Proposed Comments

[JPFisher55]

I thought that it would be a good idea to have a thread devoted to proposed comments. So I will post my first two proposed comments.

The first comment concerns opposition to the creation of a list of UIG businesses.

Jennifer J. Johnson
Secretary, Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, N.W.
Washington, DC 20551

Dear Secretary Johnson,
"Under II. E. 6. of Supplementary Information to the proposed PROHIBITION ON FUNDING OF UNLAWFUL INTERNET GAMBLING, the agency requests comments on the feasibility of creation of a list of unlawful internet gambling businesses. In my opinion, the creation of such a list is not practical or judicious.
Under the UIGEA, the term unlawful internet gambling is essentially defined as any internet gambling that violates any applicable state or federal law. However, the power to interpret state or federal laws is granted to the judiciary branch of government; not to the executive. So how can any government agency determine whether any business is engaged in unlawful internet gambling? Interpretation of the laws affecting internet gambling of all 50 states and the federal government and applying these laws to determine which businesses are violating them would place any agency in the position of being judge and jury for any potential business.
Besides being extremely costly, I believe that any such judgment should be left to the judiciary branch and not any government agency. Without some judicial ruling about any business engaged in internet gambling how can an agency insure that such business is engaged in unlawful internet gambling?
In my opinion, the Agencies discussion about the difficulties of creating a list of businesses engaged in unlawful internet gambling is correct. In my opinion, the Agencies cannot establish, maintain and update such a list."

Sincerely
JPFisher55

TE, and others, let me know what you think. Also, anyone feel free to copy or other use this comment.

[JPFisher55]

This is my comment with a proposed definition of the term "unlawful Internet Gambling." It is not an alternative to TE's proposed comment on overblocking by banks. They could be separate comments or could be combined.

Jennifer J. Johnson
Secretary, Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, N.W.
Washington, DC 20551

Dear Secretary Johnson,

I cannot understand how the UIGEA or your proposed regulations can be enforced or interpreted without defining the term “unlawful internet gambling.” Surely, your agency does not intend for a bank to have to define this term. Yet, how can a bank know if any transaction is restricted under the UIGEA and the regulations without defining this term. In fact, unless a definition of unlawful internet gambling can be established, I believe that the UIGEA and its regulations are so vague that they could not be enforced under the US constitution.

Under federal case law, In Re MasterCard International Inc., 313 F.3d 257 (5th Cir. 2002) and other cases, the Wire Act covers sports betting only (excluding horse racing per the Interstate Horse Racing Act). Additionally, the Professional and Amateur Sports Protection Act of 1992 covers interstate (and, in 46 states, intrastate) professional and amateur sports betting. Since federal case law holds that the Wire Act only covers sports betting, then, for the application under federal law, the term unlawful internet gambling should only include all internet sports betting except for horse racing as defined under the Interstate Horse Racing Act.
Very few states have expressly outlawed Internet gambling. For application under state laws, to keep from placing an unfair burden on our banks, in defining the term unlawful internet gambling, the regulations should specify that state laws must contain a provision that uses the term internet gambling and expressly states that all internet gambling is unlawful, or other similar language or expressly states the specific forms of internet gambling banned by that state. Additionally, states wishing to have federal assistance in enforcing their Internet gambling restrictions should be required to request this assistance from the Treasury Department. This will enable our banks to have a clear understanding of what it required of them.

Thus, I recommend that unlawful internet gambling is defined to mean accepting, receiving or otherwise knowingly transmitting a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager (1) involves, or is related to, a sporting event or sporting contest; except for horse racing, (2) involves, or is related to, a game of chance, contest, card game or other event that a statute of the state in which the bank resides expressly prohibits the use of the Internet to place, receive or otherwise transmit such bet or wager or (3) involves, or is related to, a game of chance, contest, card game or other event, and the state in which the bank resides expressly prohibits, by statute, all Internet gambling.

If your agency does not feel that it has the power to define the term unlawful Internet gambling, then I suggest that you use the following non-exclusive examples.
1. In any state, accepting, receiving or otherwise knowingly transmitting a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager involves, or is related to, a sporting event or sporting contest; except for horse racing is unlawful Internet gambling.
2. Accepting, receiving or otherwise knowingly transmitting a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager involves, or is related to a game of chance, card game, casino or other contest that does not involve a sporting event or sporting contest is not unlawful Internet gambling unless (1) the state in which the bank resides expressly prohibits, by statute, all Internet gambling or (2) the state in which the bank resides expressly prohibits, by statute, a bet or wager by use of the Internet on the particular game of chance, card game, casino or other contest that such bet or wager involves or relates.
Sincerely,

Please feel free to copy or use this comment in any manner that assists our efforts.

[Coy_Roy]

[ QUOTE ]
This is my comment with a proposed definition of the term "unlawful Internet Gambling." It is not an alternative to TE's proposed comment on overblocking by banks. They could be separate comments or could be combined.

Jennifer J. Johnson
Secretary, Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, N.W.
Washington, DC 20551

Dear Secretary Johnson,

I cannot understand how the UIGEA or your proposed regulations can be enforced or interpreted without defining the term “unlawful internet gambling.” Surely, your agency does not intend for a bank to have to define this term. Yet, how can a bank know if any transaction is restricted under the UIGEA and the regulations without defining this term. In fact, unless a definition of unlawful internet gambling can be established, I believe that the UIGEA and its regulations are so vague that they could not be enforced under the US constitution.

