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UIGEA regulations proposed

Discussion in 'Casino Industry Discussion' started by jetset, Oct 2, 2007.

    Oct 2, 2007
  1. jetset

    jetset Ueber Meister CAG

    Occupation:
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    PROPOSED UIGEA REGULATIONS PUBLISHED

    Just short of a year since it was signed into law, regulations are up for discussion


    US government officials were given 270 days to produce regulations supporting the Unlawful Internet Gambling Enforcement Act when it was passed by Congress late last year. And after weeks of 'will he, won't he' speculation, President George Bush signed the unpopular legislation into law on October 13, starting a train of business events that cost international companies billions of dollars and created untold hardship for employees and investors.



    The UIGEA, which seeks to ban financial transactions with online gambling companies, entered a new phase Monday as government tried to stave off determined legal attacks on the law by the Internet Media Entertainment & Gaming Association (iMEGA).



    Way over their deadline (see previous InfoPowa reports) US Treasury and Justice officials finally got around to publishing the 52 pages of regulations that enforce the law....but only as a proposal on which comments are invited before December 12, so it would appear that practical implementation will not take place for some time yet.



    Importantly, the rules govern only those that are participants in a designated payment system or are financial transaction providers. An end-user or customer is not defined as a participant and is therefore not covered by the proposed rules.



    Certain restricted transactions will be exempt from regulation if the government determines that "it is not reasonably practical to identify and block, or otherwise prevent or prohibit the acceptance of such transactions." For instance the proposed rules exempt all participants in the ACH (automated clearing house), check collection systems, and wire transfer systems, except the beneficiary's bank, or the bank acting on direct behalf of an illegal gambling business.



    There will be no master list of unlawful internet gaming businesses...at least not immediately. While government has stated some of the benefits to participants by creating such a list, there are problems of cost, accuracy issues and liabilities associated with its creation. The time to accurately research and interpret all of the state, federal, and tribal gaming laws was cited as a major impediment.



    The proposed regulations appear to stop short of requiring U.S. banks to block cheques their customers make to online casinos, but require banks to halt debit and credit card payments. It also bars US bank customers such as online casinos from receiving Internet gambling proceeds.



    The Treasury Department and the Federal Reserve require that bank policies and procedures that are "....reasonably designed to prevent payments being made to gambling businesses in connection with unlawful Internet gambling," lie at the heart of the enforcement.



    The proposed rule seeks to implement the Unlawful Internet Gambling Enforcement Act, prohibiting payments made for 'illegal gambling' through U.S.-based financial institutions, including payments made via credit cards, electronic funds transfers and checks.



    The proposal gives examples of the policies and procedures the financial institutions should put in place, However, it doesn't spell out what illegal gambling activities are, because the act relies on underlying federal and state laws to determine those issues.



    For example, under the proposed rule, credit-card companies and money-transmitting businesses are expected to put procedures into place to monitor and analyse payment patterns of individuals to detect suspicious activity.



    Initial reaction from banking industry officials seemed to be that regulators had addressed their biggest concern about the new law. The enforcement agencies concluded it was "not reasonably practical" for the banks to identify and block customers from sending cheques and making some other types of transfers.



    "It looks like they took a very practical and pragmatic approach. They did not ask us to do the impossible," said Steve Kenneally, a spokesman for America's Community Bankers.



    The proposed regulations were immediately criticised by one gambling industry group, the Poker Players Alliance.



    "Deputizing private U.S. financial institutions to determine what are lawful and unlawful transactions will lead to the monitoring and blocking of the personal and lawful financial transactions of many of their customers who wish to play games of skill, like poker, on the Internet," the Alliance said.



    "Poker players, the American banking community, and anyone who values Internet and personal freedoms should be troubled by this intrusive rule. Deputizing private U.S. financial institutions to determine what are lawful and unlawful transactions will lead to the monitoring and blocking of the personal and lawful financial transactions of many of their customers who wish to play games of skill, like poker, on the internet. This seems more like the actions of Iran than the USA. We are hopeful that sensibility will prevail before these rules are finalized," said PPA Chairman, former U.S. Senator Alfonse D'Amato.



    "Congress should act immediately to pass legislation which will effectively regulate Internet poker and provide the proper safeguards to prevent minors from participating in Internet gaming, preserve states' rights and ensure privacy and security of online transactions," he added.



