Feds: Vague internet gambling laws tough to enforce
WASHINGTON (AP) - April 2, 2008 "I think it is very difficult without having more of a bright
line about what is intended to be unlawful Internet gambling,"
Louise Roseman, head of the Federal Reserve's bank operations
division, told a House hearing Wednesday.
"The challenge we have is interpreting something, particularly
federal laws, that Congress themselves isn't sure what they mean,"
she said.
Congress passed the ban with little notice in 2006 when Senate
Republicans, pushed by then-Majority Leader Bill Frist, attached it
to an unrelated port security bill in a rush of year-end
legislation.
Internet gambling already was considered mostly illegal in the
U.S., but the games are played by many U.S. residents on sites
hosted overseas in a business worth more than $15.5 billion a year.
U.S. bettors have been estimated to provide at least half that
revenue.
The congressional ban sought to explicitly outlaw Internet
gambling but didn't offer a clear definition everyone could agree
on. It put the burden on financial institutions by prohibiting
gamblers from using credit cards, checks and electronic fund
transfers to settle their online wagers.
That's led to complaints from the financial services industry
about the difficulty of determining where payments are going,
especially because online betting businesses can disguise
themselves with relative ease.
It "makes financial institutions the police, prosecutors, and
judges in place of real law enforcement officers," Wayne Abernathy
of the American Bankers Association told a House Financial Services
subcommittee Wednesday.
Regulations proposed by the U.S. Treasury and the Federal
Reserve last fall would apply to the gambling business' bank -
generally not to the gambler's bank - and require it to use due
diligence to ascertain the nature of its customer's business and
ensure it is not processing illegal Internet gambling payments. The
regulation doesn't attempt a definition of illegal online gambling,
since Congress didn't give one.
The regulations have drawn numerous comments from agitated
bankers, poker players, and others. Officials from Treasury and the
Fed both testified Wednesday to challenges in finalizing the
regulations.
Poker players contend they're not covered. Hose-racing was
exempted by Congress, yet without settling definitively whether
online wagering on races breaks the law.
"A rather bizarre piece of legislation," said House Financial
Services Committee Chairman Barney Frank, D-Mass., who's introduced
a bill to overturn it.
The law has caused international disputes, including an
investigation launched earlier this month by the European Union
after European betting companies complained that Washington's
actions against them were infringing world trade rules. In the
United Kingdom and some other countries, Internet gambling is
largely legal.
Nevada's casino industry is neutral on the regulations,
supporting a bill written by Rep. Shelley Berkley, D-Nev., that
would require a study of online gambling.