Thanks DMD for bringing this issue to light. This comment period for the treasury regs is an important. It expires December 12th. I don’t believe it is a good forum for bitching about the substance of the UIGEA. That office doesn’t care. But it is a good place to tell them why their regulations will fail anyway. Or, if you have anything to do with banking/financial services, it’s a good place to say that six months is not long enough to get this thing figured out. Here is the link to look at the regs and all the comments on the
regs
I just sent my comments in via snail mail. I posted them below:
Jennifer J. Johnson
Secretary
Board of Governors of the Federal Reserve
System
20th Street and Constitution Ave., NW
Washington, DC 20551
RE: Comments to Notice of Joint Proposed Rulemaking; Prohibition On Funding Of Unlawful Internet Gambling Docket Number R-1298
Dear Madam Secretary:
It is not your job to make legislation, only to enforce it. Keeping this in mind, I will not comment on the statutes in concept, only as applied. The problems with the regulations set forth by your office are numerous.
The first problem is legislation that is drafted in an overly broad or ambiguous manner is unenforceable. The UIGEA clearly falls into that category. Furthermore, as the UIGEA is only an enforcement mechanism, the statutes it seeks to enforce are clearly ambiguous with respect to most types of gaming.
An argument could be made that statutes leading up to the UIGEA clearly make betting on sports via Internet or telephone illegal. Even assuming that is the case, your proposed regulations will have the effect of blocking all transactions to companies domestic and abroad that offer legal forms of gaming in addition to sports betting. Only a cursory mention of this problem, with no method for resolution, is written in your office’s regulations.
Another problem is that your regulations set-up banking institutions to be policing agencies, therefore forcing them to interpret unclear law. One effect of the Patriot Act was to require specific identification before opening a banking account. This was a clear mandate to banking institutions, and they needed only follow specific instructions. Your instructions with respect to UIGEA enforcement lack specificity, one effect of which will be a lack of uniformity.
You propose the keeping of a “list” of businesses engaged in unlawful gambling. You indicate it should be kept by a government agency, but no mention of a specific agency is made. To which agency would this be assigned? Without the list, there will be a completely haphazard keeping of records and policies by each institution. With the list, the enforcement becomes only as good as the list keeper. This will require an entire department within a governmental agency. Considering it took your office a year to write up the proposed regs, what makes you think this department can be formed, trained, and effective within six months?
This concern applies not only to just the “list keepers,” but the entire process as well. It took a year for your office to study the legislation, then write the regulations. This, by comparison to implementation, is the easy part of the process. Software systems, verifiers, record keeping, algorithmic tools, and training all need to be conceptualized and built. Six months for this process is not reasonable. One to two years would be more appropriate.
With a one to two year timeframe, you must take into consideration proposed legislation currently before congress. HR 2140, a bill to study Internet Gambling, could have significant implications on these regulations. HR 2610, clarifying a skill gaming carve out, could complicate enforcement. HR 2046 and HR 2607 would nullify these issues completely and force a brand new set of regulations.
How can we possibly waste taxpayer dollars the way we are to “enforce” overly broad and ambiguous laws?
I do not envy the position of your office. You have no choice but to write regulations for unclear law. It is, however, within your power to withdraw these proposed regulations to wait for clear statutes. I wish you office the best with this incredibly difficult issue.