    The president of iMEGA, Edward J. Leyden, commented on the proposed regulations, saying:



    "In its ongoing lawsuit in the U.S. District Court for the District of New Jersey, iMEGA has pointed to the unconstitutional, chilling effect that the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006 has already imposed on all of our digital civil rights by stifling beneficial innovation of the Internet and impeding our otherwise content-neutral financial system.



    "The proposed regulations jointly promulgated today by the Federal Reserve Board of Governors and the Department of the Treasury would, if anything, aggravate these already intolerable circumstances.



    "The regulations which are proposed under UIGEA continue a trend to regulate our Internet freedoms by passing the responsibility to define legal and illegal purposes behind a web-based financial transaction on to neutral third parties who then become victims of the system. In this case the victims caught between the governments criminal punishment and ill-defined regulations are the payment system providers credit card companies, banks, third party payment clearing houses.



    "The regulations, while they are supposed to provide for a system which identifies legal transactions between persons who are allowed to enjoy Interactive gaming, instead virtually condemn the system to complete elimination because of the payment system providers risk of criminal penalties and injunction against further financial transactions if they guess wrong. There are no standards in the proposed UIGEA regulations which allow companies or individuals to safely navigate the inconsistent laws or ever-changing web business environment.



    "We believe that our government can--and must do better--if the Internet is be continue to be the engine for growth and prosperity for all of us. That being so, iMEGA is confident that the important and fundamental rights for which we are fighting in federal court in New Jersey will be vindicated."



    Details of the proposal are at You must register/login in order to see the link. .pdf
     
    7 people like this.
  2. Oct 2, 2007
  3. Mousey

    Mousey Ueber Meister Mouse CAG

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    Fixed the linky.

    You must register/login in order to see the link.
     
    1 person likes this.
  4. Oct 2, 2007
  5. NASHVEGAS

    NASHVEGAS Banned User - flamming, disrespecting admin,

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    As Mousey already requested, could the 2 threads be merged when possible(may have to wait til after Barcelona, I assume):)
     
  6. Oct 2, 2007
  7. lots0

    lots0 Banned User - troll posts - flaming

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    More Stories

    You must register/login in order to see the link.

    You must register/login in order to see the link.
     
  8. Oct 3, 2007
  9. EasyRhino

    EasyRhino Dormant account

    Occupation:
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    I'm really glad it looks like they'll except ACH and checks. That would have been nearly unenforceable.

    Looks like the full doc will make for good light reading.
     
  10. Oct 4, 2007
  11. Mousey

    Mousey Ueber Meister Mouse CAG

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    But... if the casino processors won't do ACH for fear of indictment, intimidation, etc. from the DoJ.... Actually, it's as if the UIGEA has already gone into effect, as processors have already bailed out. I don't see that this changes much (in the short term) except it makes sweet old Miss Mary at my bank, in effect, a cop.
     
  12. Oct 4, 2007
  13. EasyRhino

    EasyRhino Dormant account

    Occupation:
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    Okay, got through the proposed rules, it's interesting.

    The biggest caveat, of course, if they neither the proposed regs, nor UIGEA, or any other law, truly explicitly what is a defined internet gambling transaction, and what is not. Anyway.

    - Ewallet, credit/debit card networks, and money transfer businesses would be assumed to have perfect knowledge of each restricted transaction, and block them.
    - Checks are generally exempt, exempt the bank receiving the deposit (has a relationship with the gambling business) is expected to prevent such checks from being presented.
    - ACH is generally exempt, excempt the bank originating the ACH debit is also expected to prevent such transactions from being originated.
    - Wires are generally exempt, exempt for the bank receiving the funds.

    However, since virtually all net gambling is of an cross-border, the regs are proposed to apply to the first bank in the US food chain, the one that corresponds with the foreign bank or payment processor. This is where the regs still get pretty squishy. The suggested would be a contractual agreement with the foreign payment processor that they will not originate restricted transactions, thus "exporting" the restriction to the foreign institution. It becomes a know your customer's-customer's-customer situation.

    Also, the regs bring up the idea of maintaining a federal blacklist, but they recommend against it.
     
    1 person likes this.
  14. Oct 4, 2007
  15. EasyRhino

    EasyRhino Dormant account

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    I did a little more thinking, and while I'm totally not a lawyer, for US banks or payment processors on the hook with UIGEA, it really does seem to be a case of "know your customer's customer". But it also provides a theoretical, but unlikely, way for a bank to go legit with payment processing in the US.

