Agencies Issue Final Rule to Implement Unlawful Internet Gambling Enforcement Act

[michael777]

November 12, 2008 ,The Department of the Treasury and the Federal Reserve Board today announced the release of a joint final rule to implement the Unlawful Internet Gambling Enforcement Act of 2006. The Act prohibits gambling businesses from knowingly accepting payments in connection with unlawful Internet gambling, including payments made through credit cards, electronic funds transfers, and checks.

The Board and the Treasury are required by the Act to develop a joint rule in consultation with the Department of Justice. The final rule requires U.S. financial firms that participate in designated payment systems to establish and implement policies and procedures that are reasonably designed to prevent payments to gambling businesses in connection with unlawful Internet gambling. The rule provides non-exclusive examples of such policies and procedures and sets out the regulatory enforcement framework. For purposes of the rule, unlawful Internet gambling generally would cover the making of a bet or wager that involves use of the Internet and that is unlawful under any applicable federal or state law in the jurisdiction where the bet or wager is initiated, received, or otherwise made.

Compliance with the rule is required by December 1, 2009.

[bigboydan]

[jjgold]

Not going to do anything

[mtneer1212]

I believe it will do extreme harm to funding with person to person transfers.

[Bluehorseshoe]

I believe it will do extreme harm to funding with person to person transfers.

How?

[flyingillini]

JJ, call me on the 805 line

[Brock Landers]

lets see, MOST books don't take credit cards anyway...No way of knowing who a check is coming from when its a 3rd party processor, Don't remember the last time a book paid me with an EFT.

This is just something to make people think who voted for this that NOW its in place, well lets see what affect it has, i say very little to none.

[Brock Landers]

To top it off, its not like this has been "legal" ever, so whats this do, makes the same stuff that was illegal before REALLY illegal now? LOL

[Bluehorseshoe]

To top it off, its not like this has been "legal" ever, so whats this do, makes the same stuff that was illegal before REALLY illegal now? LOL

Exactly.


"You guys are on double, secret probation!!!!"

[mtneer1212]

How?

Because once they get the e-checks, credit cards, and bank wires under control, they will be able to focus on ** and **. I believe most books will go back to utilizing local agents for the monetary exchange part of this.

You don't think they will start with some folks with numerous ** and ** transactions to 30 different people in 5 Latin American countries and start asking questions? The 'I'm sending funds to my bastard child and his mom in Nicaragua' excuse is fine for one transaction to a $10/hr clerk at Walmart, but when they start looking at ALL of your transactions......

I'm the last person on Earth to be a conspiracy theorist, but it just seems like the next logical step.

[bigboydan]

To top it off, its not like this has been "legal" ever, so whats this do, makes the same stuff that was illegal before REALLY illegal now? LOL

It's the hidden terminology of this one that could be deemed as really scary IMO. Because it could effect much more than just banking regulations.

[mtneer1212]

It's the hidden terminology of this one that could be deemed as really scary IMO. Because it could effect much more than just banking regulations.

A very valid point Dan...........

[element1286]

Pretty shitty.

[Bluehorseshoe]

Because once they get the e-checks, credit cards, and bank wires under control, they will be able to focus on ** and **. I believe most books will go back to utilizing local agents for the monetary exchange part of this.

You don't think they will start with some folks with numerous ** and ** transactions to 30 different people in 5 Latin American countries and start asking questions? The 'I'm sending funds to my bastard child and his mom in Nicaragua' excuse is fine for one transaction to a $10/hr clerk at Walmart, but when they start looking at ALL of your transactions......

I'm the last person on Earth to be a conspiracy theorist, but it just seems like the next logical step.

I don't agree. That would be amazingly difficult. If they were going to do it, they'd do it the same wave as this.

What are they going to charge people with sending money to one of these individuals?? Whatever it is, it would never hold up.

[laxdjock]

Boo!

[mtneer1212]

I don't agree. That would be amazingly difficult. If they were going to do it, they'd do it the same wave as this.

What are they going to charge people with sending money to one of these individuals?? Whatever it is, it would never hold up.

Tax evasion for winners?

It would be difficult, but they don't need to get everyone -- just a few........

Regardless if anything comes of this or not -- I don't believe we will ever get to a point where we can enjoy the safety and speed of the Neteller days...... even in a Democratic government.

[Bluehorseshoe]

Tax evasion for winners?

It would be difficult, but they don't need to get everyone -- just a few........

Regardless if anything comes of this or not -- I don't believe we will ever get to a point where we can enjoy the safety and speed of the Neteller days...... even in a Democratic government.

