Banks React to Online Gaming Legislation

The Unlawful Internet Gambling Enforcement Act of 2006 passed a week ago by Congress does not change any current laws about what is legal or not legal, and does nothing to make online poker illegal.

It does just what it says. It enforces current laws regarding online gaming. It does this by requiring banks to monitor and block transactions to and from online gaming companies from US customers.

At first, the banking industry expressed concern about how hard it would be to monitor the many millions of yearly transactions. But they quickly realized that most companies already block credit card transactions to gaming companies.

"When I spoke to the credit card companies that we represent, they find the new requirements to be workable, and in fact consistent to what they are already doing," said Laura Fisher of the American Bankers Association which represents banks and credit card companies ranging from the largest banks in the world to small community banks.

She continued, "Some credit card companies already block payments to Internet gambling sites. So, for them, it's something that is now mandated, but something many of them have been doing already."

So it appears the banking associations representing the banks now feel the language in the enforcement act can be handled without great changes.

Once area of concern, yet to be resolved, relates to checks and online checks.

"When you get to checks, and ACH [automated clearing house, or e-check] transactions, those are something that the industry feels would be extremely difficult, if not impossible to monitor," added Fisher. She noted, "In terms of checks, there are 40 million checks processed per year. Monitoring those transactions would be an impossible burden for the industry to bear."

Steve Verdier, Director of Congressional Relations for the Independent Community Bankers of America (who represent smaller, independent bankers) thinks the government will work with banks on trying to adapt to the new legislation.

"If they find that the banks just don't have the technology to track and block these transactions, then we don't have to. The Fed and Treasury are not supposed to ask us to do the impossible," Verdier recently told MSN Money.

A government board consisting of the Federal Reserve Board and the Treasury have 270 days within which to define the procedures for banks to follow to comply with the enforcement act. Fisher commented, "We still have to wait for the Fed, and the Treasury to write the rules. They will be the final arbiters of what are trackable transactions, and what are not."

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