Online gambling regulations bill approved by House committee

In a 41-22-1 vote, the House Financial Services Committee approved a bill Wednesday that would license and regulate online gambling in the United States.

The decisive vote is a sign of a how far the Democratic Congress has come since Committee Chairman Barney Frank (D-Mass.) attempted to halt the implementation of the Unlawful Internet Gambling Enforcement Act in 2008. Frank's first attempt to halt UIGEA implementation failed to get out of Committee on a 32-32 vote. A second bill which would have allowed UIGEA regulations for sports betting only passed Committee on a 30-19 to vote, but was never voted on by the full House of Representatives.

This year, Frank's Internet Gambling Regulation, Consumer Protection, and Enforcement Act (HR 2267) drew substantial bipartisan support with seven Republicans voting for the bill and 18 voting against it. Thirty-four Democrats voted for the bill and four voted against it. Republican Ron Paul voted present, and seven members of the committee failed to vote.

Two Californians -- Republican John Campbell and Democrat Brad Sherman -- played a significant role in amending the bill Wednesday and ensuring its passage.

Campbell authored a substantial amendment which called for changes on both the administrative and consumer protection sides of the proposed legislation. On the administrative side, Campbell's amendment gives "states and tribal authorities parallel authority to administer licenses and enforce these regulations."

"There's no reason to reinvent the wheel when many states have these structures already in place," Campbell added during the markup session.

Campbell's amendment also requires licensees to maintain all online gambling facilities targeting U.S. residents within in the United States.

Campbell added additional protections for consumer by requiring the odds of winning be posted for each game. His amendment also requires loss limits for players in addition to age and location verification.

Sherman's amendments added language that prevents bad "actors" from obtaining licenses, gives states a full legislative session to opt out of the federal plan and specified that that in order to get a license, the majority of that company's job had to be in the U.S.

Rep. Spencer Bachus (R-Ala.), who was the chief opponent to Frank's bill in the committee, successfully strengthened Sherman's bad "actors" language by specifying companies -- and managers from companies -- that had deliberately evaded or violated U.S. law regarding online gambling could not obtain licenses.

The funniest moment in Wednesday's hearing came when Rep. Peter King (R-N.Y.) introduced an amendment that reiterated that sports betting on the Internet would be illegal.

"This is a full employment act for bookies," joked Campbell, before voting for the amendment. The amendment did pass.

Other amendments that passed include bans on inappropriate advertising, bans on ads targeting minors and the frequent testing of minor protection systems.

The Poker Players alliance was quick to praise the passage of the amended bill.

"The fact is, online poker is not going away," said former Sen. Alfonse D'Amato, chairman of the PPA in a statement. "Congress has a choice – it can license and regulate it to provide government oversight and consumer protections, or our lawmakers can stick their heads in the sand, ignore it, and leave consumers to play on non-U.S. regulated websites in all 50 states. I'm glad the Financial Services Committee today overwhelmingly chose to act and protect Americans as well as preserve the fundamental freedoms of adults and the Internet."

Frank's bill still has several hurdles it needs to clear before it can become law. First the full House needs to vote on it. That vote is not likely to happen before the House's August break begins in two weeks (Aug. 9) and during the lame-duck session of Congress after the November elections. That means it has to pass a full floor vote between Sept. 7 and Oct. 8. In order for a full vote to happen, the Democratic leadership in the House, led by Speaker Nancy Pelosi (D-Calif.), needs to schedule it.

If the House passes the bill, then it needs to be taken up by the Senate. If it is passed by both the House and the Senate, then it will need to be signed by President Obama. All of this needs to happen this year, before the end of the legislative session. If it doesn't happen before the end of this year's legislative session, the process will have to start over next year -- when the makeup of both the House and the Senate will be different.