U.S. Online Gambling Prohibition A Failure

[PokerT]

U.S. Online Gambling Prohibition A Failure
U.S. Federal Reserve, Treasury Department and Financial Service
Companies Call Proposed Rules Unworkable



WASHINGTON, April 2, 2008 /PRNewswire-USNewswire/ -- Expert testimony
to Congress today offered further evidence that the ban on Internet
gambling won't work. Witnesses unanimously agreed that U.S. financial
service companies would face serious regulatory burdens in attempting to
enforce the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), a
law that is not likely to stop millions of Americans from gambling online.



"Testimony from the federal regulators and representatives of the
financial services community made clear today that the prohibition on
Internet gambling isn't working now and will not work in the future," said
Jeffrey Sandman, spokesman for the Safe and Secure Internet Gambling
Initiative. "U.S. banks and credit card companies, along with every other
type of U.S. company involved in payment systems, would be forced to spend
substantial resources to comply with a ban on Internet gambling that can be
easily circumvented by anyone in the U.S. that wants to continue to gamble
online."



Representatives of the U.S. Department of the Treasury and Federal
Reserve System acknowledged at the hearing the challenges U.S. financial
institutions will face in attempting to comply with UIGEA. Since most
payment systems are not well designed to comply with this law, "it will be
very difficult to shut off payment systems for use of Internet gambling
transactions," said Ms. Louise Roseman, Director, Division of Federal
Reserve Bank Operations and Payment Systems, Board of Governors of the
Federal Reserve System. "The implementing statute will not be iron clad at
all."



Representatives from the American Bankers Association, Financial
Services Roundtable, Wells Fargo & Co. and Credit Union National
Association unanimously opposed regulations proposed to implement UIGEA in
testimony to the House Committee on Financial Service's Subcommittee on
Domestic and International Monetary Policy, Trade, and Technology. They all
questioned the fundamental approach taken by Congress in enacting
legislation to force financial institutions to police online gambling.



"The UIGEA and the Proposed Rule do not provide a rational path towards
halting unlawful Internet gambling," said Wayne Abernathy, American Bankers
Association's executive vice president of financial institutions policy and
regulatory affairs. "The path leads to an increased cost and administrative
burden to the banks and an erosion in the performance of the payments
system, but it will not result in stopping illegal Internet gambling
transactions. Imposing this enormous unfunded law enforcement mandate on
banks in place of the government's law enforcement agencies is not likely
to be a successful public policy."



Mr. Leigh Williams, president of the technology division of the
Financial Services Roundtable stated in his testimony concerns that
enforcement of the proposed rules "could impose significant compliance
burdens on financial institutions by increasing their role in policing
illegal activities, determining whether a transaction is illegal, or by
imposing ambiguous compliance requirements that could be subject to wide
variations in interpretation by regulators and law enforcement agencies. We
believe these functions are more appropriate for law enforcement agencies."



The testimony supports over 200 comments submitted to the Department of
the Treasury and Federal Reserve System on the burden and ambiguity in the
proposed rules to implement UIGEA.



"Rather than trying to implement a ban that is unclear, burdensome and
doomed to fail, Congress should instead look to regulate Internet gambling
in order to protect consumers and collect billions of dollars that is being
lost to offshore Internet gambling operators," added Sandman.



Congressman Barney Frank (D-MA) introduced the Internet Gambling
Regulation and Enforcement Act (H.R. 2046) last year, which establishes a
regulatory and enforcement framework for licensed gambling operators to
accept bets and wagers from individuals in the U.S. It would include a
number of built-in consumer protections, including safeguards against
compulsive and underage gambling, money laundering, fraud and identity
theft. States would also have the right to control what, if any, level of
Internet gambling is permissible within their borders and could apply
additional taxes and restrictions.



A companion piece of legislation to the Frank bill introduced by
Congressman Jim McDermott (D-WA), the Internet Gambling Regulation and Tax
Enforcement Act of 2008 (H.R. 5523), would ensure the collection of taxes
on regulated Internet gambling activities. According to a tax revenue
analysis prepared by PricewaterhouseCoopers, taxation of regulated Internet
gambling is expected to generate between $8.7 billion to $42.8 billion in
federal revenues over its first 10 years.

[GWUGWU]

This is why we feel this is the future in North America:

Allows Lottery Corporations to run online gaming with a simple patented process:

1. Players purchase tickets at the lottery retailers, printed at the terminals.
2. Printed tickets have an activation code printed on the ticket.
3. Players go online to a corporation run site.
4. Players join online gaming by using activation code.
5. Winners return with ticket to retailers for validation and to receive winnings.

Lottery Corporation Benefits & Highlights

* Corporations are able to control and regulate their own games within each jurisdiction, setting their own rules, betting limits, games offered and profits margins
* Higher profits for corporations, which in turn are charitably redistributed (Education and Heath Care)
* Corporations do not compete with each other in any way
* Ease in which corporations can implement the process, everything is already in place
* Tickets may only be purchased by players of age, identification required
* Corporations cater to new clientele, expanding their customer base to higher income brackets

Governments Benefits & Highlights

* Places boundaries on Internet gambling that currently do not exist
* Governments make taxes off online gaming
* No cross over in money spent between jurisdictions, so taxes are not lost to other jurisdictions
* Players' losses and Players' winnings do not leave jurisdiction, so all money is continuously redistributed
* Laws don’t need to change, although some jurisdictions may amend current laws

Retailers Benefits & Highlights

* Retailers make profits from ticket sales and percentage of winning tickets they redeem

Players Benefits & Highlights

* Ease to purchase a ticket, almost anywhere, in seconds
* Ease to participate in online gaming
* Players play without divulging any personal information online
* Skeptical players who have never played online for money will now participate
* Players may play for Cash, no credit cards required or wiring money, transaction fees, time constraints, headaches
* Winners may collect instantly, no long delays in receiving winnings
* Allows players not geographically near land base casinos to participate in gambling

Online Casinos & Poker Rooms Highlights

* No fear games aren’t run fairly now, thanks to the corporations' good names

[wallstreeterww]

I mean why doesnt the government just regulate online gambling? Our economy is in a mess and just think about what that money would mean to teh american money in the form of gambling profit taxes. They do it in Vegas and Atlantic City, why not online globally?

[holdemholic]

I agree. That could be a whole new source of tax revenue for the government.

[wallstreeterww]

See Guys, didnt i say the government needs this source of revenue. Bush is about to propose a huge 700 billion mortgage bailout on an allready passed 300 billion bailout recently. This is a no brainer and i think the only way they can get that debt paid back. Its amazing no one has proposed making it legal again. Im sure the new president will .

[luckofthedraw]

Originally Posted by holdemholic

I agree. That could be a whole new source of tax revenue for the government.

And they could definitely do with it!