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Written by Thomas Jensen
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Wednesday, 02 April 2008
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 Expert testimony to Congress today offered further evidence that the ban on Internet gambling won’t work. Witnesses unanimously agreed that U.S. financial service companies would face serious regulatory burdens in attempting to enforce the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), a law that is not likely to stop millions of Americans from gambling online.
“Testimony from the federal regulators and representatives of the financial services community made clear today that the prohibition on Internet gambling isn’t working now and will not work in the future,” said Jeffrey Sandman, spokesman for the Safe and Secure Internet Gambling Initiative. “U.S. banks and credit card companies, along with every other type of U.S. company involved in payment systems, would be forced spend substantial resources to force compliance with a ban on Internet gambling that can be easily circumvented by anyone in the U.S. that wants to continue to gamble online.”
Representatives of the U.S. Department of the Treasury and Federal Reserve System acknowledged at the hearing the challenges U.S. financial institutions will face in attempting to comply with UIGEA. Since most payment systems are not well designed to comply with this law, “it will be very difficult to shut off payment systems for use of Internet gambling transactions,” said Ms. Louise Roseman, Director, Division of Federal Reserve Bank Operations and Payment Systems, Board of Governors of the Federal Reserve System. "The implementing statute will not be iron clad at all."
Representatives from the American Bankers Association, Financial Services Roundtable, Wells Fargo & Co. and Credit Union National Association unanimously opposed regulations proposed to implement UIGEA in testimony to the House Committee on Financial Service’s Subcommittee on Domestic and International Monetary Policy, Trade, and Technology. They all questioned the fundamental approach taken by Congress in enacting legislation to force financial institutions to police online gambling.
“The UIGEA and the Proposed Rule do not provide a rational path towards halting unlawful Internet gambling,” said Wayne Abernathy, American Bankers Association’s executive vice president of financial institutions policy and regulatory affairs. “The path leads to an increased cost and administrative burden to the banks and an erosion in the performance of the payments system, but it will not result in stopping illegal Internet gambling transactions. Imposing this enormous unfunded law enforcement mandate on banks in place of the government’s law enforcement agencies is not likely to be a successful public policy.”
Mr. Leigh Williams, president of the technology division of the Financial Services Roundtable stated in his testimony concerns that enforcement of the proposed rules “could impose significant compliance burdens on financial institutions by increasing their role in policing illegal activities, determining whether a transaction is illegal, or by imposing ambiguous compliance requirements that could be subject to wide variations in interpretation by regulators and law enforcement agencies. We believe these functions are more appropriate for law enforcement agencies.”
The testimony supports over 200 comments submitted to the Department of the Treasury and Federal Reserve System on the burden and ambiguity in the proposed rules to implement UIGEA.
“Rather than trying to implement a ban that is unclear, burdensome and doomed to fail, Congress should instead look to regulate Internet gambling in order to protect consumers and collect billions of dollars that is being lost to offshore Internet gambling operators,” added Sandman.
Congressman Barney Frank (D-MA) introduced the Internet Gambling Regulation and Enforcement Act (H.R. 2046) last year, which establishes a regulatory and enforcement framework for licensed gambling operators to accept bets and wagers from individuals in the U.S. It would include a number of built-in consumer protections, including safeguards against compulsive and underage gambling, money laundering, fraud and identity theft. States would also have the right to control what, if any, level of Internet gambling is permissible within their borders and could apply additional taxes and restrictions.
A companion piece of legislation to the Frank bill introduced by Congressman Jim McDermott (D-WA), the Internet Gambling Regulation and Tax Enforcement Act of 2008 (H.R. 5523), would ensure the collection of taxes on regulated Internet gambling activities. According to a tax revenue analysis prepared by PricewaterhouseCoopers, taxation of regulated Internet gambling is expected to generate between $8.7 billion to $42.8 billion in federal revenues over its first 10 years.
