Congress Shocks Online Gaming Firms- Outlaws Payments

Late last Friday, the United States Congress unexpectedly passed a bill which makes it unlawful for banks and credit-card companies to process transactions for online-gaming sites.

The bill was attached to an unrelated bill providing $3.4 billion for U.S. port security, which was favored by both parties. The port security bill was passed late September 30 before Congress recessed to campaign for the November 7 Congressional elections.

If President George Bush signs the bill it will become law, which he can do so before the November 7th.

"Basically we are shutting down the payment system for Internet gambling," said Representative James Leach, an Iowa Republican.

Leach continued, ''Internet gambling has been illegal since inception of the Internet, but there has been no way to enforce it." By making it "illegal to use a financial instrument to settle an Internet wager,'' Congress is "putting responsibility on the financial community."

The banking sector has consistently voiced strong opposition to their having to pay to block electronic funds transfers or e-check payments to online gambling sites, and to be made liable if they do.

Several internet gambling company boards held emergency meetings over the weekend. Several firms are expected to issue statements to the stock market today to update investors on the situation, while others may stop trading. Some are likely to announce they no longer accept US customers and will continue their expansion in European and Asian markets. Several UK and Gibraltar companies had already stopped doing business with US customers.

The Poker Players Alliance, with over 50,000 members, said, "This last-minute deal reeks of political gamesmanship. The American people should be outraged that Congress has hijacked a vital security bill with a poker prohibition that nearly three fourths of the country opposes."

The American Gaming Association, which represents major U.S. casino operators based in Las Vegas and elsewhere, had asked Congress to fund a federal commission that would study whether online gambling can be regulated and taxed in the U.S. The lobby group hoped a study might eventually permit major casino operators such as Harrah's Entertainment Inc. and MGM Mirage join the online gaming business.

More news on the bill will be published as it becomes available.

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