Tax evasion??? So if I just declare my winnings I don't have a problem?

[mtneer1212]

Tax evasion??? So if I just declare my winnings I don't have a problem?

Exactly -- just like the rest of us do...........

[TeamPlayer]

lets see, MOST books don't take credit cards anyway...No way of knowing who a check is coming from when its a 3rd party processor, Don't remember the last time a book paid me with an EFT.

This is just something to make people think who voted for this that NOW its in place, well lets see what affect it has, i say very little to none.

You are spot on, Brock Landers. Everybody may be a winner.

1.) Business should continue as usual for us free people who care about our freedom.

2.) The Republicans can pretend that they did something for the bible thumpers/religious Rrght

3.) The religious right can believe that they made society a more holy place

4.) After implementing some ho-hum procedures which can be circumvented, the banks no longer need worry about being fined by the federal government

[Brock Landers]

You are spot on, Brock Landers. Everybody may be a winner.

1.) Business should continue as usual for us free people who care about our freedom.

2.) The Republicans can pretend that they did something for the bible thumpers/religious Rrght

3.) The religious right can believe that they made society a more holy place

4.) After implementing some ho-hum procedures which can be circumvented, the banks no longer need worry about being fined by the federal government

you summed it up better than i ever could!

[Santo]

"Compliance with the rule is required by December 1, 2009."

Plenty of time for solutions to be found.

[LT Profits]

bleh. How would this change the environment we have been in the last two years?

[vanzack]

You are spot on, Brock Landers. Everybody may be a winner.

1.) Business should continue as usual for us free people who care about our freedom.

2.) The Republicans can pretend that they did something for the bible thumpers/religious Rrght

3.) The religious right can believe that they made society a more holy place

4.) After implementing some ho-hum procedures which can be circumvented, the banks no longer need worry about being fined by the federal government

Bingo.

And may I add another:

5. The gambler should be happy about this because #1 through #4 above means that we have a wink wink agreement with the govt. They get to go around saying that "internet gambling is illegal" (which it isnt), and we get to keep gambling without some really intrusive law that criminalizes the player. Effectively, nothing changes from today, banks have no way to code bank wires and checks, so it is business as usual for the player - but the preacher in Kansas gets to tell his congregation that gambling is illegal due to great humanitarians like Bill Frist.

Not the best possible solution but compared to some alternatives, I will take it.

[Willie Bee]

"You guys are on double, secret probation!!!!"

Thanks for the early morning chuckle, Blue.

[thespeculator]

this news actually made cnn headline news, the girl said the law will outlaw all internet gambling , except horses and state lotteries, then she added her own commentary , it is a good thing it will keep people from losing there.

so correct me if i am wrong
the lottery players all play responsibly, the lure of millions of dollars has never tempted any player???????
certainly no one has have lost more they can afford at the track??????
Like another poster said , the books will find a way around this.

[vanzack]

this news actually made cnn headline news, the girl said the law will outlaw all internet gambling , except horses and state lotteries, then she added her own commentary , it is a good thing it will keep people from losing there.

so correct me if i am wrong
the lottery players all play responsibly, the lure of millions of dollars has never tempted any player???????
certainly no one has have lost more they can afford at the track??????
Like another poster said , the books will find a way around this.

This is exactly what I said above. This is the "wink wink" deal between us and the govt and the media. They say all internet gambling is "outlawed" even though this has nothing to do with outlawing anything with internet gambling. We get to go about our business with a few more hassles moving money.

Like I said - I will take it - they are satisfied with their crusade, and by now (2 years later) we have all figured out ways around it - and there is nothing that makes what we are doing illegal in any way.

[vanzack]

this news actually made cnn headline news, the girl said the law will outlaw all internet gambling , except horses and state lotteries, then she added her own commentary , it is a good thing it will keep people from losing there.

so correct me if i am wrong
the lottery players all play responsibly, the lure of millions of dollars has never tempted any player???????
certainly no one has have lost more they can afford at the track??????
Like another poster said , the books will find a way around this.

And BTW - you should know - all lottery players, jai alai, dogs, horses, poker bettors, indian casino gamblers, las vegas gamblers, and bingo players all bet responsibly and the govt has verified this and is only looking to protect you - the sportsbettor - from financial ruin which is inevitable if you bet on a football game, as opposed to a jai alai game because jai alai is played with baskets on their arms and football is not (and the ball is much harder).

[thespeculator]

there is great article at covers.com , in it they quote one of the leading , online gambling lawyers, the lawyer basically says this law won't change anything.