Testimony provided at the hearing can be found at:
http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr040208.shtml
The Safe and Secure Internet Gambling Initiative promotes the freedom of individuals to gamble online with the proper safeguards to protect consumers and ensure the integrity of financial transactions. For more information on the Initiative, please visit safeandsecureig.org. The Web site provides a means by which individuals can register support for regulated Internet gambling with their elected representatives. |
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Last Updated ( Wednesday, 02 April 2008 )
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Written by Thomas Jensen
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Wednesday, 12 March 2008
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 Congressman Peter DeFazio (D-OR) has requested the U.S. Trade Representative (USTR) disclose trade concessions made to foreign trading partners without Congressional approval. DeFazio’s inquiry raises the possibility of Congressional intervention to void new market access commitments granted by USTR to the European Union and other complainants as compensation for a United States trade violation regarding Internet gambling.
In a letter circulated to all members of Congress last week, DeFazio encouraged his colleagues to join him in calling for the USTR to provide a copy of the concession agreement between the United States and the European Union. The USTR had recently rejected a Freedom of Information Act request for the same document, claiming the agreement was classified for national security reasons. “There is a concern that the USTR may have been ambitious in its use of a ‘national security’ classification to avoid any publicity of which new business sectors are to be subject to the GATS (General Agreement on Trade in Services) treaty,” said DeFazio’s March 6 letter.
“The issue will be whether the USTR abused its authority by granting new market access to the EU without first securing the consent of the trade committees in Congress,” said Nao Matsukata, formerly Director of Policy Planning for USTR Robert Zoellick and now a Senior Advisor for Alston & Bird, LLP. “Ultimately, this could invalidate the deal with the EU and cause various WTO Members to revisit the issue of fair compensation from the United States."
Congressman DeFazio’s request is an indication that the Administration’s unilateral action to attempt to resolve the WTO Internet gambling dispute is in jeopardy. “Congress should have been consulted before the US agreed to these trade concessions,” said Jeffrey Sandman, spokesperson for the Safe and Secure Internet Gambling Initiative. “We hope that Mr. DeFazio’s colleagues will join him in demanding more transparency, communication, and consultation from the Administration on Internet gambling. A non-discriminatory market for Internet gambling in the United States will restore integrity to the international trading system.”
The DeFazio request comes following a contentious trade dispute over Internet gambling, in which the Caribbean nation of Antigua successfully challenged the regulation of Internet gambling in the United States. The European Union announced earlier this week that it will open an investigation into a possible international trade violation by the US on this issue. The investigation is the result of a Trade Barriers Regulation complaint filed by the Remote Gambling Association (RGA), which represents the largest remote gambling companies in Europe. The RGA claims the US is in violation of international trade law by threatening and pursuing criminal prosecutions, forfeitures and other enforcement actions against foreign Internet gaming operators, while allowing domestic U.S. online gaming operators, primarily horse betting, to flourish.
Legislation introduced by Representative Barney Frank (D-MA), the Internet Gambling Regulation and Enforcement Act (H.R. 2046), would regulate Internet gambling and resolve the international trade dispute.
“Rather than paying out millions in trade concessions, which would have an adverse impact on the American economy, the US should embrace the legislative solution presented by the Frank bill, which brings the U.S. into compliance by regulating Internet gambling and creating a level playing field among domestic and foreign Internet gambling operators,” said Jeffrey Sandman, spokesperson of the Safe and Secure Internet Gambling Initiative.
A provision of the European Union’s Trade Barriers Regulation allows any EU company or association to complain against obstacles to trade in other countries, which the EU must then investigate. After the investigation, the EU could pursue discussions with the US to find an appropriate solution to end the discrimination. If the parties cannot settle the matter themselves, the EU could bring a case against the US to the WTO.
The Safe and Secure Internet Gambling Initiative promotes the freedom of individuals to gamble online with the proper safeguards to protect consumers and ensure the integrity of financial transactions. For more information on the Initiative, please visit www.safeandsecureig.org. The Web site provides a means by which individuals can register support for regulated Internet gambling with their elected representatives. |
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Written by Thomas Jensen
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Tuesday, 11 March 2008
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 The European Union announced yesterday that it will open an investigation into a possible international trade violation by the United States for discriminatory trade practices against European online gambling companies. A solution to this international trade dispute is contained in the Internet Gambling Regulation and Enforcement Act (H.R. 2046), introduced by Congressman Barney Frank (D-MA). This legislation would bring the United States into compliance with World Trade Organization (WTO) requirements by regulating Internet gambling and creating a level playing field among domestic and foreign Internet gambling operators.
