Opponents of Internet gambling ban like their odds in '09

Critics of long-awaited regulations issued this week by the Treasury Department and Federal Reserve Board to enforce a federal ban on Internet gambling are betting on the Obama administration and Congress to overturn the rules. Lawmakers and financial services firms have complained that the proposed rules were vague, burdensome and not likely to stop millions of Americans from online betting, but the Bush administration worked hard to finish the guidelines, which stemmed from 2006 legislation, before the end of the term.

Comment on this article in The Forum.Under the rules, which take effect Dec. 1, businesses are barred from knowingly accepting payments linked to Web gambling operations through credit cards, electronic funds transfers, and checks. The House Financial Services Committee approved a bill in September that would put off implementation of the gambling ban, but it never reached the House floor.

House Financial Services Chairman Barney Frank wrote to Treasury Secretary Paulson and Federal Reserve Chairman Bernanke this week asking them to postpone issuing the regulations. Frank offered legislation to regulate rather than ban the activity; he said the rulemaking "will tie the hands of the new administration [and] burden the financial services industry at a time of economic crisis."

Rep. Shelley Berkley, D-Nev., who introduced a 2007 bill to study how the government can respond appropriately to Internet gambling, said this week she was not surprised that similar "backdoor tactics" were used to implement the rules -- given that in 2006, the language was slipped into a port security bill without debate. Financial Services ranking member Spencer Bachus backs the new rules, arguing they will protect young people and prevent illegal offshore casinos from funneling money to "largely unknown ... and often criminal hands." Frank intends to keep fighting the gambling ban and may use the Congressional Review Act, a 1996 statute that lets lawmakers review and overrule regulations issued by agencies, to undo the rule. Meanwhile, Berkley is expected to reintroduce her bill in the new session and urge President-elect Obama to take a fresh look at the issue, an aide said.

Financial Services Roundtable lobbyist Andy Barbour said Frank and most panel members are "very serious about getting this regulation right" and want administrators to "go back to the drawing board." Meanwhile, the members of Barbour's trade group will try to comply with what he calls "nebulous and confusing" rules. Former Sen. Alfonse D'Amato, R-N.Y, chairman of the Poker Players Alliance, said the administration finalized "a truly bad public policy" and hopes Obama and the 111th Congress will act swiftly to overturn them and establish an effective licensing and regulation regime.

A spokesman for the Safe and Secure Internet Gambling Initiative panned the rules and called on Obama and Congress to "relieve this burden on the financial service sector and regulate the industry." While Obama has been silent on the issue, Vice President-elect Biden has an indirect connection to the industry. Until recently, his son Hunter was a lobbyist who worked with a law firm that represents Russ DeLeon, the billionaire founder of PartyGaming.com, a popular online gambling destination.