Banker Speaks Against UIGEA

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In an interview given to the Medill News Service, the vice-president of the American Bankers Association Kenneally spoke out against the UIGEA calling it an ineffective and costly piece of legislation. He did not say anything that has not been said before, but his words bore the frustration of someone who appears helpless in the face of the approaching June 1 deadline. The UIGEA rules will become applicable on June 1 2010.

Kenneally said that the banks would be able to implement the law in most cases, but the systemic changes that they would have to make would take time to implement. What needs to be understood by all concerned is that there are certain transactions the banks cannot stop. For example if a player writes a check to an online gambling site it cannot be stopped by the banking system because the check would be in the name of the holding company and there is no way to tell that the company is running online gambling operations. The same would apply to wire transfers. It is true that these funding methods take longer than the electronic options but that is something the online gambling industry would be able to live with.

Kenneally also pointed out that banks could prevent transfers by credit and debit cards to online casinos, provided they honestly identified themselves as such. If an online casino used a code belonging to another kind of online merchant and thus disguised its identity then it would not be possible to stop the transfer of funds. Though this practice of disguising the identity is illegal, some online casinos, especially the more shady ones, could resort to it. Kenneally also said that overzealous bank officials could err on the side of caution and stop legitimate transactions like buying of state lottery tickets.

Kenneally also referred to another angle that needed the attention of legislators. All the steps that the banks would be forced to take would cost a lot. Under no circumstances the banks would be able to bear such a cost burden. Ultimately it would have to be passed on to the consumer. And it will be passed on across the board. Therefore those people who have no intention of engaging in online gambling would end up paying for a futile attempt to stop some people from wagering at Internet casinos.

The only solution according to Kenneally is legalization and regulation of online gambling. Everyone seems to be saying this but action is missing. The House Committee hearing on Barney Frank’s bill scheduled for April 16 was postponed and no new date has been set. Therefore Kenneally finally issued a grim warning. He said, “We’re just telling all of our bankers to be prepared on June 1.”

Source: Casino Advisor.