Monday, October 01, 2007

Taking Notice (UIGEA Regs Arrive)

The Board of Governors of the Federal Reserve System throws a chip into the middleThe regs are here. Am wondering how many people will notice.

The Board of Governors of the Federal Reserve System, working together with other Dept. of Treasury offices and in consultation with the U.S. Attorney General, have finally released regulations concerning the prohibiting of funding unlawful internet gambling. The document, presented as a “Notice of Joint Proposed Rulemaking,” responds to the Unlawful Internet Gambling Enforcement Act’s directive for the Board to draft such regulations, albeit ten weeks or so after the date when they were supposed to have done so. (For those interested, you can read the full 52-page document here.)

Now what?

Officially, these here regs have been published to the Federal Registrar, with today marking the start of a so-called “commenting period” which extends until December 12, 2007. During this period, banks and other “financial transaction providers” will not be required to follow any of the procedures outlined in the regs to block transactions. Anyone can submit comments regarding the regulations to the Board of Governors of the Federal Reserve System and/or the Dept. of Treasury.

Once the commenting period concludes, there will be an additional period of reevaluation -- likely lasting another 180 days -- before the regulations are finalized. Only then will banks be required to follow the instructions as dictated by the regulations. Meaning we’re probably looking at early summer 2008 before any of our banks will stop taking checks from online poker sites, if then.

Folks are already starting to comment (unofficially) on the regs over at Two Plus Two. I’ve yet to try to tackle in earnest this here weighty pile o’ legalese, though I do notice a couple of interesting items there in the summary with which the document begins.

The summary states that the regulations “establish policies and procedures reasonably designed to identify and block or otherwise prevent or prohibit transactions in connection with unlawful Internet gambling.” It also states that those agencies who “believe it is not reasonably practical . . . to identify and block, or otherwise prevent or prohibit, unlawful Internet gambling transactions” would be exempt from having to enforce the law as stipulated by the regulations. This qualification actually appears in the UIGEA itself (in section §5364.b.3).

We have been hearing all along about the impracticality of banks searching through and identifying particular transactions as unlawful. It appears those who drafted these regulations are aware of such limitations and are acknowledging them here.

The summary also states that the “Notice” that follows “does not specify which gambling activities or transactions are legal or illegal because the Act itself defers to underlying State and Federal gambling laws in that regard and determinations under those laws may depend on the facts of specific activities or transactions (such as the location of the parties).”

I think this statement might be slightly misleading, if I’m reading it correctly. My understanding had been that the UIGEA does identify (albeit in a potentially ambiguous way) what is and what is not “unlawful” (in section §5362). However, the Act also appears to tell the feds to defer its authority in this regard to the district courts, states, and “Indian lands” (in section §5365, “Civil remedies”).

In other words, the authors of the regs don’t appear interested here to try to clarify anything with regard to the legality of, say, online poker. I’ve said before that I do think transactions related to online poker are in fact prohibited by the UIGEA, although I understand the perspective of those who want to interpret the Act differently.

Doesn’t really matter at the moment, though. Today’s issuing of the proposed regulations brings into focus what the real issue is going to be as we move forward -- not whether this or that form of online gambling is indeed “unlawful,” but whether the law as written can ever really be enforced in a way that will directly affect the activities of those of us who do engage in online gambling. As we all know, the UIGEA has already had considerable effect on online poker, and even if it is never enforced a single time, the Act may well further influence how we interact with one another in our little world of virtual chips, cards, and felt.

The appearance of the regs, though, does bring us one significant step closer to the actuality of enforcement.

And if that day comes, believe me . . . we’ll notice.

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