Bank Technology Expert Asks for Online Casino Regulation

A top banking official told Congress that Barney Frank's regulatory plan for online casinos and Internet gambling would solve the difficulties posed the financial industry by the UIGEA ban.

During today's testimony before the House Financial Services Committee's gathering on online gambling, Samuel Vallandingham said the UIGEA online casino ban makes impossible demands on community banking in the US. Vallandingham is vice-president of the First State Bank of Barboursville, West Virginia, and is also vice-chairman of the Payments and Technology Committee of the Independent Community Bankers of America.

While refusing to take a position on the desireability of legal Internet gambling, Vallandingham testified that the attempt to block payment transactions by online casino operators is a burden the financial industry cannot handle.

"The added burden of monitoring all payment transactions for the taint of unlawful Internet gambling would drain finite resources currently engaged in complying with anti-terrorism, anti-money laundering regulations, the plethora of new regulations emerging from the financial crisis and the daily operation of community banks to meet the financial needs of their customers," said the expert on banking technology.

Vallandingham continued tobemoan the lack of definition of illegal online gambling provided in the UIGEA. Because no overriding law exists, he said, banks would have the problematic task of determining each customer's legality with regard to hundreds of state, federal, and local laws.

He noted that card companies have the advantage of merchant coding to more easily classify casino and gambling transactions, but also pointed out that coding depends on full disclosure by merchants, asking Internet gaming operators to essentially give themselves up.

"ICBA strongly endorses H.R. 2267, the Internet Gambling Regulation, Consumer Protection and Enforcement Act which establishes a federal regulatory and enforcement framework for licensing Internet gambling operators," concluded the banking representative, throwing the support of the financial industry behind Barney Frank's bill proposing regulatory systems for online casinos and Internet gambling.