FLAK FOR PROPOSED UIGEA REGULATIONS

16 November 2007

"....the entire set of policies and procedures would be useless, lack practical utility."


US government officials, who were tardy in releasing the first drafts of the regulations giving teeth to the Unlawful Internet Gambling Enforcement Act, have given interested parties until December 12 to comment, and the public criticism has not been slow in coming.

This week the Center for Regulatory Effectiveness, a D.C.-based lobby group headed by former Office of Management and Budget executives released a report in response to the proposed regulations, which were submitted well after the Congressional deadline of 270 days by the Treasury Department.

The UIGEA seeks to disrupt financial transactions with online gambling companies, and the CRE focused mainly on the fact that the Treasury has not provided "objective, supported estimates" of the burden that the proposed regulations could have on impacted groups such as small businesses. These estimates are required in terms of the Paperwork Reduction Act, the CRE points out.

The lack of clarity on what gambling transactions are permissible is also criticised as increasing the burden on companies required to enforce the regulations.

"The [US government] agencies have declined to state which Internet gambling transaction are unlawful and have recognized the difficulty of doing so for reasons including 'the fact that the legality of a particular Internet gambling transaction might change depending on the location of the gambler at the time the transaction was initiated, and the location where the bet or wager was received,'" the CRE highlights.

Although the agencies are not required to list a set of restricted transactions, the proposed rule in reality requires designated payment systems and non-exempt processors to determine what is and is not a restricted transaction in each jurisdiction in which they do business.

"Without such a determination, which underlies all identification and blocking tasks, the entire set of policies and procedures would be useless, lack practical utility and, thus, could not be approved by OMB (the Office of Management and Budget)," the CRE report concludes.

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