A few days ago, Congress passed a bill — the Unlawful Internet Gambling Act (UIGA) — which will attempt to make existing anti-gambling laws easier to enforce against Internet gambling. On Friday 13th, President Bush is expected to sign UIGA into law.

As UIGA’s preamble accurately notes, “traditional law enforcement mechanisms are often inadequate” in this area. The online casino industry is operated almost entirely outside the United States, although about half of its patrons live in the U.S. Accordingly, getting direct jurisdiction over Internet gambling companies can be difficult. UIGA explores several alternative approaches.

UIGA was tacked onto the end of the SAFE Port Act - legislation focused on the separate, important subject of port security in an age of terrorism. Accordingly, it’s possible that some legislators voted for the bill simply because of a wish to ensure port security, rather than any special dislike for Internet gambling.

In this column, I’ll argue that UIGA’s approach is misguided: Regulating online gambling would be a far better solution than selectively banning it. And as I will explain, the ban is selective indeed.

What the Legislation Would Do

UIGA would prohibit both individuals and institutions - such as banks, credit card companies, and other payment providers — from knowingly accepting credit card payments, funds transfers, checks, and the proceeds of any other types of financial transactions made in connection with Internet gambling.

The Federal Trade Commission and other federal financial regulators would be responsible for enforcing this prohibition. There are also civil and criminal penalty provisions.

Separately, UIGA would also allow law enforcement officials to work with Internet providers to block access to gambling websites.