    Let's look at it from the perspective of the US bank that's accepting transactions from the foreign correspondent bank or payment processor. They are going to need a contract from that bank saying that they will not be sending over any restricted gambling transactions.

    Now, neither bank can be reasonably expected to determine which transactions are legal, and which are illegal. There's too much confusion over which types of betting are restricted, and it also depends on where the gambler is, and where the casino is.

    So, the foreign correspondent bank is going to need a contract with their client, the casino, guaranteeing that the casino will not use them for any restricted transactions for US customers. This means that the casino has the onus of figuring out which bets are legal, and which are restricted. Which would be a huge pain for casino and their software provider.

    However, if a casino went in, dropped sports betting from US customers, ensured that customers from restricted states were not allowed, then they'd have a reasonable guarantee of ensuring that they would not originate any restricted transactions, so they could guarantee their own bank, who could guarantee the US bank, who would then not have a problem handling the transactions.

    But the additional problem is why would any US bank bother with this, when instead they could just refuse any gambling transactions and make their lives easier?
     
    1 person likes this.
  16. Oct 7, 2007
  17. lojo

    lojo Banned User - repetitive violations of <a href="ht

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    Even as its proposed, it seems to be a deal breaker, unless a bank chooses to do no US business in the long run. Very bad for everybody... this uigea has the potential to shape international banking protocal for generations, and if we follow the money, we find the motive.

    Banks that conform to the imagined purpose of the law (enforce wire act '61) would still be vulnerable under some letter or dojfux intent of the 'law' and all it would take is a little pressure for them to buckle to whatever squiggly policy the actors in place wanted to enforce.
    Bad Law, bad proposed policy.

    Any transaction not 'condoned' by whatever (as yet created 'tsar') could create fear and discontent among all international banking partners of the US markets, and the dollar could go on a rollercoaster.

    Follow the money... by the time we see the result of the uigea, we could be in for a very nasty surprise. There is something far more sinister than my or your bets at play here in my opinion.
     
  18. Oct 8, 2007
  19. webber286

    webber286 Dormant account webmeister

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    Quite interesting on 2 fronts.

    1) Checks are not included, so basically as long as you are comfortable transacting with a physical check, there are no problems.

    2) There is no definition of "illegal online gambling". If an online casino is regulated in the EU, aren't they a legal entity? Sort of sounds that way when they mention needing to look into tribal regulations and such. Sounds to me like any online casino that is legally licensed in their country is engaging in "legal online gambling"

    But, that's just my interpretation, if this gets further down the road, I would suspect that electronic transactions to any known online gambling company would just be outright banned by the banks. It's not like they can sort out who is legal and who isn't without a list. Of course this brings up the obvious question of...how do you even know the bank account that money is going to or from is part of a gambling operation?
     
  20. Oct 18, 2007
  21. Mousey

    Mousey Ueber Meister Mouse CAG

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    Nelson Rose on the proposed regulations...

    You must register/login in order to see the link. And Players
    Gambling and the Law

    The federal government has issued proposed regulations to enforce the ban on money transfers for unlawful Internet gambling transactions. The most important thing for online poker players to know is that nothing has changed. And nothing will, for many, many months.

    The proposed regs are the result of a bill rammed Congress through last year. Then Senate Majority Leader Bill Frist (R.-TN) attached his Unlawful Internet Gambling Enforcement Act to the SAFE PORTS Act. Frist refused to let Democrats even read the bill. If they didnt like it, they could vote against port security.

    A good indication of how quickly the law was written is that it does not even have a good acronym. Since UIGEA is unpronounceable, Ill call it Prohibition 2.0.

    Prohibition 2.0 is often characterized as outlawing Internet gambling in the U.S. Although it scared the bejesus out of publicly traded companies, it actually does only two things: It creates one new crime, being a gambling business that accepts money for unlawful Internet gambling transactions, and it calls for new regulations for banks and other payment processors.

    What it doesnt do is make it a crime to play poker on the Internet. It doesnt directly restrict players from .....
     
    2 people like this.
  22. Oct 18, 2007
  23. lojo

    lojo Banned User - repetitive violations of <a href="ht

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    Thanks for finding that Mousey, I wish he would write more often

     
    1 person likes this.
  24. Oct 19, 2007
  25. Mousey

    Mousey Ueber Meister Mouse CAG

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    Another interesting article...

