On November 12, the U.S. Treasury Department and the Federal Reserve Board issued a new rule implementing the Unlawful Internet Gambling Enforcement Act that was signed into law in October, 2006. The Act prohibits gambling businesses from knowingly accepting payments in connection with unlawful Internet gambling, including payments made through credit cards, electronic funds transfers, and checks.
The new rule requires U.S. financial firms that participate in designated payment systems to establish and implement policies and procedures that are reasonably designed to prevent payments to gambling businesses in connection with unlawful Internet gambling.
The Act defines unlawful Internet gambling as "to place, receive, or otherwise knowingly transmit a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is unlawful under any applicable Federal or State law in the State or Tribal lands in which the bet or wager is initiated, received, or otherwise made."
The Act includes several important exceptions from this definition, which are summarized in our October 2006 Alert. Compliance with the rule is required by December 1, 2009. The House Financial Services Committee approved a bill to block the Treasury Department from issuing the rule, but the bill was not approved by the full Congress.