Unintended Consequences

Posted on January 26th, 2009

Recently the outgoing Bush administration used a little known legal tool known as the ‘Midnight Drop’ to force implementation of the unpopular Unlawful Internet Gambling Enforcement Act  of 2006. The law was introduced by a few far right senators, presented to congress in a late night session with no time for debate, and worse of all was attached to a safe port bill which would have been political suicide to vote against. While the law did not ban internet gambling outright it made the processing of transactions related to internet gaming illegal.

Enforcement responsibilities were foisted on financial institutions without any funding for the new responsibilities that banks faced. The American bankers association objected to the bill and pointed out that the rules were so vague as to make enforcement impossible. The Bush administration, pressured by far right and religious right groups went ahead and forced through last minute changes to the UIGEA.

Now in a twist of irony several New Hampshire lottery customers report that state NH lottery transactions are being rejected due to the implementation of UIGEA rules. The implementation of the new rules has had an unintended effect on the nation’s oldest state lotto.

The New Hampshire Union Leader has reported that the problem is isolated to credit and debit card purchases of the popular Powerball and Tri-State Megabucks lottery game subscriptions, which players can buy through the state’s Web site: NHLottery.com. New Hampshire State Lottery Executive Director Rick Wisler stated, “We could end up losing some significant revenue from this. It can amount to a million dollars a year or more to the Lottery if credit cards are not allowed.” He also said the New Hampshire state lotto is “caught in the cross-hairs of over-regulation”. Obviously the new implementation of the regulations will make it more difficult to buy lottery tickets.

To be cautious banks have chosen to block all online companies’ transactions which are coded as gambling. State Lotteries were supposed to be exempt from UIGEA regulations but this has not proved to be the case in New Hampshire. To add insult to injury many Lotto players whose transactions did make it through the credit card filters are complaining they were charged a service fee for handling their lottery transactions. The new regulations have wreaked havoc on many attempting to buy lottery tickets.

Many hope the new Obama administration and Democratic majorities in congress will reverse these regulations. Oregon Senator Wyden stated, “Congress is going to have to roll up its sleeves and review these midnight regulations because it’s clear that they are part of a desire for the Administration, as it heads out the door, to put some ideological trophies on the wall.” Until then look for more lotto transactions to be voided by understandably cautious credit card companies and banks.

The UIGEA is just one of many obstacles standing in the way of the sale of online lottery tickets. Surveys show that most players would welcome the ability to purchase lotto tickets online. States hard hit by the current recession would be wise to investigate the possibilities that online lottery tickets could provide.