The outgoing Bush administration has ordered that a controversial law banning internet gambling must be ENFORCED even though it is claimed it could tip hard-pressed U.S. banks over the edge.
The order is among the final actions of President Bush’s Whitehouse and comes despite a pledge that no big legislation would be passed after November 1.
Financial institutions now have until Dec. 1, 2009, to stop transfers of money to Internet gambling sites or face shut down.
The Whitehouse edict implements the 2006 Unlawful Internet Gambling Enforcement Act, which bans payments made through credit cards, electronic funds transfers and checks for online wagering.
Moves to fully implement UIGEA in 2007 were FOILED by a new Democrat Party-controlled Congress which opposed the new law and since then several attempts have been made to redefine it and redraw it.
One major issue is that UIGEA leaves banks and other financial institutions to decide what “internet gambling” actually means.
Faced with the consequences of getting it “wrong” most operate a blanket ban.
Talk about scrapping UIGEA completely has been widespread all year and climaxed with last week’s election of Democrat Barack Obama. Senior members of his party demanded that any moves to enforce the law be left to president-elect Obama when he is sworn in next January.
And on Monday, House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat, warned of the dangers of implementing UIGEA, saying it would “burden the financial services industry at a time of economic crisis”.
The U.S. Treasury has estimated that it will take providers 1 million hours to implement policies and procedures to bring them into compliance with the rule, at a cost of over £60 million in the first year.
However, top Republicans — backed by lobbyists for the NFL which fears it would lose out on lucrative deals if internet gambling were made legal — successfully persuaded the Bush administration to order the enforcement of UIGEA, a move which seems likely to delay the repeal of the law for many months.
Last month a top Congressional committee passed a bill to force Treasury chiefs to define the term “unlawful Internet gambling” but a full vote in Congress ran out of time before elections.
The biggest losers from the 2006 Law have been European online gambling companies — including 888.com and Party Poker — who lost billions in market value as they were forced to retreat from one of their most lucrative markets.