U.S. Agencies Release Regulations Re Payments to Online Casinos
In order to ensure installment before the beginning of the Obama administration, the Federal Reserve and the Department of the Treasury published the final rules implementing the UIGEA today. By doing so, the regulations against payment transactions involving Internet gambling become effective January 19th, the day before the new President is inaugurated.
The notice published addresses concerns and comments received during review processes of the proposed rules, explains what changes were made or why none were made, and delivers the final rule. A prominent change is the granting of nearly a year before affected institutions will be accountable for payments made to online casinos.
This change was introduced to satisfy complaints that financial centers other than credit card companies were not properly set up to review individual transactions to detect illegal gambling. While the rule does not require such a system, the time period is set aside to allow for the establishment of due diligence procedures, designed to detect the opening of accounts which may service Internet gambling.
Even though many of the comments were critical of the lack of definition of "illegal gambling" and unlawful Internet gambling", no effort was made to explain these terms. Instead, the agencies referred readers to the mishmash of federal and state laws which contradictorily define gambling. Further, the report places the burden of proof of legality on the gambling website, so banks can refuse transactions at the smallest of doubts.
Further, the complaints of online poker players that poker as a game of skill should not be included as a type of illegal gambling were met with hazy reasoning. According to the authors of the notice, when Congress defined gambling as a game of chance, it later used the term "predominantly game of chance." Since the word "predominantly" was used later but not in the original definition, it has been interpreted for the purposes of this report as containing any significant chance, even if skill is predominant.
This means poker has been classed as a chance game, while fantasy football and horse racing are games of skill.
The report refused to specify illegal websites, instead leaving the burden upon institutions to determine what is legal. Most of the objections against the original proposed rule were noted, then rejected.
Sherman Bradley, Online Casino Advisory's senior gaming analyst, said, "Perhaps the one good thing in this report is the time frame given banks to set up procedures. With any justice at all, the Democrats will have torn down this abomination and established sensible and safe regulatory guidelines before the December deadline."
