Poker News

Lou Krieger

The Feds finally issued regulations to implement provisions of the Unlawful Internet Gaming Enforcement Act (UIGEA). These regulations make banks responsible for blocking credit and debit card payments for online gambling. They also bar online casinos and other bank customers from receiving Internet gambling proceeds. US banks are not required to block checks written to online casinos. Banks cannot possibly scrutinize the billions of checks they handle per year by hand and the industry was dead set against regulations that would have required them to do so.

The Treasury Department and Federal Reserve set a December 12 deadline for public comments on their proposal. Following this public comment period, the Feds may modify their regulations, and then issue them.

The proposed rule is posted at: http://www.treas.gov/press/ releases/reports/noticeofproposedrule.pdf

While the US has taken the position that any bets made in the United States-even those made at online casinos-violate the law, the United States’ action was challenged as an unfair trade practice at the World Trade Organization (WTO), which ruled in favor of the complaint by Antigua, and that decision was upheld on appeal. International trade expert Naotaka Matsukata, former director of policy planning for the US trade Representative, and Mark Mendel, the attorney who represents Antigua before the WTO, claimed that the United States might face trade penalties of $100 billion-yes, that’s billions-with-a-”B”-if it cannot extricate itself from its online gaming conundrum with Antigua and the European Union.

“The $3.4 billion claim by Antigua and the much larger claim of over $100 billion by the seven other economies seeking compensation are some of the largest penalties in the history of the WTO,” said Matsukata. “This is by far the most significant WTO case ever and its implications for both the US and the EU are enormous. Given the size of the US gaming market, both the potential benefit for European industry and the corresponding potential damage to US companies is unprecedented.”

In addition to Antigua and the European Union, Macau, India, and Australia are also seeking compensation because of US actions. Jeffrey Sandman, of the Safe and Secure Internet Gambling Initiative, urged the US to embrace Barney Frank’s internet gambling bill. According to Sandman, “Rather than face paying billions in trade compensation, the US should embrace the legislative solution presented by the Frank bill.”

Although the US has threatened to withdraw from its WTO commitments in its dispute with Antigua, it has much more to lose than to gain by such an action, and could weaken its claims against China at the WTO. Walking away from WTO obligations might even open the door to Antigua receiving WTO backing for abrogating copyright protection and revoking trademark and intellectual property agreements between the two countries.

Former U.S. Senator Alfonse D’Amato, who is now the PPA’s Chairman said in response to the proposed rule, “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.”

He added, “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.”

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