Even as the United States is getting geared up to get rid of the Bush administration and welcome in the Obama administration, the U.S. Treasury Department and the Federal Reserve issued a rush final ruling on Wednesday, November 12, 2008 that is aimed at ceasing all illegal Internet gambling in the United States.  Democratic leaders had called for a delay of the ruling due to the havoc it would wreak with the American banking system which is already a mess, but the Fed and Treasure simply plowed ahead anyway.

Republicans who are still controlling congress have been pushing for this ruling since the UIGEA was put into effect in 2006.  They want it to be signed off by Bush before he leaves office in January and not give President-elect Obama the opportunity to have a say in the issue. In a statement released by Republican Spence Bachus from Alabama, “No longer will the offshore gambling interests benefit from any turning any computer into a casino that is available every minute of the day.”

The new legislation will bar businesses from knowingly accepting payments of money that has connection to unlawful Internet gambling.  This includes all payments made by credit card, electronic fund transfer, and checks.  Already the 2006 ruling has cost the European online gambling market billions in lost revenue when they were chased out of America.  The new ruling, if it is passed by Congress, will require ‘U.S. financial firms that participate in designated payment systems to establish and implement policies that are reasonably designed to prevent payments to businesses in connection with unlawful Internet gambling’.

The Treasury defined the ‘unlawful Internet gambling’ as covering the making of a bet or wager on the Internet that is unlawful under any applicable federal or state law.  What is interesting to note here is that some states allow Internet gambling, and the state of California is working on regulation based on the guidelines set forth in the UIGEA that will allow legal Internet gambling in the state.  The UIGEA is confusing enough, and many players are caught between playing legally in their state but unlawfully in the nation.  Companies have until December 1, 2009 to comply with the new ruling.

However, House Financial Services Committee Chairman Barney Frank of Massachusetts has waded into this battle as he has with all of the rest.  He has accused the Bush administration of rushing in to implement the regulation and effectively tie President-elect Obama’s hands.  Said Frank, “This midnight rulemaking will tie the hands of the new administration, burden the financial services industry at a time of economic crisis and contradict the stated intent of the Financial Services Committee,” Frank said.

He added that once again the regulation did not clearly define unlawful Internet gambling and that the Treasury’s definition as listed above is vague.   “Furthermore, some of the information needed to make this determination would likely be unavailable to banks because customers or financial institutions in foreign jurisdictions will likely be unwilling or unable to provide it,” Frank added.  The House Financial Services passed a bill to block the regulation until the rules and definition are thoroughly defined and they are waiting on Congress to approve their block.