U.S. Internet gambling regs exempt some transfers

WASHINGTON (Reuters) - Internet gambling regulations proposed by U.S. officials on Monday stopped short of requiring U.S. banks to block checks their customers make to online casinos while forcing banks to halt debit and credit payments.

The Treasury Department and the Federal Reserve issued a plan requiring bank policies and procedures that are "reasonably designed to prevent payments being made to gambling businesses in connection with unlawful Internet gambling," they said in a statement.

The new U.S. regulations would make the banks responsible for blocking credit and debit card payments for online gambling. It also bars bank customers such as online casinos from receiving Internet gambling proceeds.

"I think that that's doable," an industry source said of the proposal.

But industry officials said it seemed that regulators had addressed their biggest concern about the new law. The agencies concluded it was "not reasonably practical" for the banks to identify and block customers from sending checks and making some other types of transfers.

The new regulations are designed to put into effect a law passed by Congress last year aimed at stopping most forms of Internet gambling.

"At first blush it looks like they took a very practical and pragmatic approach. They did not ask us to do the impossible," said Steve Kenneally, a spokesman for America's Community Bankers.

The Internet gambling ban has been closely watched by investors in British-based gaming companies such as BETonSPORTS Plc, Partygaming Plc and 888 Holdings Plc.

The proposed regulations were criticized by one gambling industry group, the Poker Players Alliance.