinformation by reminding readers that the Internet Gambling Regulation and Enforcement Act (H.R. 2046) introduced by Barney Frank last year, seeks to establish a regulatory and enforcement framework for licensed gambling operators to accept bets and wagers from individuals in the U.S.

It would include a number of built-in consumer protections, including safeguards against compulsive and underage gambling, money laundering, fraud and identity theft. States would also have the right to control what, if any, level of Internet gambling is permissible within their borders and could apply additional taxes and restrictions.

Online Casino News courtesy of InfoPowa