Regulations are out

[TheEngineer]

Please comment on letter 2.0. Thanks

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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. Most of the weaknesses, which include the inability of the regulations to define “unlawful Internet gambling” and the risk of overblocking transactions to legal businesses, are inherent in UIGEA itself. I urge the Treasury Department and the Federal Reserve to further clarify these regulations prior to implementation to ensure orderly and fair enforcement of these regulations.

The primary weakness in the regulations as proposed is the lack of a definition of “illegal Internet gambling”. If the Treasury Department and the Federal Reserve were 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 gambling bans.

Banks may choose to comply with these regulations by banning all gambling transactions. This overblocking could cause many problems for legitimate businesses, including the domestic horse racing industry, which was specifically excluded 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.

These issues can largely be avoided by defining the term “illegal Internet gambling” in the regulations. I propose defining illegal Internet gambling as all Internet gambling that is clearly illegal under existing federal law, plus that which is unambiguously illegal under state laws. Federal law is relatively clear in this matter – per appeals court decisions in re MasterCard International Inc. and other cases, the Wire Act covers only sports betting. Additionally, the Professional and Amateur Sports Protection Act of 1992 covers interstate (and, in 46 states, intrastate) professional and amateur sports betting. That is all that is covered by federal law. Since federal case law holds that the Wire Act covers only sports betting, unlawful Internet gambling as defined by federal laws should include only interstate Internet sports betting and intrastate Internet sports betting in the 46 states covered by the Professional and Amateur Sports Protection Act of 1992, excluding horse racing as defined under the Interstate Horse Racing Act.

As for state laws, very few states have outlawed Internet gambling. To keep from placing an unreasonable burden on our banks, the regulations should specify that state laws must be unambiguous in their application to the Internet and to the specific types of 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 Secretary of the Treasury. This will enable our banks to have a clear understanding of what it required of them.

Our financial institutions deserve to know exactly what they have been tasked to prevent. Thank you for your consideration.

Sincerely,

TheEngineer

[TheEngineer]

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TE, I recommend the following language in the place of the last large paragraph of your comment that defines unlawful internet gambling.

These issues can largely be avoided by defining the term “unlawful Internet gambling” in the regulations. I propose defining illegal Internet gambling as all gambling that is clearly illegal under existing federal law, plus that which is unambiguously illegal under state laws. Federal law is relatively clear in this matter – per appeals court decisions in re MasterCard International Inc. 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. That is all that is covered by federal law.
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.

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Thanks. [img]/images/graemlins/grin.gif[/img]

[What?]

These regs seem harmless. Why run the risk of stirring things up?

[TheEngineer]

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These regs seem harmless. Why run the risk of stirring things up?

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That's what we said prior to UIGEA passing....keep quiet and don't stir things up. That loss put us on offense, where we should have always been, IMHO. The regs aren't too bad for us, but we have a risk of getting blocked by a bunch of banks that have zero incentive to let our transactions through.

Also, the FoF types will stir this up plenty for us. We'd better get our voice heard, I think.

Even if you like the regs as they are, please post affirmatively to offset the FoF folks. Thanks.

[JPFisher55]

TE, if you want a precise definition of unlawful internet gambling along the lines of the UIGEA that is most favorable to us without court challenge to the few state laws expressly prohibiting one or more forms of Internet gambling, then how about the following.

Unlawful internet gambling is defined to mean placing, 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.

Since I have written lots of contract, I am pretty handy with these types of terms and definitions. I won't pretend to be the foremost expert, but usually lawyers who have reviewed my contracts had few complaints.

[Johnny McEldoo]

[ QUOTE ]
These regs seem harmless. Why run the risk of stirring things up?

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I think it's important to keep in mind that these are only "proposed regulations". There is a comment period which we are in now. If we stay silent while groups against us are very active, the final product may not turn out to be the same as what we are seeing now.

The wording of the proposed regulations make it sound like the comments submitted during this time will be read and could have a big impact on how the final regulations turn out. Because of this, it seems more important than ever for us to be active and agressive.

[pineapple888]

WTF Cliffs Notes somebody PLZ k thx. [img]/images/graemlins/confused.gif[/img]

[DeadMoneyDad]

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Thanks. [img]/images/graemlins/grin.gif[/img]

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There are no extra points in the rule making system for speed .

There is no reason to send off a thousand letters before we are exactly sure how we as a group want to attack this proposed reg.

I've only read through it once.

We have quite a few ways we might want to attack this and we may simply end up attacking it on each and every one, but lets keep our group powder dry for at least a week.

There is also some value to letting the other side taking their best shot first and let them show their hand.

Me I'm not ready for a showdown this week...........


D$D

[TheEngineer]

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Thanks. [img]/images/graemlins/grin.gif[/img]

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There are no extra points in the rule making system for speed .



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That's why I put it out for comment....so we could start thinking about what we want to do and why. I won't send anything out just yet, as I'm formulating where we wish to end up as well.

[DeadMoneyDad]

Cool.