Proposed Comments

[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.