Frank introduces twin Internet gambling bills

May 7, 2009 – House Financial Services Committee Chairman Barney Frank, D-Mass., unveiled two bills Wednesday aimed at blunting the impact of the Unlawful Internet Gambling Enforcement Act which places restrictions on Internet gambling.

The UIGEA, which was passed in 2006, prohibits businesses from knowingly accepting payments related to unlawful Internet gambling, including payments made through credit cards, electronic funds transfers and checks.

Pursuant to the law, a joint final rule issued from the Federal Reserve and Treasury late last year would require credit unions and other financial institutions that use designated payment systems to implement by Dec. 1, 2009, “policies and procedures that are reasonably designed to prevent payments to gambling businesses in connection with unlawful Internet gambling.”

Frank pointed out last fall that the law would create problems for financial institutions because it does not define the term “unlawful Internet gambling.” The law would ultimately force individual financial institutions to “reconcile conflicting state and federal laws, court decisions and inconsistent Department of Justice interpretations when determining whether to process a transaction.”

NAFCU has also expressed concerns about the new law's impact on credit unions.

Both pieces of legislation Frank introduced yesterday attempt to address burdens placed by the regulations.

One bill, The Internet Gambling Regulation Consumer Protection & Enforcement Act of 2009, would establish a federal regulatory and enforcement framework under which Internet gambling operators could obtain licenses authorizing them to accept bets and wagers from individuals in the U.S.

The other bill would delay the Dec. 1, 2009, implementation date of the new regulations. Frank said the idea is to stop federal regulators from enforcing the UIGEA until Congress has had a chance to decide national policy.

NAFCU supports the move to delay implementation of the regulations. NAFCU President Fred Becker said the association remains very concerned that the regulations would have a detrimental impact on credit unions.

“Given the current economic climate and the number of unresolved issues with regard to the legislation, it seems ill-advised at this time to implement these regulations,” Becker said. “NAFCU recommends a moratorium be placed upon the implementation of these proposed regulations.”