UIGEA Compliance Less Than Two Months Away, Frank Seeks Delay

We poker fans and players have a lot to occupy ourselves at the moment. There are the various tourneys happening in London and Aruba to follow. We continue to look forward to the November Nine (just over a month away now). And, of course, we continue to enjoy our own games.

Meanwhile, that Unlawful Internet Gambling Enforcement Act of 2006 -- or, as I sometimes purposefully mispronounce it, the Awful Internet Gambling Enforcement Act -- continues to creep up on us. Will something be done before that absolutely-final-no-we-cannot-delay-it-any-further deadline of December 1 arrives? Or will time run out?

You may recall that the finalized regulations for the UIGEA were put into effect on January 19, 2009, the very last full day of the George W. Bush presidency. In other words, it has been the case for a while that banks (or “designated payment systems”) can, if they choose, block clients’ transactions with online poker sites, although for the most part very few have bothered to do so.

There have been a few reports scattered here and there in the forums of people running into occasional hassles with transactions. There was also that bit of applesauce that occurred over the summer when the Assistant Attorney General of the Southern District of New York ordered a few large banks to freeze the accounts of a couple of companies (Allied Systems and Account Services) that were processing payouts for online poker sites. Not sure, actually, that it was the UIGEA that afforded the legal leverage to do that or not, but it did cause quite a bother for online poker players nonetheless.

Something like $30 million in funds were frozen, with the result being that many online poker players faced inordinate delays when trying to withdraw from the sites, most particularly from Full Tilt Poker and PokerStars. The sites eventually found new means to make the payouts happen, though, and all was (mostly) well.

However, from the perspective of the “designated payment systems,” adhering to the UIGEA’s prohibition against allowing their clients to make transactions with online sites that offer (still undefined) “unlawful internet gambling” has been essentially voluntary, since the regs state that “compliance... by designated payment systems is not required until December 1, 2009.” Also noteworthy is how in the finalized regulations the blocking of transactions will only be required when players try to move funds from their bank accounts to the online sites -- not when they withdraw.

That’s less than two months away. Meaning if nothing happens between now and December 1, the online poker experience for the American player is going to change significantly, I think. We’ll be able to withdraw, I imagine, but depositing is gonna be a headache. And you can imagine how things will go once that starts to happen.

We’ve seen a few bills proposed over this year -- a couple in the House, one in the Senate -- that if somehow rushed through and made law would successfully stop the UIGEA madness, either temporarily or permanently.

There’s the Internet Gambling Regulation, Consumer Protection, and Enforcement Act (H.R. 2267) introduced by Barney Frank (D-MA) which seeks to establish a federal licensing and regulatory system for online gambling to be run by the U.S. Treasury. That one has exactly 60 co-sponsors at present, and has been referred to the Subcommittee on Crime, Terrorism, and Homeland Security. So there are members of Congress other than those on Frank’s own Financial Services committee who have been (theoretically) invited to contemplate it.

Then there’s the Internet Poker and Games of Skill Regulation, Consumer Protection, and Enforcement Act of 2009 (S. 1597), introduced by Robert Menendez (D-NJ) over in the senate. Menendez’s bill offers to create a similar system of licensing and regulation, but focuses more specifically on “skill” games like poker. Menendez’s bill also includes a few other differences that make it less attractive than it might seem to online poker players. S. 1597 appears to be collecting dust at the moment, having no co-sponsors after having been referred to the senate’s Committee on Finance.

And there’s also Barney Frank’s H.R. 2266, the Reasonable Prudence in Regulation Act, which very simply asks that forced compliance with the UIGEA regs be delayed for a year (to 12/1/2010). That one, which has been referred to the House Committee on Financial Services (chaired by Frank), has collected 46 co-sponsors.

I suppose it’s possible -- though highly unlikely -- that one of these bills could suddenly catch fire and start moving through Congress. There’s always a chance, too, that one could get appended to some other bill and via a bit of legislative legerdemain (not unlike what helped the UIGEA become law in the first place) could get pushed through before December 1. But the likelihood of that happening seems mighty remote, too.

Let’s not give up hope yet, though. As always seems to be the case when it comes to U.S. legislative procedure, there’s still another way.

Last Thursday (October 1), a letter was sent to Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke asking for a one-year delay of the implementation of the UIGEA regs, citing how the enforcement of the law would place an “unreasonable burden on regulators and the financial services industry at a time of economic crisis.” The letter is signed by Frank and 18 other members of the House Financial Services Committee.

To be specific, the letter asks the feds to use their authority under the Administrative Procedure Act to bypass the usual hurdles and go ahead and agree to the one-year delay. Mention is made in the letter of Frank's H.R. 2266 (which would accomplish the same purpose), with the optimistic statement that “we believe this legislation is likely to move.”

So, yeah, the feds can still do whatever the hell they want when it comes to the UIGEA. Here’s hoping they do, in fact, give us another year to pursue the fight against that awful law.

But, really, it is hard to have any idea here what river card is gonna fall.