Rep. Barney Frank Moves to Clarify Lawful Internet Gambling Activities

Representative Barney Frank (D-MA), who chairs the House Committee on Financial Services, introduced the Payments System Protection Act of 2008 earlier today. This legislation would direct the Department of the Treasury and Federal Reserve System, in consultation with the Attorney General, to create a formal process to define what types of online gambling are unlawful.

Frank’s legislation would make it possible for the U.S. financial services industry to comply with the Unlawful Internet Gambling Enforcement Act of 2006, or UIGEA.

To deal with concerns voiced by the financial services industry about the ambiguity of UIGEA, this bill would require federal regulators to appoint a special Administrative Law Judge to define unlawful Internet gambling activities and conduct an economic impact study on the costs of compliance.

Concerns about the proposed rules to implement UIGEA were previously raised at a congressional hearing on April 2, 2008. At the hearing, representatives of the Department of the Treasury and Federal Reserve System acknowledged the challenges U.S. financial institutions will face in attempting to comply with UIGEA.

“Chairman Frank is doing the right thing by saying it is unfair to burden US financial service companies with the job of the Internet gambling police at a time when their undivided attention ought to be on the economy,” said Jeffrey Sandman, spokesperson for the Safe and Secure Internet Gambling Initiative. “The reality is that UIGEA is dangerous to the payments system and unlikely to stop anyone from using the Internet to play poker, bet on horses, or engage in other types of wagering.”

Earlier this year, Reps. Frank and Ron Paul (R-TX) introduced the first version of the Payments System Protection Act (H.R. 5767), which attempted to stop the U.S. government from developing regulations to implement UIGEA. Ultimately, the bill, along with an amendment offered by Rep. Peter King (R-NY), was defeated in the House Committee on Financial Services.

Let’s hope this one fares better.