Under federal case law, In Re MasterCard International Inc., 313 F.3d 257 (5th Cir. 2002) and other cases, the Wire Act covers sports betting only (excluding horse racing per the Interstate Horse Racing Act). Additionally, the Professional and Amateur Sports Protection Act of 1992 covers interstate (and, in 46 states, intrastate) professional and amateur sports betting. Since federal case law holds that the Wire Act only covers sports betting, then, for the application under federal law, the term unlawful internet gambling should only include all internet sports betting except for horse racing as defined under the Interstate Horse Racing Act.
Very few states have expressly outlawed Internet gambling. For application under state laws, to keep from placing an unfair burden on our banks, in defining the term unlawful internet gambling, the regulations should specify that state laws must contain a provision that uses the term internet gambling and expressly states that all internet gambling is unlawful, or other similar language or expressly states the specific forms of internet gambling banned by that state. Additionally, states wishing to have federal assistance in enforcing their Internet gambling restrictions should be required to request this assistance from the Treasury Department. This will enable our banks to have a clear understanding of what it required of them.

Thus, I recommend that unlawful internet gambling is defined to mean accepting, receiving or otherwise knowingly transmitting a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager (1) involves, or is related to, a sporting event or sporting contest; except for horse racing, (2) involves, or is related to, a game of chance, contest, card game or other event that a statute of the state in which the bank resides expressly prohibits the use of the Internet to place, receive or otherwise transmit such bet or wager or (3) involves, or is related to, a game of chance, contest, card game or other event, and the state in which the bank resides expressly prohibits, by statute, all Internet gambling.

If your agency does not feel that it has the power to define the term unlawful Internet gambling, then I suggest that you use the following non-exclusive examples.
1. In any state, accepting, receiving or otherwise knowingly transmitting a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager involves, or is related to, a sporting event or sporting contest; except for horse racing is unlawful Internet gambling.
2. Accepting, receiving or otherwise knowingly transmitting a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager involves, or is related to a game of chance, card game, casino or other contest that does not involve a sporting event or sporting contest is not unlawful Internet gambling unless (1) the state in which the bank resides expressly prohibits, by statute, all Internet gambling or (2) the state in which the bank resides expressly prohibits, by statute, a bet or wager by use of the Internet on the particular game of chance, card game, casino or other contest that such bet or wager involves or relates.
Sincerely,

Please feel free to copy or use this comment in any manner that assists our efforts.

[/ QUOTE ]


That's pretty good.

[oldbookguy]

Excellent, you might want to work in the Humphries / N.J. case as well that determined 'contests' were not in violation of any gambling laws per say.

obg

[DeadMoneyDad]

[ QUOTE ]
This is my comment with a proposed definition of the term "unlawful Internet Gambling." It is not an alternative to TE's proposed comment on overblocking by banks. They could be separate comments or could be combined.

[/ QUOTE ]

Right now I think IMPO that attempting to defeat the rule completely is or should be the thrust of our initial comments. I don't see any value in helping the Gov't write a better rule that may or may not include language that helps poker.

IMPO we might give that a shot later on if and only if it looks like from reviewing the commnets and reaching out to people in the process if we thought the Agencies were going to try to re-write the rules with better language.

IMPO at least for now the best attack is to show how unworkable and possibly un-constitutionl any attempted regualtion would be no matter how well written any proposed regulation would be.



D$D

[JPFisher55]

D$D, I agree with you. However, the "Agencies" cannot just abandon the regulations as hopeless even though the entire UIGEA is hopeless. They do not have the power. That is why we have courts of law.
But they do have the power to adopt regulations that might be better for us online poker players. To be honest, I warned TE that I did not think that all our comments will matter. I think that the regulations are deliberately vague so that the DOJ and Treasury can intimidate the banks like they have online gambling entities. The Agencies want to see "overblocking" by the banks.
The real reason that the Agencies will not create a list of UIG businesses is that any listed business would clearly have standing to sue and one loss by the government might unravel their entire campaign against online gambling.
However, TE stated that we have to try anyway. I agree, so I will give it my best effort. My definition of UIG and/or my examples would benefit online poker players in most states. Also, I think that no so-called black list is, at present, best for our side.

[MiltonFriedman]

You write "IMPO we might give that a shot later on".

There is no "later on" for comments, THIS is the opportunity to comment.

Fire all your guns now, if there is a litigation effort "later on", you would want to have comments in the record to support your claims.

[Skallagrim]

JP - these are great comments. I think there can be some changes and some improvement (e.g., I think you should explain why a bank should only have to follow the law of the state its in - namely, it would be far too expensive to know the law of every state).

I just have been too busy on my real job to, so far, make the touch-ups I think could help. May take me till the weekend to really get going here, sorry. But while I think i can add some value, I also think everyone else can add some value here too.

JP has given us a great first comment, lets now work to make it even better.

Skallagrim

PS D$D, JP's proposal's are clearly better FOR POKER than the current regulations. They also make it even easier for banks to comply without disrupting the play from MOST states. There is not much we can do in those other few states through the regulations.

[HelloandGoodby90]

I worry that by pushing for more specific regs.

A. We risk completely shutting down poker until any lawsuit may happen, because the banks have a set of specific rules outlawing poker, to go off of.

B. The sites are going to pull out of the areas they are not allowed to operate in "by law." States, or perhaps the entire U.S.

C. SOOOO many states are going to realize they need internet gambling laws, and start passing them, banning poker.

Now, it is entirely possible, that the sites will continue to ignore any U.S. laws, and operate as usual. I hope that happens. But, we risk the banks not allowing them to operate, thanks to tougher enforcement.

I guess I have a few questions. Many people on these boards want tougher, more specific regs.

1. Do we risk the sites pulling out of the U.S., or pulling out of certain parts of the U.S., due to the tougher regs?
2. Do we risks state's realizing that they need internet gaming laws, thanks to the more specific regs?
3. Do we risk the FR and DOT, writing such specific regs, that poker is hurt? (I suppose that means we can sue)

I hate to break up the status quo. Right now, I live in the United States, in a state where it is a felony to play online poker. I am still able to play if I wanted, although I don't. I hate for that to change.

