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Despite many significant questions put by many elected officials, new rules have been issued by the Treasury Department along with the Federal Reserve which effectively block all financial companies in the United States from processing payments that are in any way connected to the vast majority of online gambling websites. This will effectively put a legal halt on all Internet gambling in the United States. The new rules give companies just over a year (until the 1st December 2009) to make the necessary adjustments which will enable them to comply with the ban. This ban on websites engaged in Internet gambling covers all transactions regarding credit cards, electronic funds transfers and cheques. Opposition to this move has been registered by the banking sector, Democratic lawmakers and many high level elements of the online gambling industry. These rules have been adopted under a ports-security law made in 2006 which was actually written during the closing days of the Bush administration. This was enacted shortly before Congress was about to change from Republican to Democrat control. The law gave instructions to the Treasury and the Federal Reserve to develop a set of rules outlining the implementation of this effective ban. Barney Frank (D., Mass.), the House Financial Services Chairman has called on the federal government for online gambling to be regulated rather than banned. This week, Mr Frank sent a strong letter urging Treasury Secretary Henry Paulson to delay the implementation of these rules at least until the new incoming Obama administration and Congress have had the opportunity to review this 2006 law next year. The new rules do not actually define what is or is not an illegal gambling transaction. Instead they rely on state law to make that definition. Mr Frank along with other lobbyists from the financial sector have brought into question the tactfulness of telling banks to bear the additional costs of new rules, especially at a time when the financial industry is still counting the cost of the US credit crisis along with a declining housing market. In an interview, Rep. Frank said the new rules were “a disaster” and that he intended working continuously to get them overturned. Thankfully, banks have been given a year to work out how to deal with the new law, which will give Congress enough time to do something about it. The law however, does include some exemptions which include betting on interstate lotteries, horse racing and fantasy sports. |
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