Groups Make New Push to Legalize Gambling on Internet

12/4/09 - Congress Daily AM

A range of interested parties told the House Financial Services Committee on Thursday the best way to control Internet gambling is to legalize it, allowing regulators to license, regulate and tax what is largely an offshore industry.

The panel made up of consumer advocates, banking industry and gaming officials and others was generally supportive of two related bills introduced by Financial Services Chairman Barney Frank.

One would push back by one year the implementation date for the Unlawful Internet Gambling Enforcement Act, a 2006 law banning financial institutions from accepting payments from credit cards, checks or electronic fund transfers to settle online gambling bets.

The Federal Reserve and Treasury Department announced last week they will delay implementation of the law for six more months to give financial institutions additional time to comply. Financial institutions have been critical of the law, saying it is an unworkable burden that forces them into policing online gambling.

Frank's other bill would establish a regulatory and enforcement framework for legalized Internet gambling. West Virginia's First State Bank Chief Information Officer Samuel Vallandingham testified for the Independent Community Bankers of America and said his group backs both bills.

Financial Services ranking member Spencer Bachus opposes Frank's legislation, saying "Internet gambling is and has been and will continue to be a substantial threat to our youth."

But Parry Aftab, executive director of the Web safety group WiredSafety, said she has reluctantly come to the conclusion that the only way to protect consumers and youth from the risks of online gambling is to legalize it. "If we don't legalize it, we can't regulate it," she said.

The only witness to come out against Frank's legalization bill was Robert Martin, chairman of the Morongo Band of Mission Indians, who voiced concern that the measure could hurt legal U.S. gambling operations.

"The legislation will do nothing but legalize offshore gaming at the expense of American jobs," he said. But when pressed by Frank, Martin said his group does not oppose Internet gambling but is more concerned about the bill's competitive impact. Frank said he would be willing to work with Martin to address his concerns with the bill.