"The U.S. has the right to address legitimate public policy concerns relating to Internet gambling, but discrimination against E.U. companies cannot be part of the policy mix," said E.U. Trade Commissioner Peter Mandelson. "We are interested in a constructive and mutually satisfactory solution to this issue."
The European Union investigation comes following a contentious trade dispute over Internet gambling, in which the Caribbean nation of Antigua successfully challenged the regulation of Internet gambling in the United States. During the WTO dispute last year, Mandelson stated that the U.S. Congress should consider opening its market to overseas operators. “I think (Frank) takes a fair-minded, common sense approach to this and we look forward to that being effective legislation,” said Mandelson in an interview with Reuters.
“The EU investigation only highlights the reckless manner in which the U.S. has handled its withdrawal of gaming commitments under the GATS (General Agreement on Trade in Services),” said Nao Matsukata, formerly Director of Policy Planning for USTR Robert Zoellick and now a Senior Advisor for Alston & Bird, LLP. “This situation would not be possible if the United States had chosen to resolve the GATS dispute from the beginning by appropriately changing U.S. law and adopting the Frank bill."
The investigation by the E.U. is the result of a Trade Barrier Regulation complaint filed by the Remote Gambling Association (RGA), which represents the largest remote gambling companies in Europe. The RGA claims the United States is in violation of international trade law by threatening and pursuing criminal prosecutions, forfeitures and other enforcement actions against foreign Internet gambling operators, while allowing domestic U.S. online gambling operators, primarily horse betting, to flourish.
"To move into a formal investigation reflects the E.U.’s belief that this matter is serious enough for them to put at risk the larger transatlantic relationship and other positive developments in the bilateral trade relationship,” Matsukata added.
“It is time for the U.S. to end its hypocritical practices that discriminate against foreign online gambling operators, while allowing U.S. gambling operators to accept bets for certain forms of gambling,” said Jeffrey Sandman, spokesperson for the Safe and Secure Internet Gambling Initiative. “Regulating Internet gambling should be supported as a means of resolving this trade dispute, protecting consumers and ensuring that billions of dollars in taxes are collected for critical government programs.”
After the investigation, the E.U. could pursue discussions with the U.S. to find an appropriate solution to end the discrimination. If the parties cannot settle the matter themselves, the E.U. could bring a case against the U.S. to the WTO.
The Safe and Secure Internet Gambling Initiative promotes the freedom of individuals to gamble online with the proper safeguards to protect consumers and ensure the integrity of financial transactions. For more information on the Initiative, please visit www.safeandsecureig.org. The Web site provides a means by which individuals can register support for regulated Internet gambling with their elected representatives. |
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Written by Thomas Jensen
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Friday, 07 March 2008
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 Congressman Barney Frank (D-MA), chairman of the House Committee on Financial Services, will hold a hearing in early April to explore the burden on U.S. financial institutions to comply with the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). The law was intended to deter illegal Internet gambling activity. Meanwhile, support for legislation that would regulate Internet gambling continues to gain momentum as Congressman George Miller (D-CA), one of the most influential members of Congress, signed on last week as a co-sponsor of the bill introduced by Congressman Frank.
“The banks have a lot of other things to worry about right now,” said Frank, as reported by Politico, referencing the mortgage crisis and other challenges faced by the industry. “I don’t think poker should be one of them.”
Hundreds of comments submitted to the Department of the Treasury and Federal Reserve highlight the ambiguity in the proposed rules to implement the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). One of the major criticisms is that the rules do not clearly differentiate between legal and illegal Internet gambling activities. Concerns raised by the American Bankers Association and others state that the proposed rules will be a compliance trap and is not likely to stop anyone from gambling with foreign-based Internet gambling operators.
“This hearing is significant and must address the issues being raised by the financial services sector and others. The proposed Treasury Department regulations are unclear, burdensome and untenable,” said Jeffrey Sandman, spokesman for the Safe and Secure Internet Gambling Initiative. “It becomes clearer each week that the attempt to prohibit Internet gambling activity is doomed to fail. Rather than waste valuable resources attempting to enforce UIGEA, the U.S. should instead regulate and tax Internet gambling.”
Some of the views expressed by Congressman Frank and many financial institutions are shared by Republican Senators John Sununu (N.H.) and Pete V. Domenici (N.M.). In a letter to the Treasury Department and Federal Reserve, the senators stated, “in failing to provide more detail, the proposed rules would inordinately burden every bank, credit union, credit card company, money transmitting business and payment system in the country, leading to non-uniform compliance and confusion.”