[Adebisi]

I didn't read all of these comments but IMO, the best way to really take the teeth out of the UIGEA would be to create a private cause of action against the banks for any customer who has a transaction wrongfully declined. If a person had a transaction to a non-illegal gambling company denied, and could prove it, the bank would have to pay him $2500 or something like that.

[DeadMoneyDad]

My proposed comments:


Docket Number Treas-DO-2007-0015

Jennifer J. Johnson
Secretary, Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, N.W.
Washington, DC 20551



Secretary Johnson,

I realize that the Federal Reserve and The Department of the Treasury have been placed in a very bad position by the actions of Congress with the passage of the UIGEA law. This clear from reading between the lines of your comments in the preface of the proposed rule in the comments concerning Docket Number Treas-DO-2007-0015.

As you point out the main issue is one of incomplete law making; “The Act does not spell out which activities are legal and which are illegal, but rather relies on the underlying substantive Federal and State laws.” You further make it clear that you are trying to do the best job you can under the circumstances; “to establish policies and procedures reasonably designed to identify and block or otherwise prevent or prohibit restricted transactions.”

However in my opinion Congress has tasked you with not only an impossible job given the complexity of all the various state laws concerning the legality or illegality of various wagers. While I applaud your goal “to achieve the purposes of the Act as soon as is practical, while also providing designated payment systems and their participants sufficient time to adapt their policies and practices as needed to comply with the regulation.”

However I urge you to abandon this attempt to correct the mistakes of Congress, by trying to craft an unworkable fix with a regulatory scheme so fraught with problems that it will only make matters worse rather than better.

Given that determining the legality or illegality of the source of any funds being transferred is a uniquely governmentally activity that, in my opinion, no matter how well intentioned Legislative or Executive Branches of Government may be in an attempt to “solve a social problem”, that power is solely reserved for the Judicial Branch of our government in our Constitution.

Even if the Justice Department as suggested in the former Attorney General's Testimony of January 12th, 2007 before the Senate Judiciary Committee could as Senator Kyl almost demanded create a perfect list of “offending online gambling sites” its creation let alone practical implementation, if even possible under current law, would be useless.

The mere fact that transaction originated from or was destined to a site where it was possible for a US citizen to potentially violate US or state laws by placing a wager is not proof of any illegality. I could make a deposit from a jurisdiction where if I did indeed gamble the legality might be in question, but I could also deposit and go to a jurisdiction where any such gambling was entirely legal. You point out such jurisdictional concerns in the preface of the rule itself.

Unless the ultimate goal of our government is to have the NSA track and record not only every citizens location when they make a deposit or with draw from a gambling site, but also where they were when the actual “illegal” gambling took place to prove a violation of the UIGEA and set up a special “Gambling Court” to protect the due process rights of US citizens that will arrise from inevitable disputes from both over blocked as well as under blocked potentially illegal gambling deposits to the US banking system, I firmly urge you to suggest to Congress they do their jobs rather than looking to your Agency to fix their problems.

In conclusion I strongly urge you to remove the proposed rule from the docket and join me in sending a letter to Congress to either repeal the UIGEA Law or write legislation that is both Constitutional and practical.

Yours,


D$D<--enjoying this immensely

[TheEngineer]

This is the only one I've submitted:

Jennifer J. Johnson
Secretary, Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, N.W.
Washington, DC 20551

Dear Secretary Johnson,

Following careful review the proposed regulations (Docket No. R-1298) implementing the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), I agree with the authors of the regulations - the regulations as proposed do have several weaknesses that are inherent to UIGEA itself. The primary risk is that of overblocking transactions to legal businesses.

I live in Kentucky. Internet horse race betting is legal here under the Interstate Horse Racing Act of 1978 (IHRA). Additionally, Internet poker is not illegal here under any state or federal law (federal case law has consistently held that the Wire Act applies only to sport betting). Despite the exclusion of the domestic horse racing industry operating under the auspices of the IHRA from the provisions of the Act, banks may choose to comply with these regulations by banning all Internet gambling transactions (as was noted in the proposed regulations themselves). I am concerned that these legal businesses will be unfairly affected by these regulations, affecting my ability to access and patronize these legal businesses.

An additional issue concerning overblocking is the risk of an illegal restraint of trade. As the United States recently lost its trade dispute (and its final appeal) with Antigua and Barbuda with regards to providing of cross-border betting services, additional restrictions via overblocking resulting from these regulations could result in either new or increased WTO penalties, especially as domestic financial transactions are largely excluded from these regulations.

I urge a revision to the proposed regulations to ensure a proactive bias towards processing of all financial transactions. To accomplish this, I propose revising the regulations to remove from the regulations all penalties for all but willful and egregious noncompliance. Also, I propose that the Monitoring section of the regulations be revised to require banks to process all lawful transactions.

The last thing our country needs is more impediments to lawful financial transactions.

Thank you for your consideration.

Sincerely,

TheEngineer
[address]

[JPFisher55]

[ QUOTE ]
JP - these are great comments. I think there can be some changes and some improvement (e.g., I think you should explain why a bank should only have to follow the law of the state its in - namely, it would be far too expensive to know the law of every state).

I just have been too busy on my real job to, so far, make the touch-ups I think could help. May take me till the weekend to really get going here, sorry. But while I think i can add some value, I also think everyone else can add some value here too.

JP has given us a great first comment, lets now work to make it even better.

Skallagrim

PS D$D, JP's proposal's are clearly better FOR POKER than the current regulations. They also make it even easier for banks to comply without disrupting the play from MOST states. There is not much we can do in those other few states through the regulations.

