AP/DowJones on Gambling legislation: Banks say regs aren't that strict

[Kramer.]

XPost from internet


BC-Internet Gambling-Banks,0453 �
Banking group sees protections in Internet gambling bill �
With BC-Britain-Internet Gambling �
By GREG EDWARDS Ž
Dow Jones Newswires Ž

ST. LOUIS (Dow Jones/AP) — The Internet gambling legislation passed late last week by the U.S. Congress, which led to a major sell-off of Britain-based online gambling stocks Monday, remains a concern to the U.S. banking industry but isn’t as burdensome as feared.

“We got some language in the bill that looks like it protects the financial services industry,” said Steve Verdier, director of congressional relations for the Independent Community Bankers of America, which represents almost 5,000 banks in the United States. “It could have been a lot worse.”

The legislation is designed to prohibit U.S. banks and credit card companies from processing payments for illegal online gambling. Financial services companies and the U.S. Chamber of Commerce had expressed concerns about the compliance burdens that would be imposed, such as tracking and blocking potentially millions of transactions.

Under the legislation as passed, “If you are acting as a normal bank, and you’re not in some sort of conspiracy with a betting house, then you are not going to be held liable,” Verdier said.

In addition, the legislation will be guided and enforced by regulations written by the Federal Reserve and the U.S. Treasury Department.

“If they find that the banks just don’t have the technology to track and block these transactions, then we don’t have to,” Verdier said. “The Fed and Treasury are not supposed to ask us to do the impossible.”

Still, Verdier said, “we will have to see how those regulations get written.”

The legislation, attached to an unrelated port security bill, was approved by the U.S. House of Representatives Friday and by the U.S. Senate early Saturday. It is expected to be signed into law by President Bush.

Shares in Britain-based betting companies, such as PartyGaming PLC, 888 Holdings PLC and Sportingbet PLC, plunged Monday. The companies said they would suspend business from the United States if the legislation is enacted.

The U.S. Justice Department has been bringing fraud charges against online gambling companies and their executives.

For example, BetOnSports PLC and its former chief executive, David Carruthers, were indicted in June in federal court in St. Louis, and the company closed its U.S. operations Aug. 12.

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[jrz1972]

[ QUOTE ]
Under the legislation as passed, “If you are acting as a normal bank, and you’re not in some sort of conspiracy with a betting house, then you are not going to be held liable,” Verdier said.

In addition, the legislation will be guided and enforced by regulations written by the Federal Reserve and the U.S. Treasury Department.

“If they find that the banks just don’t have the technology to track and block these transactions, then we don’t have to,” Verdier said. “The Fed and Treasury are not supposed to ask us to do the impossible.”

[/ QUOTE ]

Both of these statements are true. Banks are going to be able to allow transfers to Neteller because Neteller is not in the business of betting or wagering. And Verdier is also correct that banks aren't going to be asked to do the impossible, or even the impractical (again, this is explicitly in the bill).

Good find/post.

[DONTUSETHIS]

Maybe in the end, this will not be as bad as it seemed this weekend or earlier this morning.

[JuntMonkey]

Very good news.

[FoldYourLife]

I want to believe these positive reports, but I don't know how realistic any of them are...

[JPFisher55]

So why is Party Poker saying goodbye to their business? This info is how I have interpreted this law since Friday. But Pacific Poker and Party Poker act like the world has come to an end and voluntarily cease most of their business.
I am suspicious of their real motivation. I wonder if this new law is just an excuse.

[whiteladder81]

Correct me if i'm wrong but for the sake of arguement assume some banks are not able to inforce this law; wouldn't they have an unfair competitive advantage against other banks that do?

[suzzer99]

[ QUOTE ]
So why is Party Poker saying goodbye to their business? This info is how I have interpreted this law since Friday. But Pacific Poker and Party Poker act like the world has come to an end and voluntarily cease most of their business.
I am suspicious of their real motivation. I wonder if this new law is just an excuse.

[/ QUOTE ]

As has been stated here before - I think Party's statement had more to do with putting a stop to their free-falling stock price than anything else. Possibly also in appeasing the US govt. It's not like their locked into anything. They can always ease up on how soon they ban US players, or not at all, as events develop.

[Losing all]

[ QUOTE ]
So why is Party Poker saying goodbye to their business? This info is how I have interpreted this law since Friday. But Pacific Poker and Party Poker act like the world has come to an end and voluntarily cease most of their business.
I am suspicious of their real motivation. I wonder if this new law is just an excuse.

[/ QUOTE ]

They werent looking for an excuse to make much less money.

[HSB]

[ QUOTE ]
So why is Party Poker saying goodbye to their business? This info is how I have interpreted this law since Friday. But Pacific Poker and Party Poker act like the world has come to an end and voluntarily cease most of their business.
I am suspicious of their real motivation. I wonder if this new law is just an excuse.

[/ QUOTE ]

They have never acted like they are in it for the long haul. If they did, they'd have attempted to develop a loyal player base rather than alienating current players and trying to get new ones.

Personally I think it's more because they are publicly traded than anything else.