The Internet Gambling Regulation and Enforcement Act of 2007 (H.R. 2046), introduced by Congressman Frank, would require licensed operators to put in place safeguards to protect consumers and ensure the individual placing the bet or wager is physically located in a jurisdiction that permits a particular form of Internet gambling. States would also have the right to control what, if any, level of Internet gambling is permissible within their borders and could apply additional taxes and restrictions.
A companion piece of legislation that would ensure the collection of taxes on regulated Internet gambling activities, the Internet Gambling Regulation and Tax Enforcement Act of 2008 (H.R. 5523) was introduced earlier this week by Congressman Jim McDermott (D-WA). The legislation strengthens provisions in an earlier version of the bill introduced last year. A recent letter sent by Congressman McDermott to fellow members of Congress stated that, according to a tax revenue analysis prepared by PricewaterhouseCoopers, taxation of Internet gambling is expected to generate between $8.7 billion to $42.8 billion in federal revenues over its first ten years.
“It is encouraging to see the momentum building in support of regulating Internet gambling,” said Sandman. “It is time for Congress to address this issue and support legislation that would not only protect consumers, but generate billions in revenue needed for critical government programs.”
The Safe and Secure Internet Gambling Initiative promotes the freedom of individuals to gamble online with the proper safeguards to protect consumers and ensure the integrity of financial transactions. For more information on the Initiative, please visit safeandsecureig.org. The Web site provides a means by which individuals can register support for regulated Internet gambling with their elected representatives. |
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Written by Thomas Jensen
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Wednesday, 05 March 2008
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Congressman Jim McDermott (D-WA) introduced yesterday the Internet Gambling Regulation and Tax Enforcement Act of 2008 that would ensure that taxes are collected on regulated Internet gambling activities. These revenues are estimated between $8.7 billion and $42.8 billion over ten years, according to a recent tax revenue analysis prepared by PricewaterhouseCoopers.
“To be clear, these are not mostly new taxes – the bulk of the revenues generated would come from taxes required under existing law,” said Representative McDermott in a letter circulated last year to all members of Congress. “This is simply a framework to collect taxes on existing activity that is currently unregulated, unsupervised, and underground.”
The legislation strengthens provisions in an earlier version of the bill introduced last year, and includes an enhanced reporting mechanism under which licensed gambling operators are required to provide each customer an annual statement of winnings and losses. It also establishes a two percent licensing fee that is paid by the operator, not the individual gambler. The licensing fee is designed to equalize the costs of operation in providing gambling services online, as opposed to brick-and-mortar casinos providing gambling services in-person, and would only be applied to online operators.
“Before us is a tremendous opportunity to protect consumers and recoup billions of dollars that should be collected by the Internal Revenue Service,” said McDermott. “These are revenues that are desperately needed, given that we are at war and face difficulty financing the nation’s priorities.”
McDermott’s legislation functions as a companion bill to the Internet Gambling Regulation and Enforcement Act (H.R. 2046), legislation introduced by Representative Barney Frank (D-MA) that would regulate Internet gambling in the U.S. Under the Frank legislation, each Internet gambling operator would be licensed by the Financial Crimes Enforcement Network (FinCEN) and be required to ensure that the individual placing the bet or wager is physically located in a jurisdiction that permits a particular form of Internet gambling. The legislation would also reinforce the rights of States to control what, if any, level of Internet gambling is permissible within their borders, including the ability to apply additional taxes, and to ensure that appropriate consumer protections and limitations were in place.
”By not regulating and taxing Internet gambling, the United States is forfeiting billions of dollars in revenue needed for critical government programs,” said Jeffrey Sandman, spokesman for the Safe and Secure Internet Gambling Initiative. “It is time for Congress to address this issue and put in place security controls to protect the millions of Americans that continue to gamble online despite the prohibition.”
The Safe and Secure Internet Gambling Initiative promotes the freedom of individuals to gamble online with the proper safeguards to protect consumers and ensure the integrity of financial transactions. For more information on the Initiative, please visit www.safeandsecureig.org. The Web site provides a means by which individuals can register support for regulated Internet gambling with their elected representatives. |
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