Hearing of the House Financial Services Committee's Domestic and International Monetary Policy, Trade and Technology Subcommittee: Proposed Regulation to the Unlawful Internet Gambling Enforcement Act (UIGEA)
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REP. PETER KING (R-NY): Thank you, Mr. Chairman. Thank you for extending the courtesy to me to sit here today, and I thank Ranking Member Bachus for withdrawing his objection to my appearance.
Though, seriously, like Chairman Frank, I am a co-sponsor of H.R. 2046, because I believe it has protections built into it which would address the concerns that Congressman Bachus has raised. But the purpose of today's hearing is on the regulations.
And my concern is the unintended consequences that can and often do result when we ask financial regulators to, in effect, be interpreting laws for Congress and enforcing morality for Congress.
I think if we're talking about sports gambling, that's one thing. But to be asking regulators to define what is unlawful conduct, what is unlawful gambling, to me really runs a severe risk of going too far.
And this is an issue I think which brings people from all sides together. Just the other day I received a letter -- in fact just today -- from Grover Norquist, president of Americans for Tax Reform, where he expresses severe concerns about the implications of this rule in terms of personal freedom, personal privacy, and regulatory burden on the banking industry and international trade.
So I think going ahead with these regulations poses real dangers. I don't know why we just don't confine it to sports gambling and leave it at that for now. And I would ask, Mr. Chairman, if I could also ask unanimous consent to place anywhere in the record a statement for the hearing by one of our on-leave members of the Committee, Representative Sessions from Texas, with a letter from Mr. Sessions and other members, the secretary of the Treasury and chairman of the Federal Reserve.
Again, thank you for allowing me to be here today. I'm a member of the full Committee, but not this Subcommittee. I look forward to the testimony, and again, I just want to express my real concern that these regulations, as they go forward, could really have unintended consequences that all of us would rue in the future. And I ask unanimous consent to insert this statement in the record.
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REP. KING: Thank you, Mr. Chairman.
Thirty years ago I was general counsel to a government-run off- track betting corporation in New York, and we were going through a number of similar legal issues; that was 30 years ago. I don't know how much progress we've made since then as to what can be done and not done.
But let me just follow up on what Congressman Clay said. And I'm not trying to really be trivial in saying this. But with everything facing Chairman Bernanke and Secretary Paulson and revamping the regulatory structure in a way that hasn't been done in over 70 years, to be putting this much effort into something which even the greatest minds in Congress could not define when it comes to illegal gambling, I wish you well on that.
But very seriously, your testimony, and I really appreciate your testimony, and I appreciate your honesty on it. And the questions that are coming show to me the impossibility of coming up with adequate regulations or meaningful regulations based on the legislation; or coming up with regulations which could have the most dire unintended consequences with severe impact on the financial services industry.
I would just propose, and I'm probably not going to use all my five minutes, but since there does seem to be a consensus, including from sports itself, would it make sense to go ahead with regulations dealing with sports -- and then either put the other aside or allow an administrative law judge to look at it -- but at least go ahead with the regulations as it applies to professional and intercollegiate sports.
MS. ROSEMAN: I think it would provide more clarity. The challenge is, many Internet gambling websites I believe have a combination of sports gambling and other types of gambling done by the same company.
So again by the time the transaction gets into the payment system, it would be very difficult for the financial industry to know what type of gambling the payment related to.
REP. KING: I don't have the same ability as the chairman of the committee to expressed outraged hyperbole. But if even on something which everyone agrees is illegal, and everyone agrees should be controlled, and if that can't be done, doesn't that just show almost the impossibility of coming up with regulations that would cover an area which no one has been able to fully define?
MS. ROSEMAN: It does point out that problem. Now if Congress were to say that any transaction related -- involving a company that had sports betting would be prohibited, that would be somewhat different than prohibiting just the sports better itself because the financial industry wouldn't be able to determine the difference of the flow of transactions involving that company.
REP. KING: I see. Ms. Abend, do you have any comment?
MS. ABEND: I'd just concur with what my colleague from the Federal Reserve Board has said that it is difficult to separate out the differences between, you know, whether it is a sports transaction or some other type of transaction. And obviously we have to adhere to what Congress gave to us, so we are just following the exactly the steps that we were provided, and there is no provision there to really deal with that.
REP. KING: Thank you. I yield back.
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