    You must register/login in order to see the link.: Joe Saumarez-Smith

    By Joe Saumarez Smith

    Oct. 19 (Bloomberg) -- A year ago last Saturday, President George W. Bush signed the Unlawful Internet Gambling Enforcement Act and online gambling was banned in the U.S.

    At least, that was the intention. Twelve months later, there are just as many people gambling online, if not more. Many bettors don't even know the law was changed, partly because it was tacked on as an amendment to a measure aimed at increasing port security.

    The biggest difference now is that the companies offering online gambling are privately held and operate out of countries where it is impossible to know who controls them; if you had a huge win, then the risk of not being paid is probably much higher. The major public companies that used to offer online betting to Americans, such as PartyGaming Plc, 888 Holdings Plc and Sportingbet Plc, all quit the U.S. market ....
     
    1 person likes this.
  26. Oct 20, 2007
  27. lojo

    lojo Banned User - repetitive violations of <a href="ht

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    I'll give an opinion
     
  28. Oct 30, 2007
  29. Mousey

    Mousey Ueber Meister Mouse CAG

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    Has anyone seen or heard the banks/financial community's reaction to the UIGEA proposed regs?

    Meanwhile... an editorial...

    You must register/login in order to see the link.
    Editorial
    RENO GAZETTE-JOURNAL
    Posted: 10/30/2007


    If the Internet really is the Wild Wild West, then it's appropriate that poker is its leading game.

    It's also appropriate that Congress wants to send in the marshal to shut down the illegal games that are raking in money faster than you can say, "Bat Masterson!"

    Ideally Congress should do for Internet gambling what Nevada did for casino gambling more than 75 years ago. By legalizing gambling in the state, Nevada turned from the reactive model prevalent in most states -- in which law enforcement concentrated on closing down illegal games -- to a proactive model: It allowed just about anyone...

    **

    And the Safe and Secure Internet Gambling Initiative has a press release out....

    You must register/login in order to see the link.
     
  30. Oct 30, 2007
  31. jetset

    jetset Ueber Meister CAG

    Occupation:
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    This assessment is the latest:


    WASHINGTON, D.C.

    U.S. financial institutions would face a variety of regulatory burdens to prevent the processing of prohibited Internet gambling transactions under the proposed rules to implement the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) according to a new analysis.

    According to the advisory "Proposed Internet Gambling Regulation Would Require New Policies and Procedures for the U.S. Payment Systems," by the national law firm Alston & Bird, U.S. residents would be able to circumvent the proposed regulations and continue to gamble online by processing financial transactions through a foreign bank account in a jurisdiction where Internet gambling is legal.

    The challenge U.S. financial service firms face is that enforcement of UIGEA will be very difficult and burdensome. "The proposed rules create an unprecedented and unwieldy regulatory burden on the U.S. financial services sector," said Jeffrey Sandman, spokesperson for the Safe and Secure Internet Gambling Initiative.

    "U.S. financial service companies are being left to interpret ambiguous State and Federal gambling laws, which do not clearly differentiate between legal and illegal Internet gambling activities or transactions, and then implement unreasonable and costly solutions to achieve compliance."

    The advisory provides an overview of the proposed regulation and raises concerns about regulatory burden due to the impact of implementation costs on U.S.-based payment service companies and ability for U.S. resident to be able to still gamble online after adoption of the rules. U.S. financial service companies with concerns about potential burdens and compliance exposure are encouraged to submit comments on the draft rules published on or before December 12, 2007.

    Legislation to regulate and tax Internet gambling would provide a rational and safe approach to allow Americans to gamble online. "Rather than waste valuable resources attempting to enforce the Unlawful Internet Gambling Enforcement Act, a flawed law that erroneously presumes prohibition will keep millions of Americans from gambling online, the U.S. should instead regulate and tax Internet gambling," added Sandman.

    Congressman Barney Frank (D-MA) and Jim McDermott (D-WA) have introduced the Internet Gambling Regulation and Enforcement Act and Internet Gambling Regulation and Tax Enforcement Act, companion pieces of legislation, to regulate and tax Internet gambling activity.

    The proposed legislation would require licensed Internet gambling operators to put in place safeguards to protect against underage and compulsive gambling and ensure the integrity of financial transactions. Taxation of Internet gambling is expected to generate between $6 billion and $25 billion in revenues for the U.S. Treasury in the first five years of enactment.

