House Committee Passes Bill to Clarify UIGEA: H.R. 6870

Efforts to regulate online poker and online gaming in the United States took a small but significant step forward yesterday when the House Financial Services Committee passed the Rep. Barney Frank-sponsored bill, called the 'Payment Systems Protection Act' (PSPA, officially H.R. 6870), by a 30-19 vote. The bill is now eligible for a vote on the floor of the House of Representatives, but will likely run out of time before Congress adjourns next week.

The online gaming advocacy group called the Safe and Secure Internet Gambling Initiative (SSIGI), in a quote reportedly from a press release, commented: "The bill still faces significant hurdles before it has a chance to become law, but the fact that it cleared committee represents at least a slight reversal of legislative momentum for supporters of online poker."

The goal of the bill is to clarify that the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) applies in the main to sports betting, as did the earlier Federal Wire Act.

Specifically, the bill would prohibit the U.S. Treasury and Federal Reserve from proposing, prescribing or implementing any regulations under UIGEA apart from those relating to sports betting, until the meaning of key definitions such as 'unlawful internet gambling' had been clarified, and an economic impact study conducted on the costs associated with compliance.

A similar measure failed to make it out of committee two months ago after a 32-32 vote.

Currently, the proposed regulations to implement UIGEA forces banks and other payment services to determine what types of online activity are lawful and what are not.

At a congressional hearing on April 2, 2008, even representatives of the Department of the Treasury and Federal Reserve System acknowledged the challenges that financial institutions will face while trying to comply with UIGEA, and how they were unable to distinguish between lawful and illegal online gambling activities.

"Under this bill, at least the banks will know what is and isn't illegal," Rep. Frank said at the markup hearing. "We're asking the Treasury Department to give them a list."

It would also be good news for online poker players in the USA, as it would openly clarify that online poker is legal, unless specifically forbidden by state law (as, for example, it is in the state of Washington).

PPA COMMENTS

The Poker Players Alliance (PPA) reportedly sunk considerable time and focus into promoting the bill. Passage of the bill by the House Financial Services Committee drew immediate praise from the PPA:

"The PPA is pleased that the House Financial Services Committee today recognized the need to provide necessary clarification to what constitutes 'unlawful Internet gambling' under the Unlawful Internet Gambling Enforcement Act (UIGEA) by passing H.R. 6870," said PPA chairman and former Senator Alfonse D'Amato.

"This bipartisan compromise bill will rightfully advance the UIGEA to become immediately effective for such internet gambling that is clearly unlawful, namely sports betting. The legislation also appropriately requires a formal rulemaking, overseen by an administrative law judge, to provide the clarification requested by the Department of Treasury and the Federal Reserve, among others, as to the definition of 'unlawful Internet gambling'."

"Even those who oppose internet gambling should applaud the passage of this legislation as it provides the most realistic opportunity to block truly unlawful internet gambling transactions," he added.

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