The dark days of the UIGEA may finally come to an end this week. A conservative Washington think tank issued a “white paper” on the UIGEA delineating its many shortcomings and the unrealistic demands it puts on numerous parties. The publication of this paper comes only days before the House of Representatives is set to hold a review to examine the effectiveness of the UIGEA implementation rules in a hearing of the Subcommittee on Domestic and International Monetary Policy, Trade and Technology.

Written by Eli Lehrer, the strongly worded paper entitled “Time to Fold the Unlawful Internet Gambling Enforcement Act: A Bad Law with Perverse Outcomes,” will surely be on the minds and laps of Representatives in the House during their hearing this Wednesday. Lehrer, a senior fellow at the Competitive Enterprise Institute – a D.C. advocacy house that is often associated with conservative, pro-business causes – has been relentlessly attacking the legislation these last few weeks.

His paper was quickly summarized in an “American Spectator” pieced entitled “No Dice”. The article was authored by Lehrer as well as Michelle Minton, a policy analyst for CEI. Poker Players Alliance has made the entire original white paper available on their website at pokerplayersalliance.com.

The focus of his paper is mostly on the collateral damage that the implementation of the UIGEA will incur on the American banking system. In his introduction, Lehrer notes that, “The Act seems unlikely to stop Internet gambling and could even threaten the stable, smooth operation of America’s banking system.” A full implementation of the UIGEA would essentially make America’s banks default financial officers.

Also covered in the CEI white paper is the unfounded nature of the UIGEA. For example, the Department of the Treasury – one of the two agencies that would oversee UIGEA implementation – has estimated that their expenses alone for keeping track of the UIGEA will be upwards of $20 million and 350,000 labor hours a year. According to CEI’s notes, this is the equivalent of hiring over 330 new full-time government employees.

According to the report, the Small Business Administration’s Office of Advocacy has protested that the law’s impact on other small businesses has thus far been excluded from the preliminary Treasury analysis. Thus interpreted, the expenses that will be incurred in fulfilling all UIGEA requirements will ultimately be passed on to consumers, even if the small businesses will be only indirectly impacted by the discriminatory legislation. The ABA has already made clear that they are strongly against the legislation due to the direct mandates they will face in lieu of the UIGEA. Following through with this bill more than the US already has could force incremental charges such as higher loan rates, lower savings and CD interest rates, and higher fees for consumers who are in no way related to Internet gambling.

The full impact of the UIGEA is still largely unknown and will hopefully remain that way. With the Democrats leading the UIGEA hearings next week, opposition to this unfounded piece of legislation in its current form is quickly growing across the entire political spectrum. Both Republicans and Democrats are teaming up against the UIGEA in light of several WTO arbitration cases brought against them, including a potential legal battle with the entire European Union in the near future. As Lehrer and Minton described in their “American Spectator” piece, there is no logical reasoning for this “bad, bad law”. Sooner than later lawmakers will realize their folly and hopefully reduce what has thus far been a tremendous mistake that is only exacerbating an already failing American economy.

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