Proposed regulations for UIGEA

[Wynton]

The Treasury Department has published its proposed rules regarding the implementation of the Unlawful Internet Gambling Enforcement Act.

Link is here: http://www.treas.gov/press/releases/reports/noticeofproposedrule.pdf

Before these regulations go into effect, comments are solicited and considered for the next couple of months.

[ciaran]

Someone needs to distill that into basic English. At a first glance, it looks like they're largely giving ACH/Check/and Wire Transfers a pass, at least enough of one that you'd expect the poker sites to be able to work around any regulation.

[Wynton]

As you can see, the regulations are quite lengthy. I will certainly try to digest them, time permitting, but I encourage anyone else who's interested to get the ball rolling in the meantime.

[bpgui]

Thanks for posting these!

[SlfMade]

I havent' read it yet, just a few article about it. But it appears that it won't regulate ACH, check, or wire. What does that leave? Debit/credit card transactions? The industry already declines such transactions, though many online gambling sites manage to process them anyway.

Also, it doesn't look like there will be a list of "illegal" online gambling site. They admit that this varies depending on where the bet originates. That's a positive step compared to the Administration's usual interpretation of the Wire Act.

[SlfMade]

A few articles on it:

Compatible Poker

PokerNews.com

InfoPowa

[mchilger]

Some good insights into those articles. Several things seem to jump out to me.

1/ How can the government allow banks to determine what is legal or illegal? For example, Neteller cut off our Merchant account, even though it was only used to receive monies for book sales and Tutor sales. It certainly isn't illegal to buy a book or poker lesson, yet we suffered consequences since Neteller took such drastic actions.
2/ What is a bank customer's recourse if a transaction is incorrectly stopped? There is no clear definition of what is legal or not so I'm not sure how banks can make those judgments.
3/ It appears that ach and wire transfers aren't included. I would think that there will be plenty of ways to transfer money then.
4/ Let's take a company like Epassport that operates offshore. Let's say that you can transfer money to Epassport. "merchants' then accept epassport for payment. These merchants could be electronic shops, book stores, other retails outlets, and gambling sites. John Doe wants to transfer money to Epassport. Should the bank stop the transaction? What if John Doe is intending to transfer the money for the purposes of buying some books? That is a perfectly legal transaction. It just seems very difficult to prevent these types of companies from doing business.

Matthew

[SlfMade]

Allyn Jaffrey Shulman of CardPlayer wrote an article as well. Of course most of the detailed discussion is taking place in a 2+2 thread.

[Wynton]

I know the regulations don't contemplate a list immediately, but I think it's inevitable. Individual banks simply are not equipped to investigate companies and make the factual and legal determination whether illegal gambling is involved.

Whether or not its created by the Treasury Department or a group of banks and financial institutions, and even if occurs slowly, eventually there will be a list that is relied upon, I believe.

[mchilger]

The more I read the more I think this is all a bunch of BS. Is this law going to have an impact? Why pass a law without the ability to enforce it? What is going to be the cost? It sounds like a legal and administrative nightmare for the banks.

It still is unclear to me how they are going to determine if payments are legal or not. What if I take a vacation to Arubu and win $10,000 in the casino and I ask for a check or wire? Will my bank take it? Will my bank take a check written from Harrah's? I think a blacklist is the only solution as Wynton says but there seems to be administrative and legal issues with that also.

Looks like we just keep waiting.

Matthew

[Wynton]

The whole setup is so problematic that I have a feeling the law itself will be changed before we get to the point where regulations go into effect.

[SlfMade]

[JPFisher55]

If you read the regulations concerning processing of ACH's and checks, you will find that if a bank is at the end of the process, then it is exempt. Same for a bank that acts as an intermediary. But the first US bank to process an ACH must have a policy to identify restricted ACH's. For checks it is either the bank of the issuer or the first US bank to process a cross border check that must have such a policy for checks. I believe that most banks will honor checks that you deposit, but a check that you send to an Internet gambling site might not clear.
Also, the regs assume that foreign banks are going to go along with this scheme. In fact, they demand that US bank with whom they have a relationship process their transactions or face litigation in a foreign court. Then the US bank might have a dilemna; obey US regs or face liability in a foreign court that will not recognize the UIGEA or its regs, especially the one that protects the bank from mistakenly blocking a legal transaction.
The whole system is unworkable.

[SlfMade]

Having read most of the proposed regs document, it's clear that they stuck with the UIGEA's definition of restricted transactions: it's just sending money to sites that provide illegal online gambling.

Also, while I don't claim to be an expert in American financial systems, I'd guess that these regs will be ineffective, and that the slow improvement we're seeing (e.g. the recent reintroduction of ACH transactions at some sites) will continue.

[SlfMade]

Nelson Rose posted his analysis. He's one of the most famous gaming lawyers. I'm about to read it. Here's Compatible Poker's Cliff Notes version:

Cliff Notes

- Nothing has changed and will not change for many months.

- The regulations do not directly restrict players from sending or receiving funds.

- Only gambling businesses can be convicted, not players.

- Bizarrely, for a law designed to prevent money transfers, the financial institutions involved in those transfers, including banks, credit card companies and e-wallets, are expressly defined as not being gambling businesses and so cannot be convicted of this new crime.

- Mr. Rose says the period of 6 months for financial institutions to implement these plans will not happen. He says that it can not be done at all.

- In the worst case scenario players will have to use paper checks to fund and receive money.

- Large payment processors will end up blocking gambling transactions whether it be legal or illegal forms because it would be too difficult to differentiate.

- Mr. Rose believes this “prohibition” will not be successful.