Another legislative attack on the UIGEA

Barney Frank, the Democratic Party's chairman of the House Financial Services Committee and a strong supporter of legalising online gambling in the United States, is preparing to launch another legislative attack on the controversial Unlawful Internet Gambling Enforcement Act, according to a Reuters report as the week ended.

Frank has been a consistent opponent of the Act, which disrupts financial transactions with online gambling companies and has caused billions of dollars in losses in European companies, major foreign trade hassles for the USA and extra work for a confused and already over-extended financial services industry charged with enforcing the act.

Passed in a late night session of a Congress about to go into recess, and attached to a completely unrelated "must pass" security bill, the UIGEA has been controversial and widely criticised from its inception in late 2006, when it was signed into law by former US president George Bush, precipitating an exodus from the US market of major publicly listed and reputable gambling groups.

Government agencies trying to draft regulations supporting the politically ill-considered law subsequently admitted difficulty in framing sufficiently precise provisions, causing the drafting process to go way over deadlines, and a last-minute rush by an outgoing administration to bring the regulations into force.

Although the regulations have been in place for only a few weeks, the adverse impact of a confusing law (the lack of a definition of "illegal gambling" is a major fault) is already being felt as a financial services industry that is already under pressure errs on the side of caution in blocking "illegal" transactions.

This week a member of Congressman Frank's staff confirmed that the respected political leader plans to introduce legislation to repeal the UIGEA.

"The bill introduction should happen in the next month," the aide told Reuters. "Mr. Frank will bring back legislation to repeal the UIGEA."

Congressman Frank's attempt to overturn the UIGEA comes against a background of continued pressure from the government of Antigua and Barbuda, which has conducted a fierce and so far successful fight in the World Trade Organisation against the UIGEA and the inequities of US anti-online gambling laws.

In addition, the European Union has taken up the cudgels for major online gambling companies in Europe prejudiced by the law. Whilst EU officials have said a negotiated resolution is preferred, a complaint to the WTO is on the cards should this prove impossible to achieve (see previous InfoPowa reports).

Reuters recaps the case of Anurag Dikshit, a founder of PartyGaming who pleaded guilty in December to Internet gambling charges and agreed to pay $300 million in fines after negotiating with the US Department of Justice.

EU industry officials said the pressure on Dikshit to make a deal showed the Justice Department had crossed a major line in its prosecution of cases. The European Commission, acting on an industry petition through the Remote Gaming Association, began a formal investigation in March into whether Washington was singling out EU companies for enforcement actions while allowing U.S. online firms to operate freely.

Sources familiar with that investigation told Reuters in Brussels last week that they expect the Commission investigators' report, initially due last year, to recommend action at the WTO when it is released next month.

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