Atleast that is how i understood it , if anyone is interested , they can check it out,

[picantel]

So much for creditwagering's theory. They stated they cannot be touched because they do not take phone bets. Of course, they were a bit off in their assessment and now they are way off. IF the government ever catches them they are going up creek for a long long time. I hope it is worth it.

[TeamPlayer]

#5

I forgot to add #5 to the aforementioned list.

5.) The sports leagues such as the NFL can also pretend that they tried to stop all sports wagering. Of course, it's also with a Wink Wink because surely they must realize that many people watch their product on television because they're wagering on it.


On a side note, I must say taht this past week has been great for many reasons including the following three:

- Obama was elected and thus the U.S. constitution has been saved.

- It's cool to be an American once again!

http://news.yahoo.com/s/ap/eu_election_an_american_abroad/print;_ylt=Aib0wEnmBcwsB7wkzwGV871bbBAF

Everything in the article is true. I know it because I travel.

- People are still free to wager a little bit of their hard earned money on a sports game.

[Brock Landers]

The New Internet Gaming Regulations: Nothing Changes

© Copyright 2008, Professor I Nelson Rose, www.GamblingAndTheLaw.com.

It took 66 pages of fine print. But in the end the federal regulators charged with making regulations to enforce the Unlawful Internet Gambling Enforcement Act (“UIGEA”) simply gave up. They were supposed to make rules forcing financial institutions to identify and block money transfers for unlawful Internet gambling transactions. But they were defeated by the difficulty of defining what was unlawful and the impossibility of tracking individual transactions. So they told credit card companies to come up with some additional code numbers for gambling transactions and everyone else can basically continue to do what they are now doing – oh, and financial institutions have to send a notice to all their clients telling them not to be involved in illegal gambling.

How it affects US players
Only a very few online poker players will be affected. Anyone who uses paper checks, wire transfers, foreign bank credit cards, or overseas payment processors to load, reload or cash out can continue to do so. The only players who might face some difficulties are those using U.S. bank debit cards or U.S. money transfer firms like Western Union.

Brief review of the UIGEA
As is well-known by now, the new regulations are the result of a bill rammed through Congress in 2006 by then Senate Majority Leader Bill Frist (R.-TN), without being read. It called for the impossible: The United States Treasury and Federal Reserve Board, in consultation with the Department of Justice, were told to make regulations requiring payment processors to identify and block restricted unlawful Internet gambling transactions.

Unfortunately for these federal agencies, the UIGEA does not defines what is unlawful. Whether a particular transaction is illegal depends upon the particular facts and whether it violates some other federal, state and possibly even tribal law. As the agencies themselves admit, they do not have the resources or ability to make that determination. So, in their proposed regulations, the agencies put the burden on the banks.

The proposal was met with ridicule. If the federal government could not determine whether a particular transaction involved illegal gambling, how was a bank employee supposed to make that determination? This was particularly ridiculous since banks do not know what is being bought with a credit card or money wire transfer.

Agencies give in, not much changes
The agencies, in their final rule, gave in. Except for calling for additional code numbers for credit card transactions, the regulations expressly tell financial institutions to not spend any time looking at individual transactions. And they make it clear that any money sent to an individual, even by a gambling site, is not a “restricted transaction” under the statute or regulations.

It's not a crime to gamble online
I have received emails from online poker players worried that they might be violating the UIGEA. The statute does create a new crime, being a gambling business that accepts money for an illegal transaction. But by its own terms it does not apply to individual bettors. And the regulations, which only apply to financial institutions, now make it clear that payment processors should not waste their time checking on where money is sent by individuals, and money received by individuals is not even covered by the UIGEA.

Federal Reserve smartens up
Why not require banks to see if their patrons are wiring money to illegal overseas gaming operators? The agencies admitted “there are no reasonably practical steps that a U.S. participant [financial institution] could take to prevent their consumer customers from sending restricted transactions cross-border.” They thought about requiring banks to ask their customers, “Are you sending money for illegal Internet gambling?” But someone at Treasury or the Federal Reserve had the brains to realize that the answer the banks were going to get would always be “No.”

The final rule becomes effective January 19, 2009. If there is any doubt that this is one of those last minute regulations being pushed through by the Bush White House, look at the date. When Barack Obama is sworn in as president the next day he may or may not be able to undo these regs.

Banks and credit card companies are required to put some new procedures into place. They have until December 1, 2009. The original proposed regs would have impacted 253,368 small businesses and an unknown number of large companies. The final rule has been so cut back that only 12,267 small businesses, or less than five percent of the original estimated number, are subject to the regulations. Although very few companies will spend much time with these new regulations, it’s still an enormous waste of time. The agencies estimated that the recordkeeping burden on financial institutions “to develop and establish the policies and procedures required by the Act and this final rule” will add up to “approximately one million hours.”

