The Fed, Treasury Department Release Joint Final Rule Implementing UIGEA
By Linda Tieh – Edited by Dmitriy Tishyevich
Federal Reserve Board
Department of the Treasury
Federal Register Notice
On November 12, 2008, the Department of Treasury and the Federal Reserve Board, in consultation with the Department of Justice, jointly published final rule 12 C.F.R. Part 233, implementing the Unlawful Internet Gambling Enforcement Act (“UIGEA”) of 2006. The UIGEA prohibits gambling businesses from knowingly accepting payments in connection with unlawful Internet gambling, including payments made through credit cards, electronic transfers, and checks. The final rule requires U.S. financial firms participating in certain payment systems to establish and implement written due diligence policies and procedures that are reasonably designed to prevent transactions in connection with unlawful Internet gambling. The Treasury Department has said that “unlawful Internet gambling” generally covers making a bet that involves use of the Internet and is unlawful under applicable federal or state laws in the jurisdiction where the bet is initiated, received, or otherwise made. The rule is effective as of January 19, 2009, and compliance by companies is required by December 1, 2009.
The Department of the Treasury has issued a press report on the final rule.
Reuters suggests that Republican lawmakers, who controlled Congress in 2006, passed the UIGEA in hopes of having a rule issued before Bush leaves office in January, and notes that its passage cost Europe’s online gambling companies billions in lost market value as they had to withdraw from providing service to the U.S., one of their most lucrative markets. The Associated Press reports that the final regulation drew criticism from Democrats who believe financial services companies will be burdened.
Poker News Daily likewise criticizes the regulations as “midnight rule-making” by the Bush Administration, arguing that the final rule leaves unclear which gaming activities are legal and which are not. The Poker Players Allinace (PPA), a poker grassroots advocacy group, agrees the rule failed to clarify the differences between legal and illegal gambling activities.