Now that a $700 billion bailout has successfully passed the United States Senate and House of Representatives, lawmakers’ attention may now turn to internet gambling, according to an article released by Reuters on Friday. It was revealed that Congressman Barney Frank (D-MA), Chairman of the powerful House Financial Services Committee, will introduce legislation in March addressing the ambiguities of the Unlawful Internet Gambling Enforcement Act (UIGEA). The Reuters article did not mention what Frank’s bill would specifically include.
The UIGEA was unceremoniously passed into law attached to the unrelated SAFE Port Act at the end of the 2006 Congressional session on the urging of former Senate Majority Leader Bill Frist (R-TN), who is no longer on Capitol Hill. The SAFE Port Act was passed 421-2 in the House and approved by unanimous consent in the Senate. Its regulations were passed in a similar fashion as a midnight rule by the outgoing Bush Administration. They went into effect on January 19th, 2009, one day prior to Barack Obama assuming the Presidency.
A spokesperson for Frank told Reuters that the Congressman will be introducing “legislation to repeal the UIGEA” next month. Many in the industry have been speculating as to what form the new internet gambling legislation would take. During the previous Congressional session, Frank introduced HR 2046, the Internet Gambling Regulation and Enforcement Act. The bill, which was introduced on April 30th, 2007, called for a complete licensing and regulatory framework for internet gambling in the United States. It garnered 48 co-sponsors, but did not see time on the House floor.
At the close of 2008, HR 6870, which was introduced by Frank and co-sponsored by Congressman Peter King (R-NY), was approved by the House Financial Services Committee by a 30-19 vote. However, the September vote was followed immediately by the collapse on Wall Street, which diverted attention away from internet gambling. HR 6870 would have clarified what is legal and illegal under the UIGEA, a question many banks will now face when compliance is due in December.
The enactment of the UIGEA also prompted an investigation by the European Commission into potential violations of World Trade Organization (WTO) obligations by the United States as a result of its stance towards internet gambling. A separate Reuters article revealed that the Commission is likely to recommend that the WTO act next month. However, the report added, “Sources said the E.U. executive, which oversees trade policy for the 27-nation bloc, would try to find a solution with the new U.S. government before taking any case to the global trade watchdog.”
In September, trade officials from the European Union traveled to the United States on a fact-finding mission in order to determine whether WTO obligations were being trampled on. The complaint to the Commission was brought by the Remote Gambling Association (RGA). The organization’s membership includes 888 and Party Gaming, which are both publicly-traded companies on the London Stock Exchange (under the symbols “888” and “PRTY,” respectively). Upon the passage of the UIGEA, their online poker sites were forced to abandon the U.S. market out of deference to shareholders. Meanwhile, the co-founder of Party Gaming, Anurag Dikshit, admitted to violating the Wire Act of 1961 in a New York court room in December, paying the U.S. Government $300 million and potentially facing jail time.
Other RGA member companies include Ladbrokes, Bet 365, Littlewoods, PKR, Unibet, Victor Chandler, Cryptologic, and William Hill. The organization is chaired by Clive Hawkswood and based in London.
The industry will now wait and see what the text of Frank’s bill will include. Although in the September mark-up hearing of HR 6870 Frank declared that he seeks to repeal the UIGEA entirely, many have speculated that a poker-only bill may take shape during this Congressional session. In 2007, Congressman Robert Wexler (D-FL) introduced HR 2610, the Skill Game Protection Act, which exempted poker, mah jong, bridge, and other player versus player games from all existing federal legislation, including the Wire Act of 1961 and the UIGEA.
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