The federal agencies still put the burden on the financial institutions to do “due diligence.” But what this means is banks have to do the same amount of “know your client” work with new commercial customers that they now do to prevent money laundering: basically ask the company owners what their business is and do a little checking to confirm they are telling the truth. If the new commercial customer proves it is not in the gambling business, there’s nothing more to do. If it is in the gambling business, the bank then has to ask it for its state license. The new rule says that getting a license is enough, because it is up to the states to regulate the Internet gambling operation of their licensees.

Of course, the only operators there are in the U.S. at present who have licenses are parimutuel betting outlets. Some state lotteries also use the Internet, but they are deemed to be automatically O.K. because they are a part of state government. If California or any other state authorizes Internet poker, financial institutions will be able to do business with those online poker rooms, because they will have state licenses.

There aren’t a whole lot of illegal gambling websites operating out of the U.S., so the new rule will have almost no impact.

What about licensed and unlicensed poker rooms and others overseas? If there are any left with direct business relationships with U.S. banks – and I doubt that there are – they will have to start using foreign banks, like every other foreign operator. American banks are not expected to ask their foreign respondent banks about their commercial customers.

What's really interesting
The most interesting part of the new rule, for me, is that unlicensed Internet gaming operators can set up business relations with U.S. financial institutions, if the operators “provide a reasoned legal opinion that it does not engage in restricted transactions.” That means if I, as a licensed attorney and an expert on gaming law, give a legal opinion that a gambling operator is not violating federal or state laws, that should be good enough.

This is important for games, including poker, that have free alternative means of entry or are otherwise lacking in consideration. It would also cover contests that are primarily skill – including poker tournaments.

The federal agencies went out of their way to say that they don’t believe that poker involves enough skill to take it out of the definition of gambling under the UIGEA. They declared that there are two separate standards. A lottery or other drawing involves a “bet or wager” only if winning is predominantly subject to chance. But, a “game subject to chance” can still be gambling “even if chance is not the predominant factor in the outcome of a game, but was still a significant factor.”

Of course even if a poker tournament or other game involves some element of chance, it would only fall under the UIGEA if it violated some other federal or state laws. I have given legal opinions, and will undoubtedly now give more, that games that are predominantly skill are legal under federal law and the laws of most of the states.

Credit Card deposit changes for US players
The one change that will affect online operators, and therefore players, is the addition of new transaction codes for credit card companies. For illegal and gray market operators, including overseas Internet poker sites, there is probably going to be little change. Credit card companies already have a merchant code for gambling, 7995, and American banks already refuse to let their credit cards be used for 7995 purchases.

Overseas banks are not subject to the UIGEA. The agencies admit companies issuing cards in other countries are not about to ask their merchants if they are illegally taking bets from Americans.

Conclusion and "Legal Gambling"
But the bright spot for this new rule is that it calls for new credit card codes for legal online gaming. U.S. licensed parimutuel outlets that do Advanced Deposit Wagering should lobby for their own special code with ****, **********, American Express, etc., so that banks will know that this is a legal form of online gaming. Gambling that is conducted on Indian land pursuant to federal and tribal laws is also legal and should get a code number. There should be additional codes created for other forms of gambling, including games of skill and games with free alternative means of entry. These all would be limited to operators who are licensed or have obtained “a reasoned legal opinion” that they are not involved in unlawful Internet gambling transactions. American banks should then feel free to allow their credit cards to be used for these legal Internet gaming.
END

[Brock Landers]

i'd sum it up like this...

IF we are able to continuing doign what we do online a few months from now, we are good Forever! I think this was the end all law for those concerned with this thing. I'd like think very very little will change from here on out, ** isn't going to stop taking money from being sent to juan gonzalez in peru, because they never did that really in the last decade, so why would they now, its their bread and butter.

Bottom line, this should be the end of the line for this rediculous regulation game, its now the wild west and time for a new "neteller" type to step up.

JJ, you could be the guy, you got the connections, get something setup off shore and lets get it rolling, GOLDMINE is what you call it!

[John Dough]

** isn't going to stop taking money from being sent to juan gonzalez in peru

The ex-Rangers slugger? What's he doing is Peru?

[JBC77]

There will always be away around it, some better than others. Just too much money at stake and too many bright people out there trying to find ways around whatever law they implement. It's a shame they don't realize they can't stop us....

[krk1030]

Why they refuse to make it legal and get extra tax money is beyond me.

Not going to complain.