Out of Control Policy Blog

Internet Gambling: Down But Not Out

Word is that Rep. Barney Frank (D-Mass.) is readying legislation to lift the ban on Internet gambling – or at least relieve the banks of the responsibility of enforcing it.

The bill reportedly has the support of Ron Paul (R-Texas), a member of the House Financial Services Committee that Frank chairs.

The news follows a March 30 World Trade Organization finding that the ban is not compliant with an earlier WTO ruling that called on the U.S. to change the way it regulates on-line gambling. The complaint was brought by Antigua and Barbuda, two Caribbean nations that handle a heavy amount of Web hosting for Internet gaming companies. Cato's Sallie James recently outlined the implications of the WTO decision at TCS Daily.

The Unlawful Internet Gambling Enforcement Act (UIGEA) passed last October as part of a larger ports security bill. In its wake, the U.S. Department of Justice began an unprecedented campaign of harassment against legally operating non-U.S. banks. In January, it charged two former executives of Neteller, a publicly traded U.K. online money transfer company, with moving billions of dollars of illegal gambling proceeds from U.S. citizens to Internet gambling companies located overseas. According to InformationWeek (in an excellent report on the consequences of UIGEA), the DOJ also reportedly issued subpoenas to a number of prominent global banks that had participated in the underwriting of the IPOs of overseas gambling sites. Upon this news, stock prices of online gambling concerns registered on the London stock exchange tumbled.

In the meantime, Congress' attempt at Internet nannying has led some of the best and most reputable gaming sites, like PartyPoker.com and 888 Poker-on-the-Net, to stop taking U.S.-based customers, potentially leaving the market to more shady operators.


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