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12 Gaming L. Rev. & Econ. 1 (2008)

handle is hein.journals/gmglwr12 and id is 1 raw text is: GAMING LAW REVIEW Volume 12, Number 1, 2008 ©Mary Ann Liebert, Inc. DOI: 10.1089/glr.2008.12101 Gambling and the Law® Regulators Punt on Proposed Internet Gaming Regulations I. NELSON ROSE T HE FEDERAL GOVERNMENT has issued pro- posed regulations to enforce the ban on money transfers for unlawful Internet gam- bling transactions.1 The most important thing to understand is that, legally, nothing has changed. And nothing will, for many, many months. Given the impossible job of enforcing an un- workable law, regulators punted, issuing pro- posed regulations that tell banks, credit card companies, e-wallets, and other payment processors, basically, You take care of it. Because the regulations will expressly put the burden on money transmitters to avoid il- legal gambling, financial institutions will in- crease their restrictions on all gaming, even clearly legal bets. The proposed regulations are the result of a bill rammed through Congress last year by the failed politician, then-Senate Majority Leader Bill Frist, R.-Tenn. Frist attached his Unlawful Internet Gambling Enforcement Act to the Safe Ports Act. He refused to let Democrats even read the bill. If they didn't like it, they could vote against port security. A good indication of how quickly the law was written is that it does not even have a good I. Nelson Rose is a Distinguished Senior Professor at Whit- tier Law School in Costa Mesa, Calif. His latest books are Gaming Law: Cases and Materials and Internet Gaming Law. Professor Rose may be reached at his Web site at <http://www.GamblingAndTheLaw.com>. © Copyright 2008, all rights reserved worldwide. GAM- BLING AND THE LAW® is a registered trademark of Profes- sor I. Nelson Rose, Encino, Calif. acronym. Since UIGEA2 is unpronounceable, I'll call it Prohibition 2.0. Prohibition 2.0 is often characterized as out- lawing Internet gambling in the United States It actually does only two things. It creates a new crime: being a gambling business that accepts money for unlawful transactions. And it re- quires that new regulations be written by the secretary of the Treasury and governors of the Federal Reserve Board, in consultation with the attorney general, meaning the Department of Justice (DOJ). What it does not do is make it a crime to merely make bets on the Internet. It doesn't di- rectly restrict players from sending or receiv- ing money. It doesn't spell out what forms of gambling are unlawful. Specifically, it does not do what the DOJ wanted, which was to clarify that the Wire Act covers Internet casi- nos, lotteries, and poker. The new crime it creates is greatly limited. Only gambling businesses can be convicted, not players. Bizarrely, for a law designed to prevent money transfers, the financial institu- tions involved in those transfers, including banks, credit card companies, and e-wallets, are expressly defined as not being gambling businesses and so cannot be convicted of this new crime. 1 Prohibition on Funding of Unlawful Internet Gambling, 72 Fed. Reg. 56,680 (proposed Oct. 4, 2007) (to be codified at 12 C.F.R. pt. 233 and 31 C.F.R. pt. 132). 2 Unlawful Internet Gambling Enforcement Act of 2006, 31 U.S.C. §§ 5361-5367. 3 Wire Act, 18 U.S.C. §1084. 1

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