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Internet Gambling Curtailed by New U.S. Federal Reserve and Treasury Department Rules
On November 12, 2008, the U.S. Department of the Treasury and the Federal Reserve Board released their final rules implementing the Unlawful Internet Gambling Enforcement Act of 2006. The final rules require financial institutions participating in certain payment systems to develop and implement due diligence policies and procedures that are reasonably designed to prevent payments to gambling businesses in connection with unlawful Internet gambling.
The final rules were passed in the midst of strong opposition from Internet gambling companies and financial institutions. The gambling companies objected to the rules on the basis that they do not clearly define “unlawful Internet gambling”, making compliance problematic. Financial institutions argued that the rules imposed an unreasonable burden on them to enforce gambling laws, which they suggested should be the domain of government authorities. Although the agencies acknowledged the challenges faced in carrying out these rules, their position is that the rules are flexible in dealing with the due diligence measures that must be adopted. The agencies also stated that there could be no single regulatory definition of “unlawful Internet gambling” due to the patchwork of gambling laws adopted by different states.
Companies have until December 1, 2009 to comply with the rules.
For additional information, visit:
http://www.pcmag.com/article2/0,2817,2334680,00.asp
http://jolt.law.harvard.edu/digest/internet/unlawful-internet-gambling-enforcement-act