UIGEA Regulations Released

This week, the U.S. Department of the Treasury and the Federal Reserve System board of governors (the Agencies) released the proposed regulations for last year’s Unlawful Internet Gambling Enforcement Act (UIGEA).  Three months late and excruciatingly confusing and vague, they really have not done anything yet to stop Americans from gambling online. 

One major thing that the Agencies did not do was define what constitutes “illegal” online gambling.  Their job is not to interpret the law, but rather put the regulations in place as directed by the law.  In fact, in the proposal, the Agencies even said that the UIGEA does not define what is illegal and what is not. 

In a nutshell, the proposal requires participants (for example, banks and credit card companies) to come up with procedures for blocking illegal gambling transactions and provides suggestions for doing so.  At the same time, however, some participants will be granted an exemption from blocking transactions if it is deemed that it is not practical for them.  Those participants who are expressly not exempt are those who actually have illegal internet gambling companies as customers.  The big issue here is that a bank or other financial institution might not know the business of their customers.  Now they will be required to find out. 

The Agencies are soliciting feedback on the proposed regulations until December 12.  The complete proposal can be found at: http://www.treas.gov/press/releases/reports/noticeofproposedrule.pdf.