[TheEngineer]

November 12, 2007

House Judiciary Committee
2138 Rayburn House Office Building
Washington, DC 20515

Dear Chairman Conyers and the House Judiciary Committee:

I am writing in regard to the upcoming “Hearing on Establishing Consistent Enforcement Policies in the Context of Online Wagers” to request that the committee review the unintended consequences of the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). Specifically, I request that the committee review the impact of the failure of UIGEA to define what types of Internet gaming are illegal to banks and to legal online gaming services.

Our nation’s banks have been deputized by the federal government to enforce UIGEA. However, they have not been told what exactly they are to enforce. The draft UIGEA regulations specifically state that the regulation authors do not know what is illegal and what is not. If the Treasury Department and the Federal Reserve are unable to determine what constitutes illegal Internet gambling, how can banks and other financial institutions be expected to? Surely this is an unfair burden to place on our nation’s financial institutions. After all, they are in the business of providing financial services, not of enforcing ambiguous gaming bans.

Banks may choose to comply with these regulations by blocking all Internet gaming transactions. Foreseeing this, the regulation authors actually devised a term for this – “overblocking”. This overblocking could cause many problems for legitimate businesses, including the domestic horse racing industry, despite its specific exclusion from the provisions of the Act. Additionally, banks could overblock offshore poker sites that are not in violation of any federal or state law. 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 increased WTO penalties, especially as domestic financial transactions are largely excluded from these regulations.

I urge the committee to review this situation during the Internet gaming hearing and to carefully consider the need for clarifying legislation. There are two bills currently in the House that correct this situation. HR 2610, the Skill Game Protection Act, clarifies federal law by expressly exempting games of skill like poker from UIGEA. HR 2046, the Internet Gambling Regulation and Enforcement Act, regulates online poker via stringent licensing regulations for poker site operators. Both bills have rigorous safeguards against underage and compulsive gambling. And, neither bill forces any state to permit online poker; states can opt out if they wish. I urge the committee to recommend passage of these bills to clarify UIGEA and the Wire Act. Our financial institutions deserve to know exactly what they are required to prevent.

Thank you for your consideration.

Sincerely,

TheEngineer