[/ QUOTE ]

Skall, I'll hold off submitting any comments until you have a time to submit edits. I assumed that a bank would only have to follow the laws of the state in which it resides. Of course, multi-state banks will have to have their branches in each state follow the laws their respective states. My use of the words expressly prohibits is to make interpretation of the various state laws simple for the banks and favorable to us. Maybe this definition and/or examples will help prevent overblocking. I am not sure that explaining that stratedgy in the comment is a good idea.

[TheEngineer]

[ QUOTE ]
D$D, I agree with you. However, the "Agencies" cannot just abandon the regulations as hopeless even though the entire UIGEA is hopeless. They do not have the power. That is why we have courts of law.
But they do have the power to adopt regulations that might be better for us online poker players. To be honest, I warned TE that I did not think that all our comments will matter. I think that the regulations are deliberately vague so that the DOJ and Treasury can intimidate the banks like they have online gambling entities. The Agencies want to see "overblocking" by the banks.
The real reason that the Agencies will not create a list of UIG businesses is that any listed business would clearly have standing to sue and one loss by the government might unravel their entire campaign against online gambling.
However, TE stated that we have to try anyway. I agree, so I will give it my best effort. My definition of UIG and/or my examples would benefit online poker players in most states. Also, I think that no so-called black list is, at present, best for our side.

[/ QUOTE ]

I've not yet sent in a comment asking for a definition for "unlawful Internet gambling". We may or may not be better off without the term defined. Hopefully we'll have an answer in the near term. There's really no hurry here.

Also, the overblocking issue, combined with the show of strength we've made this year, may buy us new, strong allies. Their comments plus our comments may matter.

[JPFisher55]

TE, I think that our comments will bring us lots of allies. The problem is that the Bush Administration does not listen to anyone but their religious fanatics. But our efforts are worth it for the new allies and for potential future litigation.
So, I'll wait for further directions and changes by you, Skall and the group before submitting any comment.
I really like your overblocking comment. But I suspect that the bureaucrats in the Bush administration are smiling because it confirms that their regulations will have the affect that they desire. They may not like that we realize their plan, but I doubt that they care.

[Tuff_Fish]

[ QUOTE ]
...
.
I just have been too busy on my real job to, so far, make the touch-ups I think could help. May take me till the weekend to really get going here, sorry....
.


[/ QUOTE ]

Sir, you need to get your priorities in order!

/images/graemlins/smile.gif

Tuff

[Tuff_Fish]

[ QUOTE ]
...
.
The problem is that the Bush Administration does not listen to anyone but their religious fanatics. ...
.


[/ QUOTE ]

But the hope is that the looming disaster (and it is a disaster when I promise to vote democrat) will sober up the rest of what is left of the GOP and get their minds focused more where it belongs.

Tuff

[Nortonesque]

[ QUOTE ]
I didn't read all of these comments but IMO, the best way to really take the teeth out of the UIGEA would be to create a private cause of action against the banks for any customer who has a transaction wrongfully declined. If a person had a transaction to a non-illegal gambling company denied, and could prove it, the bank would have to pay him $2500 or something like that.

[/ QUOTE ]
Banks cannot be held liable for incorrectly blocking a transaction according to the UIGEA. However, there would still be some legal costs for the bank, so this strategy might work.

[Jimbo]

[ QUOTE ]
The real reason that the Agencies will not create a list of UIG businesses is that any listed business would clearly have standing to sue and one loss by the government might unravel their entire campaign against online gambling.


[/ QUOTE ]

I believe you have stated this at least three times in various threads. Just what "standing" would a foreign entity have to sue the US government without their permission? Before you toss out the WTO please keep in mind that the US governament doesn't really care abiyt them now do they? Inertnational court, nope sorry about that, one more and three strikes means you are out.

Jimbo

[JPFisher55]

[ QUOTE ]
[ QUOTE ]
The real reason that the Agencies will not create a list of UIG businesses is that any listed business would clearly have standing to sue and one loss by the government might unravel their entire campaign against online gambling.


[/ QUOTE ]

I believe you have stated this at least three times in various threads. Just what "standing" would a foreign entity have to sue the US government without their permission? Before you toss out the WTO please keep in mind that the US governament doesn't really care abiyt them now do they? Inertnational court, nope sorry about that, one more and three strikes means you are out.

Jimbo

[/ QUOTE ]

Ban please an obvious troll.

[TheEngineer]

PPA is working on talking points for us to use for our sumbitted comments. They are reviewing the regs in D.C. and are formulating a response. They hope to have these points posted early next week.

It's far more important to get these right than it is to get something out fast. We have until Dec. 12, and there is no bonus for being first.

[TheEngineer]

Online commenting for UIGEA is now available. Instructions are at: https://pokerplayersalliance.org:443/news/newsandarticles_article.php?DID=293

[whangarei]

[ QUOTE ]
PPA is working on talking points for us to use for our sumbitted comments. They are reviewing the regs in D.C. and are formulating a response. They hope to have these points posted early next week.

[/ QUOTE ]

Sounds good. Just curious, and I know I've mentioned this several times, but will they just post this call for action or reach out to members by email or something. I'd guess < 5% of members will see the web site post but > 80% will see an email request for action.

[TheEngineer]

[ QUOTE ]
[ QUOTE ]
PPA is working on talking points for us to use for our sumbitted comments. They are reviewing the regs in D.C. and are formulating a response. They hope to have these points posted early next week.

[/ QUOTE ]

Sounds good. Just curious, and I know I've mentioned this several times, but will they just post this call for action or reach out to members by email or something. I'd guess < 5% of members will see the web site post but > 80% will see an email request for action.

[/ QUOTE ]

There's an email coming in the next couple of weeks.

[Jimbo]

[ QUOTE ]
Ban please an obvious troll.


[/ QUOTE ]

I am addressing your rude response in order to help you better form your thoughts. A simple answer will suffice, it is obvious to anyone with a modicum of legal knowledge that you are spouting off about a subject you know nothing about.

