Uncertainty over UIGEA Implementation

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The UIGEA Rules that were controversially passed in the final days of the Bush administration are to go into effect from December 1, 2009. From that day financial institutions will have to block transactions relating to "illegal" gambling operations. Legislation to prevent the UIGEA Rules from going into effect could not be passed because the Congress was preoccupied with the economic crisis. It now appears that those opposing these rules are making a last ditch effort to prevail upon the US Department of the Treasury and the Federal Reserve to delay the implementation of the rules. However, according to "Newsweek" the Federal Reserve has not taken a decision in this matter.

Nineteen Congressmen have written to the Department of the Treasury, including Barney Frank, who has sponsored the anti-UIGEA bill. Some of the others are Republicans Geoff Davis, Harold Rogers, Edward Whitfield and Brett Guthrie, and Democrats Ben Chandler and John Yarmuth. All are from Kentucky, a state that has been in the news because of the domain name seizure case. Representatives of the Poker Players Alliance have also sent in letters. The thrust of these letters is that the rules will lead to an overburdened financial sector blocking legal transactions to be on the safe side because of lack of clarity. They have petitioned that the implementation of the regulations be postponed by one year so that all issues related to it can be debated and completely resolved.

This view has been substantiated by the American Greyhound Track Operators Association and the National Thoroughbred Racing Association also asking for a postponement of the implementation of the UIGEA rules. They claim that though the rules specifically state that gambling transactions related to their sports are not illegal the credit card companies are nevertheless blocking these transactions. Credit card companies have also blocked online payments to state lotteries in New Hampshire and North Dakota, despite such transactions being specifically allowed in the UIGEA. If the financial sector has been so cautious when the rules were not in force one can easily imagine the caution that they will follow after the rules have been implemented. On the other hand the staunch proponents of the ban on online gambling such as Senator Jon Kyl and Representative Spencer Bachus have written to insist that the UIGEA rules be implemented on schedule.

According to the Newsweek report Treasury officials are averse to interfering with legislation that has already been passed. However the fact that there is no clear cut decision on this matter even a week before the implementation is due indicates that some postponement is likely. It may not be the year long postponement asked for but it will give a temporary relief to the online gambling industry.

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