Five Reasons Why the Frank Bill Will Succeed, Five Reasons Why It Will Fai

27 April 2007

It took proponents of I-gaming prohibition 11 years to get their bill passed into law, so surely one shouldn't expect Barney Frank's new regulatory bill to reach the President's desk in the near future (if at all), right?

You never know.

I've been bouncing this one around in my head over the last two weeks, and I've thought of some reasons for why this bill doesn't stand a change during the current Congress as well as reasons for why he could actually pull it off.

History tells us that the legislation introduced today by Frank could go through a lot of twists and turns before all is said and done. Nevertheless, I've compiled the following observations, based on the bill in its current state:

Five Reasons Why the Frank Bill Will Fail

1. The AGA was not brought into the mix.

The American casino lobby is strong. The prohibitionists' neutralization of the American Gaming Association was a key reason the UIGEA went through. Opposition from the AGA would have been difficult--if not impossible--to overcome. The success of the Frank bill will likely depend on AGA support, and not involving the association in these early stages could prove to be a mistake.

2. The White House won't like this bill.

The current Administration will not support a bill legalizing Internet gambling. The White House may have lost some of its power over Congress in recent months, but it can still make its influence felt. If the margin of approval is tight, the Administration could throw a wrench into the process.

3. Geo-tracking and age-verification technology isn't good enough yet.

Let's not forget that the technology standards for these controls are extremely high. It's not very difficult for a 20-year-old to walk up to a slot machine in Nevada and start playing, yet even the tiniest hole in a geo-location solution for I-gaming would serve as persuasive evidence that Internet gambling cannot be properly regulated.

4. The family values movement is still alive.

Family values took a hit in the November election, but they're not dead. Conservative anti-gambling groups will come out in force and will make their voices heard.

5. Two many special interests to satisfy.

This was a thorn in the prohibition camp's side for many years, and Frank will surely experience similar resistance. He has done a thorough job of addressing some of the stronger factions, like the states and the sports leagues, but he'll have plenty of battles in coming months. I already mentioned family values group and the AGA (which might not be so hot on welcoming foreign competition), but others will surely emerge. The vendors and convenience stores that profit from selling lottery tickets come to mind.

Five Reasons Why the Frank Bill Will Succeed

1. Kyl & Co. have had their say and have had their day.

One might even argue that the passage of the UIGEA was a necessary part of the process for regulation. They invested a lot into this fight and they were determined to see it through. They have saved face. Do they really want to get involved in the grueling battle again? We'll know the answer to this soon.

2. The money to be made through taxes is irresistible.

Money is the prevailing influence on policymakers voting to expand legalized gambling. It is difficult to turn away an opportunity to collect hundreds of millions of dollars in tax money, especially during a time when government spending is out of control,

3. The bill does not undermine the UIGEA.

Contrary to the media's take on the Frank bill, the legislation does not seek to repeal the UIGEA, and this is hugely important. Repealing a law before the Treasury Department and Federal Reserve Board even have a chance to determine its enforcement mechanisms doesn't seem practical, and a repeal bill would most certainly get under the skin of those who poured their hearts and souls into making the UIGEA happen. This was a smart decision.

4. The United States will never be able to prevent foreign, licensed online gambling services from targeting U.S. consumers.

It has to be realized at some point that Americans will be able to gamble online no matter what the United States does to prevent it. A regulatory bill is--and always has been--an inevitable outcome.

5. The bill preserves states' rights.

By allowing individual states to determine whether they want to regulate online gambling, Frank's bill preserves the notion that gambling policy lies in the hands of the states and not the federal government. Considering the states' disapproval over the years of federal measures that did not contain states' rights provisions, staying in line with this concept will help push the Frank bill forward.

Mark Balestra

Mark Balestra is the Managing Director at BolaVerde Media Group. He previously worked at Clarion Gaming and the River City Group where he was the publisher of iGamingNews. He lives in St. Louis, Missouri.