You also never replied when I pointed out your incorrect statement about Federal Regulations not having the force of law which they do 100% of the time.

If anyone should be banned it would be you because even in your vain attemps to be helpful you disseminate such poor and innacurate information and state it as gospel.

Please finish college first before delving into complex subjects or at least do some simple research.

Jimbo

[JPFisher55]

IRS regulations are routinely overturned as contrary to the IRC by the Tax Court and Federal District Courts. In fact, the IRS unsuccessfully tries the same case over its regulations multiple times, such as hobby v. business in commercial fishing. Even EPA regulations are overturned as outside their power provided by statute or not adequate to satisfy statutory requirements. Most agencies must adopt regulations within the scope the statutes that established the agency or conform to the laws that the agency enforces.
SEC regulations have the power of law because the original enabling statutes passed in 1933 and 1934 gave them the power to make regulations with the power of laws.
If you went to law school which I doubt; ask for a refund of your tuition.

[Jimbo]

[ QUOTE ]
IRS regulations are routinely overturned as contrary to the IRC by the Tax Court and Federal District Courts. In fact, the IRS unsuccessfully tries the same case over its regulations multiple times, such as hobby v. business in commercial fishing. Even EPA regulations are overturned as outside their power provided by statute or not adequate to satisfy statutory requirements. Most agencies must adopt regulations within the scope the statutes that established the agency or conform to the laws that the agency enforces.
SEC regulations have the power of law because the original enabling statutes passed in 1933 and 1934 gave them the power to make regulations with the power of laws.
If you went to law school which I doubt; ask for a refund of your tuition.

[/ QUOTE ]

An IRS regulation by defintion cannot be overturned unless it is deemed to be unconstitutional by a Federal court. Most, if not all, IRS disputes are handled by tax courts. Again an IRS regulation is never overturned, it has the force of law. Rulings and specific procedures are ocassionally but not often overturned.

Again I suggest you do more research other than from a Wiki. Just to make you feel a bit better the hobby v. business in commercial fishing that was successfully challenged was a procedure, not a regulation.

Jimbo

[JPFisher55]

I am going to try one more time. An IRS ruling is just a letter opinion that states an IRS opinion on what the law is on a issue. What you are calling procedures (I assume that you do not mean internal IRS audit procedures) are regulations. A section of the Internal Revenue Code IRC is a statute not a regulation. Each such section has numerous IRS regulations that govern how the IRS enforces and interprets it. These regulations do not have the power of law. They must conform to the law as interpreted by a federal court. A long time ago, my family successfully challenged, before the US Supreme Court, an IRS regulation that held that a family business insuring the lives of debtors to another family business was not an insurance company.
Yes, the Tax Court governs most tax disputes because the taxpayer does not have to pay the tax that the IRS says he owes to contest the matter in Tax Court. But the federal district courts decide lots of IRS cases. The taxpayer must pay the disputed tax into the federal district court and sue for a refund. Lots of taxpayers use this method to avoid additional penalty and interest if they should lose.
The commercial fishing hobby v. business deductability of loss is one example of an IRS regulation that has been overturned many times. But the IRS still maintains that its position on this issue is correct. In fact, the IRS lost a case in which it ruled that playing poker was a hobby and not a business.
The truth is that the IRS routinely enforces regulations that they know are not likley to win in court to settle for a small percentage of what they claim the taxpayer owed. This happened to me.
A section of the IRC must be ruled unconstitutional to be overturned. I am not aware of this occuring despite many attempts. All IRS regulations and procedures must conform to the IRC as interpreted by a court of law.
The regulations proposed by the Treasury and DOJ governing the UIGEA must conform to the UIGEA as interpreted by a court of law. If these regulations are adopted and if the UIGEA is not amended or repealed, which I think will happen and make sooner than you think, then I predict lots of litigation over the UIGEA and its regulations.
Some regulations in the Federal Code of Regulations have the status of laws but most do not and can be challenged in court on the grounds that they are an incorrect interpretation of statute. Even the FDA could not adopt a regulation making cigarettes controlled substances.

[DeadMoneyDad]

[ QUOTE ]
I am going to try one more time. The regulations proposed by the Treasury and DOJ governing the UIGEA must conform to the UIGEA as interpreted by a court of law. If these regulations are adopted and if the UIGEA is not amended or repealed, which I think will happen and make sooner than you think, then I predict lots of litigation over the UIGEA and its regulations.
Some regulations in the Federal Code of Regulations have the status of laws but most do not and can be challenged in court on the grounds that they are an incorrect interpretation of statute.

[/ QUOTE ]

Thank you!

It seems at least one person here knows you don't have to sit up and beg just because some idiot in DC manages to write some "rule" down somewhere!

We as US citizens have the right some would claim the duty to challenge any action of the goverment we think is wrong and even more so if it violates the Consitution.

We can speak out or roll over and take it in the ____.



D$D<--not built that way.

[JPFisher55]

D$D, avoid the SEC. Their regulations do have the force of law and they do not lose very often in court. But the SEC does not affect many people. I have a good friend who is a stock broker. He takes NASDAQ and SEC very seriously indeed. If the SEC was involved in the online gambling fight, then I would be very concerned.

[Jimbo]

JP,

I appreciate your detailed mostly accurate response including somewht reversing your position and now using the word ruling instead of regulation in the first portion of your post, it appears our disagreement was "mostly" semantic but not entirely. You seem to see no difference between IRS rulings, procedures and regulations by lumping them all together you are still misinterpreting the subtle but vast differences. In order to help you and everone else and to show that if any "Regulation" is accepted by any Federal government agency it will in fact have the force of law I will copy a short portion of an explanation below of an IRS Regulation:

"Regulations"

Regulations are the IRS Commissioner's rules, approved by the Secretary of the Treasury, or the Secretary's delegate, for the application and administration of the Internal Revenue laws. The purpose of regulations is to provide taxpayers, their representatives, and Service personnel with rules of general application so they may clearly understand the taxpayer's rights and duties under the law.

