Kentucky Derby Affected By UIGEA Ambiguities - 05-06-08 |
May 6 - Fears of being prosecuted by the Justice Department for
contravening the Unlawful Internet Gambling Enforcement Act may have
caused many banks and financial institutions to stop processing money from
wagers made at the Kentucky Derby, which took place over the weekend.
Although the UIGEA specifically makes an exemption that allows
gamblers to place wagers on horse racing via the internet, it is still unclear
whether banks could be penalized for actually processing the money from those
wagers.
A Las Vegas attorney warned that "unless the government takes the
responsibility of telling the banks which merchants they shouldn't deal with,
and when banks take the position that they are not going to process these
transactions without guidance, all heck will break loose."
One of the main problems that banks and financial institutions have
with the UIGEA is its ambiguity, which affects decisions such as those faced by
them regarding the Kentucky Derby. While the law makes a sweeping demand for
banks to stop accepting payment for certain types of online bets, it leaves it
largely up to the banks to determine which types are illegal, and which
are not.
A Californian law professor explained the issue: "The problem is
that in some states, online gambling is legal, in others it is not and in still
others, the question depends on where the bettor is, where the gaming operator
is and what form of gambling is taking place."
Under the UIGEA, banks may suddenly find themselves faced with
hefty fines for processing online gambling payments which may have looked
alright to them at the time.
A politician, Luis Gutierrez said: "The regulation fails to
adequately define what constitutes 'unlawful internet gambling' or 'restricted
transaction', yet requires the financial institutions to make a determination on
their own about what is lawful or unlawful."
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