 Banks
Oppose Tough Online Gambling Restrictions
In the latest attempt to
crack down on online gambling Senator Jon Kyl (Republican,
Arizona) has put forward a bill – the Internet Prohibition and
Enforcement Act. This bill requires that all banks monitor the
transactions between their customers and online gambling
establishments.
Several years ago most major banks voluntarily began blocking
credit card payments to online gambling outfits when regulators
put forward this proposal. Part of the bill put forward will
formalize this block on credit cards, and this is not something
that the banks oppose anyway.
There is currently a group of approximately 5,000 small U.S.
banks who are opposing the intricacies of the new bill put
forward. These smaller establishments fear that performing these
blocks would be burdensome and at worst, virtually impossible to
their already overloaded systems.
Because of the credit card transaction ban, online gambling
members choose to send their money through a middle man – an
electronic transfer service – this enables them to gambler free
from any restrictions. Money is transferred from the gamer's
bank account or credit card, to the transfer service, which is
not necessarily for the purposes of online gambling, it could be
used to make purchases in any number of online services.
These transfer services are the life blood of online gambling
establishments and this is what the bill intends to crack down
on.
Lobbyists for the banking industry say that it is easy to tell
banks to begin by blocking all payments to online gambling
businesses but the system is not designed to cope with this
proposal. Unlike credit card transactions, these electronic
transfers are not coded and therefore the bank has no idea of
the type of business on the receiving end – it could be an
online gambling business or it could be an internet bookstore.
To ask the banks to begin monitoring these online gambling
payments would require an overhaul of colossal proportions and
it would be extremely costly to the taxpayer. Another section of
the bill requires that personal checks written by gamers to
their online gambling account should also be blocked and at
present there is no system in place to perform this arduous
procedure.
The American Bankers Association which is the representative
body for the major U.S. banks have not let their concerns be
known to the same degree although spokeswoman Laura Fisher
agrees that any proposal to block payments to online gambling
businesses would be very difficult or impossible. It would mean
checking around 40 billion checks per year and then having to
try and guess whether it was made out to an online gambling site
or a restaurant.
Many people are arguing that this huge burden to crack down on
online gambling would divert attention from more important
issues such as tracing terrorist group financing. Because this
procedure is virtually impossible, looking for an online
gambling company in all the records where names of companies are
constantly changing is like looking for the proverbial needle in
a haystack.
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