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UIEGA Showdown: Let's Get Ready For a Rumble...By Hartley Henderson

When the April 2nd house subcommittee meeting was called to discuss the ramifications of implementing the UIGEA, Barney Frank and fellow pro gambling advocates were likely hoping that the banking industry could show that implementation of the regulations was going to be difficult and consequently could help garner a bit of support for other gambling bills such as Frank's own Gambling Regulation and Enforcement Act or Robert Wexler's Skill Gambling Legalization Bill. What the gambling advocates received went far beyond their wildest hopes. The scathing condemnation by the banks and payment companies of the regulations released by the U.S. treasury made it obvious to anyone with an open mind that the UIGEA is flawed and the regulations that were given to the banks are virtually impossible to implement without considerable cost and headaches that would overwhelm the whole U.S. banking sector. The banks also made the case that it wasn't their job to be the government's policeman in the effort to catch "illegal transactions", and that their focus right now must be on the economy as 99.9% of Americans would likely agree. In fact at the meeting the only person who was in favor of trying to implement the regulations as they have been laid out by the Treasury was Spencer Bachus, the Alabama Congressman and head of the House Financial Services Committee. Bachus has long been against online gambling, and in fact in a bizarre interview with CNN in 2006 he somehow managed to draw a correlation between online gambling operators and drug dealers. Bachus' exact quote was:

"There have been studies by Harvard University, University of Pennsylvania, McGill University in Canada, American Psychiatric Association - all of these say the younger someone starts gambling, the more likelihood that they become a compulsive gambler. Addicted to gambling, just like addicted to drugs. So there is a correlation between drug dealers and gambling sites."

The whole strange and misinformed interview can be viewed at

At the house subcommittee meeting April 2nd, Bachus clearly was snake bitten after realizing he had no support and he looked quite uncomfortable trying to defend something that was not only unpopular, but was also clearly unrealistic. The meeting was also highlighted by an inspired speech from Ron Paul who made it quite clear that he opposed the bill.

As a result of the banking industries overwhelming condemnation of the regulations as they were set forth, Barney Frank and Ron Paul introduced a new bill on April 10th (H.R. 5767) that would put a halt to any efforts to try and implement the UIGEA regulations. Upon introducing the bill, Ron Paul stated the following:

"The ban on Internet gambling infringes upon two freedoms that are important to many Americans: the ability to do with their money as they see fit, and the freedom from government interference with the Internet. The regulations and underlying bill also force financial institutions to act as law enforcement officers. This is another pernicious trend that has accelerated in the aftermath of the Patriot Act, the deputization of private businesses to perform intrusive enforcement and surveillance functions that the federal government is unwilling to perform on its own."

Barney Frank added that the bill puts undo burden and cost on the banking industry, and even proponents of the UIGEA have to be concerned with the possible ramifications.

The issue really never was brought up again after that, but that changed last week as Bachus, along with John Kyl, the pioneer of anti gambling bills, sent a letter to Congress urging it to oppose Barney Frank and Ron Paul's bill. The letter attacked the internet gambling companies stating that they were "shelling out eye popping sums" to have lobby groups put forth efforts to kill the UIGEA.

The contents of the letter itself were not as significant as the fact that it was sent to all in Congress. The letter reeks of desperation by two Congressmen who realize that fellow Congressmen and Senators are having doubts about a law they never really supported in the first place. For the first time in quite a while it is evident that the anti-gambling side is feeling pressure. After the UIGEA was passed, Kyl and his cronies surely felt that it would be smooth sailing in terms of eliminating internet gambling in the United States. However, since that time U.S. Congressmen and Senators have seen the country humiliated and forced to heavily compensate countries for breaking a WTO agreement as a result of the UIGEA. And now they can't even come up with a realistic way to implement the law without throwing the banking sector into turmoil. Let it not be forgotten that many of these Congressmen did not really support the UIGEA anyway. They were simply forced to vote for it when it was attached to the Safe Port Bill. And to make matters worse for all the embarrassment and efforts of implementing this bill, it hasn't done a lick to stop Americans who want to bet or play poker online from doing so. Yes, getting money to the sites is more difficult, but if Americans want to bet there are ways around the UIGEA to get money to offshore operators.

Consequently the logical assumption is that many Congressmen are having serious doubts about the UIGEA and likely expressed them to Bachus and/or Kyl. In fact the number of supporters of Barney Frank's Gambling Regulation and Enforcement Act, Shelley Berkley's Gambling Study Bill or Robert Wexler's Skill Game legalization bill seems to increase every time one looks at the list. As such, Bachus and Kyl surely found it necessary to send this letter to rally the anti-gambling troops. But will it work? With the U.S. economy in shambles, with tensions in the Middle East mounting and with a Presidential election around the corner it is unlikely this issue is on the minds of many. In fact the only Congressmen who really seem to have it as any form of a priority are Barney Frank, Ron Paul and the few others who want the UIGEA regulations quashed.

Congress is expected to end early this year due to the election and both sides want to have their agendas solidified before adjourning. Kyl and Bachus, with urging from Focus on the Family and other anti gambling forces, are prodding Congress to force the banks to comply with the U.S. treasury's mess under any circumstances. Frank, Paul, Berkley, etc., with backing from pro gambling groups and now evidently the banking industry, want the regulations halted in their tracks and replaced by a more realistic law that can be enforced and regulated properly. It's uncertain whether the UIGEA regulations can be stopped anyway (remember, a judge threw out a motion by iMEGA to have them halted), but with enough support and lobbying from gambling entities, and particularly the banking and e-wallet sector, it isn't inconceivable that the regulations could be put off indefinitely. At that point there would be a new vote on the feasibility of the UIGEA, particularly if a Democrat wins the presidency in November.

MajorWager will keep an eye on the progress of the two sides of this issue as it heats up. This is gearing up to be a battle royale throughout the summer.

Hartley Henderson

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