Panel nixes bill to stop Internet gambling rules

June 26, 2008 – A bill to prevent the implementation of rules requiring credit unions and other financial institutions to identify and block transactions that fund illegal gambling was defeated in a House Financial Services Committee mark-up Wednesday.

The vote tally for H.R. 5767, the Payments System Protection Act, was 32-32. Despite that tie, committee Chairman Barney Frank, D-Mass., determined that if all the members had voted – not all were present for the mark-up – that the bill would have been defeated.

H.R. 5767 would have stopped implementation of final rules under the Unlawful Internet Gambling Enforcement Act of 2006. In defending the bill, Frank said the 2006 statute effectively passes the responsibility for ensuring compliance with its provisions to financial institutions.

Dan Berger, NAFCU’s senior vice president of government affairs, concurred with Frank’s stance in a letter sent Tuesday to the committee. Berger said NAFCU believes that financial institutions' main role should be the “safe and sound distribution of financial services.” He said federal credit unions would have limited resources to conduct operations under the act.

During mark-up, Ranking Member Spencer Bachus, R-Ala., said the 2006 law was not meant as a moral judgment against Internet gambling but to respond to requests from state attorneys general. He said the statute does not necessarily set a precedent by regulating a type of Internet activity.