On Wednesday morning, Congressman Barney Frank (D-MA) unveiled the Internet Gambling Regulation Consumer Protection and Enforcement Act, which establishes a comprehensive licensing and regulatory framework for the industry in the United States. Legislation to delay the regulations of the Unlawful Internet Gambling Enforcement Act (UIGEA) by one year was also introduced.
Although the bill has not yet been formally assigned a number, Frank’s licensing measure focuses squarely on protecting consumers when they gamble online. The bill states, “Internet gambling in the United States should be controlled by a strict Federal licensing and regulatory framework to protect underage and otherwise vulnerable individuals, to ensure the games are fair, to address the concerns of law enforcement, and to enforce any limitations on the activity established by the States and Indian tribes.” Operators must be in good legal and financial standing, utilize proper safeguards to thwart underage and problem gambling, and have systems in place to prevent money laundering. These concerns have been brought up repeatedly in markup hearings of past internet gambling bills introduced by Frank.
The Secretary of the United States Treasury is charged with overseeing the industry and licensing the companies that would be allowed to accept U.S. customers. Applicants may be asked to provide criminal records, credit histories, comprehensive financial statements, an outline of the corporation’s structure, and their methodologies to combat underage, compulsive, and problem gambling. Licensees must also protect against “fraud, money laundering, and terrorist finance.” Licenses last for five years each and may be renewed at the end of that time period. The bill also calls for the establishment of a “program to alert the public to the existence, consequences, and availability of the self-exclusion list, and shall prepare and promulgate written materials to be used in such a program.”
Sports betting or any wager that would be considered a violation of the Professional and Amateur Sports Protection Act (PASPA) is not allowed under Frank’s legislation. However, fantasy sports and other “simulation games” are exempted. The bill does not overturn the UIGEA, which was passed in 2006. Instead, it exempts licensees from the three year-old law.
The bill appears to require a companion measure to provide for taxation of the industry. During the last Congress, that piece of the puzzle came in the form of HR 2607, which prescribed that 2% of the funds deposited online be taxed. PricewaterhouseCoopers released a study utilizing a similar bill along with Frank’s HR 2046, the Internet Gambling Regulation and Enforcement Act, to reveal that up to $52 billion could be raised over a 10 year period by taxing and regulating the industry. However, that figure relied heavily on the involvement of professional sports leagues.
A separate bill introduced by Frank on Wednesday, dubbed the Reasonable Prudence in Regulation Act, called for the regulations of the UIGEA to be enacted on December 1st, 2010, one year after the scheduled date. The House Financial Services Committee website explains, “The legislation will stop Federal regulators from enforcing the UIGEA until Congress has had a chance to decide national policy.” In essence, lawmakers on Capitol Hill will have an extra year under Frank’s second bill in order to pass legislation concerning internet gambling. The regulations of the UIGEA were approved in November as midnight rules and implemented on January 19th, one day prior to U.S. President Barack Obama taking office. As it currently stands, the financial services industry must come into full compliance by December 1st, 2009.
Poker Players Alliance (PPA) Chairman and former three-term Senator from New York Alfonse D’Amato commented in a press release, “Online poker is a legal, thriving industry and poker players deserve the consumer protections and the freedom to play that are provided for in this legislation. We are grateful for Chairman Frank’s leadership and will be activating our grassroots army made up of over one million members to help him drive legislation.” In an article published by the Associated Press last month, it was revealed that the PPA is planning to sink $3 million into lobbying efforts during the current Congressional session.
