Rep. Barney Frank, D-Mass., Chairman of the House Committee on Financial Services, today introduced his long-awaited Internet gambling bill and it is not at all what people had been expecting.
For several weeks, media reports have had the industry and U.S. online gamblers anticipating a full repeal of the Unlawful Internet Gambling Enforcement Act (UIGEA), enacted October 2006, which prevents U.S. banks and credit card companies from processing payments to online gambling businesses outside the United States.
Under the bill, titled the Internet Gambling Regulation and Enforcement Act, the UIGEA would remain in place, as would the Wire Act. Banks and credit card companies would still be prevented from doing business with illegal online gaming operators. However, Frank's bill, co-sponsored by Rep. Pete King, R-N.Y., provides a defense against the regulations that will soon be set forth by the UIGEA by proposing federal licensing and regulation of offshore Internet gambling companies.
The legislation amends Chapter 53 of Title 31, United States Code (Monetary Transactions), by adding a new subchapter titled Regulation of Lawful Internet Gambling.
Frank's bill gives the Financial Crimes Enforcement Network (FinCEN) exclusive authority to issue and enforce licenses and regulations. Companies would be subject to financial and corporate scrutiny--including criminal background checks of corporate officers--during the application process. Furthermore, companies would be required to establish a corporate structure in the United States for tax-and-fees purposes.
The bill requires licensed companies to adhere to federal- and state-income tax laws.
Addressing the concerns of those opposed to Internet gambling, the bill also stipulates that in order to gain licensure in the United States, companies must have appropriate safeguards in place for preventing underage gambling, fraud and money laundering before ever taking a bet from a U.S. resident.
Licenses are renewable each year under the proposed legislation and are subject to revocation if the company fails to comply with the regulations or any U.S. federal laws.
Frank's bill is gambling-neutral, in that it doesn't target any one form of gambling. It gives states the choice to opt out of regulating gaming entirely--or, states can choose to regulate certain forms of gaming and not others. In addition, if sports leagues don't want any form of wagering to occur on the sport within their league they can opt out as well. Furthermore, it recognizes tribes, giving them the same rights as states.
According to Congressional findings, Internet gambling is a $13 billion industry that continues to grow worldwide. Within the United States, gambling is a very popular activity, with some form being permitted in nearly every state. It is licensed and regulated in more than 50 countries and the global gaming market grossed $258 billion in 2005, of which 47 percent of North Americans were responsible. Furthermore, licensed and regulated Internet gambling in the United States would bring in additional tax revenue and reduce tax avoidance.
Internet gambling opponents, such as Sen. Jon Kyl, R-Ariz., and former Rep. Jim Leach, R-Iowa, tried for 10 years to push anti-Internet gambling legislation through Congress. Their colleague, former Sen. Bill Frist, R-Tenn., managed to attach the UIGEA to a must-pass bill in the eleventh hour on Sept. 30, 2006--the last day of the session before mid-term elections.
Since then the industry has taken a several billion-dollar spill but has shown signs of recovery. Numerous companies bailed out of the U.S. market after the bill was signed into law on Oct. 13, sustaining losses in the millions.
"Why anyone thinks it is any of my business why some adult wants to gamble is absolutely beyond me," Frank said on Wednesday at an Independent Community Bankers of America conference.
Frank has also called the UIGEA a "great mistake" and "one of the stupidest laws ever passed."
Rep. Shelley Berkley, D- Nev., is expected to introduce legislation calling for a year-long study of Internet gambling that would delay the enactment of the UIGEA, and Rep. Robert Wexler, D-Fla., is also anticipating introducing a bill to create a carve-out for online poker on grounds that it is a game of skill.
Click here to view the Internet Gambling Regulation and Enforcement Act.
Click here to view the Internet Gambling Regulation and Enforcement Act Q & A.
Click here to view the Internet Gambling Regulation and Enforcement Act Summary.
Like this article? Subscribe to IGamingNews.com for more content like this as well as breaking news bulletins, editorials, desktop conferences, a vast research library and much more.
Click Here to subscribe now.
Click Here to learn more.
Discover the world’s most complete guide to iGaming products and services.