Credit Unions Tell Congress Online Gambling Ban Unenforceable

A spokesman for the nation

During testimony this week regarding Barney Frank's bill proposing federal regulation of online gambling, a representative of the Credit Union National Association told Congress that the UIGEA cannot be enforced as written. CEO Edwin Williams of the Discovery Federal Credit Union said decisions on which sites should be blocked are delegated to financial institutions because the government can't do the job itself.

"The Treasury Department and the Federal Reserve Board have concluded that they cannot track who these entities (illegal gambling sites) are and leave this burden to the private sector," stated Williams. H e added that "...it is unreasonable to assign the liability for policing Internet gambling activity to depository institutions, many of which are small, without giving them the means necessary to determine which transactions are illegal."

Williams went on to testify that institutions relying on credit card coding to block payments to illegal online gaming sites only manage to interrupt a small number of payments per month, and much of this group is comprised of false positives, or blocked transactions that should have cleared.

Williams said that credit unions required at least a list of the sites the government determined participated in illegal gambling, but that government agencies said they could not accomplish compiling such a list. The credit union spokesman asserted that if the Federal Reserve and Treasury couldn't handle such a problem, it becomes unreasonable to expect local credit unions to do so.

Williams told the House Financial Services Committee that Frank's bill, which would clearly differentiate between legal and illegal online casinos, was a much better solution to enforcement of Internet gambling rules than the UIGEA. He asked that the bill add a clause granting absolution to institutions that abide by lists of sites allowable and not under the Frank Internet gaming rules.