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H.R. 5767, the Payments System Protection Act, failed Wednesday in the House Financial Services Committee. H.R. 5767, introduced by Representatives Barney Frank (D-Mass.) and Ron Paul (R-Tex.), was intended to stop the implementation of regulations enforcing the 2006 Unlawful Internet Gambling Enforcement Act. An attached amendment proposed by Representative Peter King (R-NY) would force the Treasury Department, the Justice Department, and the Federal Reserve to give a clear definition as to exactly what constitutes illegal Internet gambling. It was tied in a 32 for and a 32 against vote, leaving the bill defeated.

Currently, the United States banking industry has the discretion to say what is and what is not an illegal transaction for online gambling. The lack of clear definitions and regulations has left our banking industry under an undue amount of stress. Along with the banking industry, both the Federal Reserve and Department of Treasury have testified before congress the impracticable nature of enforcing the UIGEA. Without a clear definition of unlawful online gambling it is almost impossible to enforce. Instead, the result will be more financial transactions than necessary being denied and reviewed, because of the chance they may fall into the gray area of illegal Internet gambling. The UIGEA has forced the banking industry to take on a police role without clear defined laws.

Representatives from the United States Chamber of Commerce, Credit Union National Association, Financial Services Roundtable, and National Association of Federal Credit Unions all showed strong support and favored the approval of the Payments System Protection Act and King amendment. President and CEO of the Financial Serivced Roundtable wrote, “I wish to be clear that we do not support the notion that financial services companies should be ‘deputised’ to police gambling activity in any form or function. While we would support the passage of H.R. 5767 as introduced, I agree that the King Amendment makes essential improvements to a deeply flawed law and therefore support its inclusion.”

Supporters of H.R. 5767 argued that the UIGEA is perhaps one of the most ineffective and unfeasible laws ever created. Opponents, instead of focusing on the realistic credentials of the act, focused on the moral debate of gambling. Representative Steve Bachus (R-AL), an avid challenger to online gambling, said, “Today’s [Wednesday’s] vote was a victory for young people because illegal Internet gambling brings the casino into their bedrooms and dorm rooms, sometimes with tragic consequences.”

The very people that these online gambling opponents are trying to protect, however, are not able to be fairly protected by a law that does not have clear regulations. Rather, everyone is subject to being treated like underage gamblers, compulsive gamblers, or money launderers, even if they are not. Chairman of the Poker Player Alliance, Alfonse D’Amato, summed the situation nicely saying, “As it stands, UIGEA is a completely unworkable and unenforceable bill that would do little to address the main concerns of its sponsors – namely, protecting underage and compulsive gamblers as well as cracking down on money laundering. To truly address these issues, the PPA firmly believes that Congress should implement thoughtful and effective regulation of the online gambling industry as opposed to outright prohibitions, which history has shown do not work.”