Regulations are promulgated by publishing in the Federal Register, and usually are published in the weekly Internal Revenue Bulletin. All persons concerned are, by reason of publication in the Federal Register, given notice of the official rules of the Department of the Treasury for the administration, application, and enforcement of the Internal Revenue laws.

In some cases the law requires that regulations be issued with respect to specific matters; in all other cases regulations are authorized by law to supply such detail concerning the administration of the provision of law and its interpretation as is appropriate to carry out the statutory enactment.

Regulations may be proposed, temporary, or final. Temporary or final regulations carry the approval of the Treasury Dept. and are issued as Treasury Decisions. Temporary regs may be combined with final regs in the same Treasury Decision, but they may not be combined in the same Regulations Section. Temporary regs are designated with a "T" as the final character in the section number, and the word "temporary" at the end of the section heading.

Final regulations carry the force and effect of law. Proposed regulations are the Service's position

Link To Detailed Explanation (http://www.unclefed.com/Tax-Bulls/OfficialDocsExp.html)

Jimbo

[JPFisher55]

Good copying of what is a regulation, but even final IRS regulations must conform to the appropriate IRC statute, as interpreted by a court of law, to which it applies. The final regulation is still just the IRS' interpretation of the IRC statute and how the IRS will enforce that IRC statute. The IRS has no authority to create new tax law.

[Jimbo]

OOne of "those guys" I see, nver made a mistake in his life, honestly I was just rying to help but now I don't really care to point out your mistaken impressions any longer.

[ QUOTE ]
Good copying of what is a regulation, but even final IRS regulations must conform to the appropriate IRC statute, as interpreted by a court of law , to which it applies. The final regulation is still just the IRS' interpretation of the IRC statute and how the IRS will enforce that IRC statute.

[/ QUOTE ]

Completely innacurate!

[ QUOTE ]
The IRS has no authority to create new tax law.

[/ QUOTE ]

Partially correct, insofar any IRC code enacted by Congress authorizing the IRS to create new regulations to enforce that code once it completes the final approval stage it is equivalent to creating law.

Using your flawed logic no law exists at all unless it has been both challenged and upheld by the Supreme Court of the USA.

Jimbo

[Skallagrim]

Time to end this silly debate: most government regulations (all the ones pertinent here) are not laws, they are the government agency's interpretation/implementation of laws. If you believe the agency got that interpretation/implementation wrong, you can challenge it in court, and the court decides who is right. If the court agrees with you, then even if you violated the regulation you are not liable/guilty and the agency must change the regulation to agree with the court ruling. If the court agrees with the agency, then you did violate the law and are liable/guilty.

OK?

Skallagrim

[JPFisher55]

Skall, I hope you ended it. I doubt that you have in JIMBO's mind. SEC is one exception. Their regulations have the force of law. In other words, don't do a Reg A or Reg C offering without following the appropriate regulation and filing. I did participate in Reg D offering that was not formally filed but that is a safe harbor exemption.

[Jimbo]

[ QUOTE ]
Time to end this silly debate: most government regulations (all the ones pertinent here) are not laws, they are the government agency's interpretation/implementation of laws. If you believe the agency got that interpretation/implementation wrong, you can challenge it in court, and the court decides who is right. If the court agrees with you, then even if you violated the regulation you are not liable/guilty and the agency must change the regulation to agree with the court ruling. If the court agrees with the agency, then you did violate the law and are liable/guilty.

OK?

Skallagrim

[/ QUOTE ]

Thanks for your helpful attempt, I have stated that Regulations have the full force and effect of a law (not that they are a Federal Statute even though for all practical applications there is little difference) and it appears you agree, I just don't think JP can inderstand the difference.

Jimbo

[TheEngineer]

Thanks Skallagrim. It sounds settled to me. Now we can all move forward to discussing the regulations at hand.

[Skallagrim]

"Thanks for your helpful attempt, I have stated that Regulations have the full force and effect of a law (not that they are a Federal Statute even though for all practical applications there is little difference) and it appears you agree, I just don't think JP can inderstand the difference.

Jimbo "

Because I, like TE, want this thread back on track, let me point out, one final time, the distinction: A regulation can be "wrong" - a law cannot (though it can be unconstitutional). If congress passes a law saying you cant send money to company x, but you do it anyway, you cant claim in court "hey that was a mistake, Congress really meant company z." On the other hand, say Congress passes a law, like the ones that we are concerned with, that says you cant send money to an online gaming company, regulations to follow; the regulations come out and say company x is an online gaming company. You send money to company x and are charged with violating the law. YOU CAN CLAIM THAT THE REGULATION GOT IT WRONG AND COMPANY X IS NOT REALLY "AN ONLINE GAMING COMPANY" AS CONGRESS INTENDED THE LAW. A court can hear that claim, and a court can agree with you. In that sense (only) regulations do not have the same full force and effect as laws.

Skallagrim

[Jimbo]

I apologize on sidetracking the main issue. After your thourough explanation Skall then might I ask why anyone here should care what the regulations state?

If I understand you correctly why shouldn't we just wait, challenge it in court then allow them to determine that the Regulation is "wrong". Is the advantage that large to have a Regulation written in our favor even if it obviously is not what Congress intended?


Jimbo

[Skallagrim]

Jimbo, if I didnt see that you already have over 4,000 posts I would call you a troll at this point.

It is pretty obvious that having favorable regulations in the first instance is preferable to having to challenge regulations in court, isnt it?

