PESSIMISTIC OUTLOOK FOR U.S. ONLINE GAMBLING

30 March 2007

American financial services group thinks study is more likely than repeal in the immediate future

Stanford Financial Group, a privately held, wholly owned global group of financial services companies has a pessimistic outlook when it comes to online gambling in the U.S.A. in the wake of the UIGEA, it seems. Its current report suggests that whilst a study of the regulation of online gambling is possible, it is unlikely that the Unlawful Internet Gambling Enforcement Act will be successfully repealed.

"We do not believe there is the political will to overturn this legislation or to carve out poker from the prohibition," reads the report. "More likely would be legislation authorizing the National Institute of Science or a similar non-partisan think tank to study whether Internet gambling could be effectively regulated and taxed. We also expect the Federal Reserve to release shortly the rules governing how banks should stem the flow of financing the Internet gambling websites.

"In our view the Internet gambling ban [on financial transactions with online gambling entities] benefited from a perfect storm of political forces. Those who want to repeal the ban will not enjoy those favorable political wins. As a result, we expect the ban to remain and the bank regulations will take effect this year."

The report suggests that currently publicised attempts to overturn the new law will "...open Democrats to charges of being in bed with Internet gamblers. It also would link Democrats with disgraced lobbyist Jack Abramoff."

Stanford feels that another difficulty could be that Republicans might accuse Democrats of "tampering with criminal investigations" and that strong anti-online gambling manouevring by Senator Jon Kyl could muster enough support to overcome any filibuster attempt.

"Given these problems, we see only a 10 percent chance that Congress lifts the gambling ban," the report opines, going on to comment that it likewise holds out little hope that poker will be defined as a game of skill and may thus be exempted from the provisions of the UIGEA. It does, however suggest that there is, at 20 percent a better chance for poker to prevail.

Stanford is a little more upbeat when it comes to the question of whether there will be a study to determine whether online gambling in the USA can be regulated.

"This is the option that has the greatest chance of passing. It provides a means for [Representative Barney] Frank and others who opposed the prohibition to declare victory without actually overturning the prohibition. We doubt that Kyl and others would expend substantial political capital to block an 18-month to 24-month study of whether it is possible to regulate and tax Internet gambling."

Stanford's report concludes with the observation that by late June, the U.S. Federal Reserve should have banking regulations in place that will in all likelihood exempt checks and ACH transactions, predicting that the Federal Reserve Bank has the discretion to make these exemptions and probably will. Even so, the banks won limited protection from court injunctions and may argue for further exemptions that expand beyond just ACH transactions and checks.

Online Casino News courtesy of InfoPowa

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