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Feds propose regs for online gambling

Oct 23, 2007 1:05 AM

In response to last year’s Unlawful Internet Gambling Enforcement Act passed by the U.S. Congress, federal agencies charged with implementing the law have jointly released a set of Internet gambling regulations.

The regulations released by the Treasury Department and Federal Reserve would force banks to halt debit and credit payments to online casinos, but stopped short of requiring them to block checks sent off-shore.

In a joint release, the federal agencies said the regulations are "reasonably designed to prevent payments being made to gambling businesses in connection with unlawful Internet gambling."

The new U.S. regulations would make the banks responsible for blocking credit and debit card payments for online gambling. It also bars bank customers such as online casinos from receiving Internet gambling proceeds.

"I think that that’s doable," an industry source said of the proposal.

But industry officials said it seemed that regulators had addressed their biggest concern about the new law. The agencies concluded it was "not reasonably practical" for the banks to identify and block customers from sending checks and making some other types of transfers.

The new regulations are designed to put into effect a law passed by Congress last year aimed at stopping most forms of Internet gambling.

"At first blush it looks like they took a very practical and pragmatic approach. They did not ask us to do the impossible," said Steve Kenneally, a spokesman for America’s Community Bankers.

The Treasury Department and Federal Reserve set a December 12 deadline for public comments on their proposal. The two regulators will then begin finalizing the regulation.