Skallagrim

[TheEngineer]

[ QUOTE ]
I apologize on sidetracking the main issue. After your thourough explanation Skall then might I ask why anyone here should care what the regulations state?

If I understand you correctly why shouldn't we just wait, challenge it in court then allow them to determine that the Regulation is "wrong". Is the advantage that large to have a Regulation written in our favor even if it obviously is not what Congress intended?


Jimbo

[/ QUOTE ]

One reason to work the regs is that the government will defend the final regs to the death in court. They'll throw every law at it, hoping something will stick. They'll delay, and delay some more. Many plantiffs will plea bargain out of any charges. And, we may actually lose. It's far better to get it right at this time.

[JPFisher55]

[ QUOTE ]
I apologize on sidetracking the main issue. After your thourough explanation Skall then might I ask why anyone here should care what the regulations state?

If I understand you correctly why shouldn't we just wait, challenge it in court then allow them to determine that the Regulation is "wrong". Is the advantage that large to have a Regulation written in our favor even if it obviously is not what Congress intended?


Jimbo

[/ QUOTE ]

Jimbo the reason that IRS regulations and regulations of other agencies are important is that if you follow them, then you know that the agency will not claim that you violated the law. In other words, they are safe harbors. But if you do not follow a regulation you have not automatically violated the appropriate law. The court may determine that regulation is an incorrect interpretation and enforcement of the law or that it is not the only method of following the appropriate law.
But if you follow the regulation, then an agency is not going to claim that you violated the appropriate statute.
About 9 years ago the IRS adopted a regulation clearly in the favor of limited liability companies (LLC). They decided to stop challenging the tax status of LLC and let the LLC choose its own tax status, even Subchapter S if it met Subchapter S requirements. But the tax statute section 7777, which governs whether or not an entity is taxed as an association (corporation), was not changed by Congress. In a continuing legal education class, I asked a tax expert if the IRS had this power. His answer was essentially that no one knows but since it is favorable no one will question it. He was right, but I have always drafted my LLC docs to conform to the old rules for partnership taxation in case the IRS changes its mind.

[DeadMoneyDad]

[ QUOTE ]
Jimbo, if I didnt see that you already have over 4,000 posts I would call you a troll at this point.

It is pretty obvious that having favorable regulations in the first instance is preferable to having to challenge regulations in court, isnt it?

Skallagrim

[/ QUOTE ]

Damn it timed out again! 3rd try!

Skall,

Hepl me out here with the legal basis and if I've hit the best points.

I still say we try to get the Agencies to abandon this reg and I think we can do so using their own words to prove not only a regulatory violation of the two OMB regulation guide lines as well as two constitutional areguments.

Here is my thinking:

First of all the Gov't admits the difficulty in attempting to enforce this law given the lack of clear underlying and unifying Ferderal or uniform State law on gambling.

" Any government agency compiling and providing public access to such a list would need to ensure that the particular business was, in fact, engaged in activities
deemed to be unlawful Internet gambling under the Act. This would require significant investigation and legal analysis. Such analysis could be complicated by the fact that the legality of a particular Internet gambling transaction might change depending on the location of the gambler at the time the transaction was initiated, and the location where the bet or wager was received. In addition, a business that engages in unlawful Internet gambling might also engage in lawful activities that are not prohibited by the Act. The government would need to provide an appropriate and reasonable process to avoid inflicting unjustified harm to lawful businesses by incorrectly including them on the list without adequate review. The high standards needed to establish and maintain such a list likely would make compiling such a list time-consuming and perhaps under-inclusive. To the extent that Internet gambling businesses can change the names they use to receive payments with relative ease and speed, such a list may be outdated quickly. pages 24-24

The Agencies even admit my constitution argument that they could make such a legal determination even if they wanted to even try! Even if Congress has written a clear new law!

" The Agencies do not enforce the gambling laws, and interpretations by the Agencies in these areas may not be determinative in defining the Act’s legal coverage. As noted above, the Act does not comprehensively or clearly define which activities are lawful and which are unlawful, but rather relies on underlying substantive law.21 In order to compile a list of businesses engaged in unlawful internet gambling under the Act, the Agencies would have to formally interpret the various Federal and State gambling laws in order to determine whether the activities of each business that appears to conduct some type of gambling-related function are unlawful under those statutes. p.25

In the costs and benifits section the government turns constutional law on its ear by suggesting that since the gov't not only can't do the job but even uses E.O. 12866, Regulatory Assessment, to justify on costs basis that the banking system take on this "uniquely governmental duty."

"Establishing a list of unlawful Internet gambling businesses would be a time consuming process given the fact-finding and legal analysis that would be required. For example, the names of the businesses directly receiving unlawful Internet gambling payments are often not readily identifiable from their gambling websites. As a result, the Government would have to engage in fact-finding to identify the name of each unlawful Internet gambling business and its associated bank account numbers and bank. In addition, to avoid inflicting unjustified harm on lawful businesses by erroneously including them on the list, the Government would likely need to provide businesses with advance notice and a reasonable opportunity to contest their potential inclusion on the list. This process could result in a considerable lag time between the U.S. Government first identifying a gambling website and ultimately adding the name of an unlawful Internet gambling business to the list. Because it is possible for unlawful Internet gambling businesses, particularly those located in foreign countries with foreign bank accounts, to change with relative ease the business names and bank accounts of entities directly receiving restricted transactions, the list of unlawful Internet gambling businesses could be quickly outdated and thus have limited practical utility as an effective tool for regulated entities to prevent unlawful Internet gambling transactions. pages 27-28

To add insult to injury it suggest that even if the gov't could and did the job it would be more expensive to have to worry about our rights!

