Expert testimony to Congress todayoffered further evidence that the ban on Internet gambling won't work.Witnesses unanimously agreed that U.S. financial service companies would faceserious regulatory burdens in attempting to enforce the Unlawful InternetGambling Enforcement Act of 2006 (UIGEA), a law that is not likely to stopmillions of Americans from gambling online.

"Testimony from the federalregulators and representatives of the financial services community made cleartoday that the prohibition on Internet gambling isn't working now and will notwork in the future," said Jeffrey Sandman, spokesman for the Safe andSecure Internet Gambling Initiative. "U.S. banks and credit cardcompanies, along with every other type of U.S. company involved in paymentsystems, would be forced to spend substantial resources to comply with a ban onInternet gambling that can be easily circumvented by anyone in the U.S. thatwants to continue to gamble online."

Representatives of the U.S.Department of the Treasury and Federal Reserve System acknowledged at thehearing the challenges U.S. financial institutions will face in attempting tocomply with UIGEA. Since most payment systems are not well designed to complywith this law, "it will be very difficult to shut off payment systems foruse of Internet gambling transactions," said Ms. Louise Roseman, Director,Division of Federal Reserve Bank Operations and Payment Systems, Board ofGovernors of the Federal Reserve System. "The implementing statute willnot be iron clad at all."

Representatives from the AmericanBankers Association, Financial Services Roundtable, Wells Fargo & Co. andCredit Union National Association unanimously opposed regulations proposed toimplement UIGEA in testimony to the House Committee on Financial Service'sSubcommittee on Domestic and International Monetary Policy, Trade, andTechnology. They all questioned the fundamental approach taken by Congress inenacting legislation to force financial institutions to police online gambling.

"The UIGEA and the ProposedRule do not provide a rational path towards halting unlawful Internetgambling," said Wayne Abernathy, American Bankers Association's executivevice president of financial institutions policy and regulatory affairs."The path leads to an increased cost and administrative burden to thebanks and an erosion in the performance of the payments system, but it will notresult in stopping illegal Internet gambling transactions. Imposing thisenormous unfunded law enforcement mandate on banks in place of the government'slaw enforcement agencies is not likely to be a successful public policy."

Mr. Leigh Williams, president of thetechnology division of the Financial Services Roundtable stated in histestimony concerns that enforcement of the proposed rules "could imposesignificant compliance burdens on financial institutions by increasing theirrole in policing illegal activities, determining whether a transaction isillegal, or by imposing ambiguous compliance requirements that could be subjectto wide variations in interpretation by regulators and law enforcementagencies. We believe these functions are more appropriate for law enforcementagencies."

The testimony supports over 200comments submitted to the Department of the Treasury and Federal Reserve Systemon the burden and ambiguity in the proposed rules to implement UIGEA.

"Rather than trying toimplement a ban that is unclear, burdensome and doomed to fail, Congress shouldinstead look to regulate Internet gambling in order to protect consumers andcollect billions of dollars that is being lost to offshore Internet gamblingoperators," added Sandman.

Congressman Barney Frank (D-MA)introduced the Internet Gambling Regulation and Enforcement Act (H.R. 2046)last year, which establishes a regulatory and enforcement framework forlicensed gambling operators to accept bets and wagers from individuals in theU.S. It would include a number of built-in consumer protections, includingsafeguards against compulsive and underage gambling, money laundering, fraudand identity theft. States would also have the right to control what, if any,level of Internet gambling is permissible within their borders and could applyadditional taxes and restrictions.

A companion piece of legislation to the Frank billintroduced by Congressman Jim McDermott (D-WA), the Internet GamblingRegulation and Tax Enforcement Act of 2008 (H.R. 5523), would ensure thecollection of taxes on regulated Internet gambling activities. According to atax revenue analysis prepared by PricewaterhouseCoopers, taxation of regulatedInternet gambling is expected to generate between $8.7 billion to $42.8 billionin federal revenues over its first 10 years.