Federal Online Gaming Bill is Re-introduced
On March 17, 2011, the issue of whether online gambling should be legalized returned to the forefront in the U.S. Congress. The new bill, titled the Internet Gambling Regulation, Consumer Protection, and Enforcement Act was introduced by Congressman John Campbell (R-CA) with Congressman Barney Frank (D-MA) as a leading sponsor. Congressmen Ed Perlmutter (D-CO) and Peter King (R-NY) are also leading co-sponsors. This bill is nearly identical to the anti-UIGEA (the Unlawful Internet Gambling Enforcement Act) bill introduced last year in the 111th Congress.
Purpose of the New Anti-UIGEA
The new bill is designed to significantly overhaul the UIGEA, passed by the U.S. Congress in 2006. The UIGEA makes it illegal for U.S. financial institutions to transfer money to offshore gambling websites or to the online payment services which those websites use. As a result of the UIGEA, many non-U.S. Internet gambling websites halted their provision of services to U.S. residents.
Regulation of Internet Gambling Operators
The new anti-UIGEA bill, similar to the previous version, would set up a regulatory framework and create safeguards for online gaming in the U.S. Internet gambling operators would be required to obtain federal licenses from the Department of Treasury in order to accept wagers over the Internet from individuals located in the U.S. To obtain a license, an operator must have a substantial U.S. presence, and at least 50% of its employees must be U.S. residents or citizens. Those operators which have previously accepted wagers from individuals located in the U.S., in violation of federal or state law, are prohibited from obtaining a license. Once a license is obtained, operators are also required to:
The bill applies to both foreign and domestic operators.
Sponsors of the New Anti-UIGEA are Confident
Congressman Campbell believes that this new anti-UIGEA bill should be passed because the UIGEA has not been able to prevent Americans from gambling online. He stated that, “[c]learly, Americans want to gamble on the Internet, and policymakers need to provide both the freedom to do so, as well as ensure that appropriate consumer protections are in place.” Proponents of the new bill contend that regulating online gaming will protect Americans from an online gambling industry that is largely unregulated in the United States, as well as contribute to the economic growth of the U.S. by generating additional revenue.
Will there be an Impact at the State Level?
If the new anti-UIGEA bill is passed, it would likely eliminate or reduce the number of state-level online gaming bills that have been proposed in recent months.
Until recently, New Jersey was set to become the first state to offer online gambling. Both the State Senate and the New Jersey Regulatory Oversight and Gaming Committee had approved an Internet gaming bill. The bill failed however, as New Jersey Governor Chris Christie vetoed the online gambling bill, relying on the grounds that the New Jersey constitution requires the measure to be approved in a state referendum. In the meantime other states such as Iowa, Florida, Nevada, and California are considering similar bills. Notably, out of the aforementioned states, California’s proposed bill is the only one which would permit forms of intrastate Internet gaming beyond just Internet poker.
Challenges Ahead – Will the New Bill Survive?
The new anti-UIGEA will be met with fierce opposition from the House Financial Services Committee. The chairman of the Committee, Spencer Bachus, is strongly opposed to the legalization of online gambling. Moreover, the likelihood of the passage of any of the proposed intrastate bills is difficult to predict. Perhaps Nevada, with its more progressive approach to gambling, may adopt the proposed legislation.
Regardless, the one thing that almost everyone can agree on is the need to overhaul the current legislative structure in the U.S. when it comes to online gaming – the only questions are those of timing (whether changes will come this year or the next) and whether Congress will take the lead in legislative reform or leave it to state legislatures to fill the void through a patchwork of local laws.
Heydary, Javad
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