The Treasury also considered the potential costs to the U.S. Government of establishing a list of unlawful Internet gambling businesses, and has initially determined that such costs would likely be significant. This is because stablishing a list would require considerable fact-finding and legal analysis once the U.S. Government identifies a gambling website. The Government must engage in an extensive legal analysis to determine whether the gambling website is used, at least in part, to place, receive or otherwise knowingly transmit unlawful bets or wagers. This legal analysis would entail interpreting the various Federal and State gambling laws, which could be complicated by the fact that the legality of a particular Internet gambling transaction might change depending on the location of the gambler at the time the transaction was initiated and the location where the bet or wager was received. The U.S. Government would at the same time also need to dentify the business name and the bank account number and bank of the entity directly receiving payments on behalf of the Internet gambling business, which is often not readily ascertainable from the website. Identifying the business name and bank account number of the entity directly receiving unlawful Internet gambling payments might be challenging, especially where the Internet gambling business is located in and maintains its bank accounts in a foreign country. Once the fact-finding and legal analysis are concluded successfully, the U.S. Government might then need to afford the business advance notice and an pportunity to object to its potential inclusion on the list in order to ensure that lawful businesses are not harmed by being erroneously included on the list. These due process safeguards would result in considerable added costs to the U.S. Government." p. 29

The Agencies know the creation costs let alone matainence costs would never pass the Paperwork Reduction Act! So they are trying to make lemonade out of the lemon Congress passed in the middle of the night!

Are we suposed to swallow the argument that since it is the bank industry is viloating out "due process rights" and not the gov't it self that is ok with us?!?!?

They even try to slip this crap in as a benifit to the Gov't!

Even the "benifits" section is really weak given our previous discussion in the "regualtory mix" thread! Every suposed benifit could be implementate as no cost to the government, the banking industry, and more importantly POKER PLAYERS!

If Congress were to write a decent bill or pass the Wexler Bill, all of their arguements would fall flat on their pasty Beltway faces.

Page 27 2. a. Potential Benifits.

Congress determined that Internet gambling is a growing cause of debt collection problems for insured depository institutions and the consumer credit industry.23

and

This funds flow interdiction is designed to inhibit the accumulation of consumer debt and to reduce debt collection problems for insured depository institutions and the consumer credit industry.

Where where these do gooders when the very industry the suggest they are trying to protect was getting rich off of the mortage re-fi business?

The banking industry was getting rich from creating a couple of generations of mortage slaves, who because of easy credit and low interest rates we accumulating debt at an alarming rate, but able to secure it with almost every American's biggest single investment their home. Every one of those poor bastards who played this "bet your economic life on the come" con game, is now sitting on negative equity which not only "chains" these mortage slaves to pay inexcess of 30 years for all the collective impulse purchases but makes them renters in their own homes! This is better than any wealthy land owner more outragious sharecropper wet dreams. It is even better than the robber barron's "company towns", these poor bastards are fully colateralized and actually think they own their homes!

Oh that's right many of these "we will protect you from yourself from the evils of gambling types" like John Edwards were sitting on the boards of the Bank or Investment holding Companies sell the sub-prime products to generations of economic idiots, thank to Congress subsidizing out piss poor government run school system.

This is more of a rigged game than any donkey's wildest tin foil hat theories of rigged RNG's or sci-fi fears of hole card "spyware"!! It was all completely legal and Congress and the banking system including the Federal Reserve took part!

Save me from the evils of on-line poker? BS! Congress is only looking to help the US banking system to deal with idiots like the woman who posted here that her boyfriend gambled with money from their joint bank account!

The Agenices other benifits could be solved with out cost as TruePokerCEO suggested with off the shelf software.

"The proposed rule will likely provide other benefits. Specifically, the proposed rule could restrict excesses related to unlawful Internet gambling by under-age, addicted or compulsive gamblers. p. 27

As New Zealand's problem gambing expert pointed out, the likely lisencing fees and tax revenue would fund more anti-gambling studies and clinics that would ever be needed if the British study is even close to being even only 1/2 right and it's highest estimates are used.

The only reason the proposed costs are so low is the free pass Congress gives the Banking system.

"Third, the “safe harbor” provision, with its nonexclusive examples of policies and procedures deemed to be “reasonably designed,” provides regulated entities with specific guidance on how to structure the policies and procedures required by the Act. As a result, costs associated with formulating policies and procedures should be lower because the safe harbor provision provides guidance on how to so structure the policies and
procedures. p. 28

As I suggested The Agencies will try an end run around us with the OFAC bit!

"Some have suggested that the obligation of financial institutions with respect to such a list might be similar in effect to their obligations under certain other U.S. laws, such as those administered by the Office of Foreign Assets Control (OFAC), albeit in a different context.20 Some have also suggested that the list could be either available publicly in its entirety, so that financial transaction providers could check transactions against the list themselves, or maintained confidentially at a central location, so that financial transaction providers could submit transactions to the entity operating the central database, which would inform the financial transaction providers whether the transaction involved an unlawful Internet gambling business on its list. Proponents of the list suggest that under either of these approaches, certain restricted transactions directed to unlawful Internet gambling accounts could be blocked." p.24

The Baning industry could do it all in secret with out much recourse by your average Poker Player.

I told you we have to totally defeat this rule.

Waiting until later is a looser.

D$D

[JPFisher55]

I agree that UIGEA regulations in our favor is far better than having to challenge the regulations in court. Thus, I have drafted proposed comments to be sure that no list of UIG businesses is created and that a definition of UIG that favors poker is adopted. In the near future, I will draft a comment proposing that all cross-borders transactions be exempt from the regulations because foreign banks may not cooperate with US banks to follow the regulations. This would effectively kill the UIGEA.
However, in the likely event that these proposed regulations are adopted, then I think that litigation is likely. I suppose with vague regulations that banks might ignore them; so maybe they are better than clearly unfavorable regs such as online poker being defined as UIG.
So if our comments prevent unfavorable regs then they are worth the effort.