Wednesday, October 04, 2006

Internet gambling legislation passed late last week by the U.S. Congress,
which led to a major sell-off of Britain-based online gambling stocks
Monday, remains a concern to the U.S. banking industry but isn't as
burdensome as feared. "We got some language in the bill that looks like it
protects the financial services industry," said Steve Verdier, director of
congressional relations for the Independent Community Bankers of America,
which represents almost 5,000 banks in the United States. "It could have
been a lot worse." The legislation is designed to prohibit U.S. banks and
credit card companies from processing payments for illegal online gambling.
Financial services companies and the U.S. Chamber of Commerce had expressed
concerns about the compliance burdens that would be imposed, such as
tracking and blocking potentially millions of transactions. Under the
legislation as passed, "If you are acting as a normal bank, and you're not
in some sort of conspiracy with a betting house, then you are not going to
be held liable," Verdier said. In addition, the legislation will be guided
and enforced by regulations written by the Federal Reserve and the U.S.
Treasury Department. "If they find that the banks just don't have the
technology to track and block these transactions, then we don't have to,"
Verdier said. "The Fed and Treasury are not supposed to ask us to do the
impossible."

Still, Verdier said, "we will have to see how those regulations get
written."

The legislation, attached to an unrelated port security bill, was approved
by the U.S. House of Representatives Friday and by the U.S. Senate early
Saturday. It is expected to be signed into law by President Bush.

Shares in Britain-based betting companies, such as PartyGaming PLC, 888
Holdings PLC and Sportingbet PLC, plunged Monday. The companies said they
would suspend business from the United States if the legislation is enacted.