    The Alston & Bird advisory is available at You must register/login in order to see the link. 3/Presentation/PublicationAttachment/5f828ec2-97b5-4087-a34d-7ef0687d39b5/2 007%20Internet%20Gambling%20Advisory.pdf.
     
    5 people like this.
  32. Oct 30, 2007
  33. lots0

    lots0 Banned User - troll posts - flaming

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    I looked (real quick) and could not find anywhere the Banks have made public comment.

    But knowing human nature as I do... What would you do you if the Government granted your business unprecedented power to know everything about everyone that does business with you and block their financial transactions at will, without any accountability? Would you bitch and complain about all the hassles or would you dig in and get to work gathering up and getting control of all that power???

    I know what I'd do.
     
  34. Oct 31, 2007
  35. USA2112

    USA2112 Dormant account

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    This whole issue surrounding the UIGEA has been nothing more than wasted paper thrown on the table by this administration and an insult to the American peoples intelligence. I'm just glad we have congressman Barney Frank and others who are willing to fight against this bill and do what’s right.

    My opinion is, The government has known all along this bill will be repealed at some point, their just stalling for time. The UIGEA is nothing more than an attempt to stop money from going out of the USA to other countries that are easier to own and operate online casinos. The USA had no laws and regulations for businesses like online casinos or took the initiative to create them and decided to hide the UIGEA as they did. Try and stop the money flow.

    I think anyone could agree that if the government put the same effort as they have with the UIGEA into creating the necessary laws to legalize online gambling in the USA the law would have passed full steam and would be done with and they would be getting their fair share of the profits story over. But instead they decided on taking the long road to riches once again. Not to smart considering their wasting tax payers money that could be used on something with a little more merit.

    The whole quagmire their throwing at the financial institutions is even more ridiculous, expecting them to understand legislations that are not clearly laid out and possibly face penalties themselves I’m sure for not following the stringent guide lines just don’t make sense.

    It seems the only part of the UIGEA that has made any sense all along has been the part to protect against underage and compulsive gambling.


    I just hope this is all over soon! so I can play some microgaming again. :thumbsup:
     
    Last edited: Oct 31, 2007
  36. Nov 10, 2007
  37. jetset

    jetset Ueber Meister CAG

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    Update - proposed UIGEA regs criticised

    FLAK FOR PROPOSED UIGEA REGULATIONS

    "....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.
     
    3 people like this.
  38. Nov 14, 2007
  39. jetset

    jetset Ueber Meister CAG

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    U.S. TREASURY UPDATES ON UIGEA REGS

    Exemptions generally extend to the gambler's bank

    U.S. Treasury Deputy Assistant Secretary Valerie Abend outlined exemptions on the government's attempt to disrupt financial transactions with online gambling companies under the Unlawful Internet Gambling Enforcement Act today (Wednesday).

    Giving an update on the much delayed regulations supporting the unpopular Act, Abend told Dow Jones that officials were still working to finalise a new rule that would put the onus on banks to help crack down on online gambling by U.S. citizens.

    A public comment period on the proposed rule is scheduled to close December 12, and Abend said the U.S.Treasury is expecting a large number of responses and would have to provide analysis and reasons for any decisions based on the comments received.

    In prepared remarks, Abend said banking regulators are focusing their efforts on banks that do business with gambling companies, as well as the interaction between U.S. banks and foreign banks that may be tied to online gambling.

    Legislation passed by U.S. lawmakers last year required Treasury and the Federal Reserve to enact regulations aimed at preventing the flow of funds from gamblers to Internet gambling sites. The recent introduction of a proposal on the regulations was significantly over the 270 day deadline for this task imposed by Congress in October last year, and has been greeted with significant criticism.

    Included in the [UIGEA] legislation are exemptions for certain financial institutions where it is "not reasonably practical" to prevent illegal internet gambling. Abend said such exemptions would generally extend to the gambler's bank, but not banks that do businesses with firms that offer illegal gambling.

    "In the case of checks, the check collection system is highly automated and it is not reasonably practical for the gambler's bank to know whether a check presented to it for payment involves unlawful Internet gambling," Abend said.

    Conversely, she said, a gambling business' bank or the first U.S. bank to receive a check under the proposed rule would be required to have policies and procedures in place to stop the processing of a check.
     
    4 people like this.

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