• White House Seeks to Finalize Online Betting Ban
  • December 23, 2008
  • Law Firm: Manatt, Phelps & Phillips, LLP - Los Angeles Office
  • In the eleventh hour of its eight-year tenure, the Bush Administration is moving to finalize rules enforcing a controversial law aimed at banning online gambling.

    Democratic lawmakers and the online gambling industry were quick to protest the maneuver. "This midnight rule-making 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," the House panel's chairman, Rep. Barney Frank (D-Mass.), wrote earlier this month to Treasury Secretary Henry Paulson. Frank urged Paulson to push back the regulation, which has been reviewed by the White House budget office, typically a last step before publication in the Federal Register.

    At the center of the debate is a 2006 law that Senate Republicans appended at the last minute to an unrelated port security bill. The law bars financial institutions from accepting payments from credit cards, checks, or electronic fund transfers to pay for Internet gambling transactions.

    Among other problems, the law has created confusion for the institutions that are potentially affected by it, because it does not clearly define Internet gambling, instead referring to existing federal and state laws, which differ in their definitions.

    Financial institutions have complained that they have been put on the spot, having to abide by a vague statute, complicated by the difficulty of pinpointing where payments are going and the relative ease with which online betting organizations can disguise the nature of the transactions.