Barney Frank to Reintroduce Internet Gambling Legislation

In an interview with the Financial Times this week, it was revealed that Congressman Barney Frank (D-MA) will reintroduce legislation favorable to internet gambling “in the next few weeks.” During the previous Congress, Frank introduced HR 2046, the Internet Gambling Regulation and Enforcement Act, which established a full licensing and regulatory framework for the industry in the United States.

Steven Adamske, Press Secretary for Congressman Frank, confirmed to Poker News Daily the timeline of a few weeks, although would not unearth specifics of the bill. The lawmaker from Massachusetts and Chairman of the House Financial Services Committee told the Financial Times, “I expect an Obama DoJ to be less zealous about locking people up. These outrageous arrests in transit – they should be stopping that stuff.” Frank alludes to the arrests of BetOnSports executive David Carruthers and others that occurred following the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) in late 2006.

The Financial Times added that “public opinion was demanding the right to gamble online,” which served as the impetus behind Frank’s decision to reintroduce legislation. The proposed bill may take on a similar form to HR 2046, which offered licensing opportunities for companies to solicit U.S. customers. It was officially introduced on April 26, 2007 and referred to the Subcommittee on Commerce, Trade, and Consumer Protection. Frank’s bill stood at 48 Co-Sponsors at the end of the 2008 calendar year, including Shelley Berkley (D-NV), Peter King (R-NY), Jim McDermott (D-WA), Ron Paul (R-TX), and Robert Wexler (D-FL). Since it was not acted on during the 2008 Congressional session, it must now be reintroduced for consideration.

On Wednesday morning, the House Judiciary Committee Subcommittee on Commercial and Administrative Law held a hearing on a remedy for so-called “midnight rules,” which is the term given to regulations created at the last minute by outgoing Presidential administrations. Among the various rules created in the waning moments of the Bush Administration were the regulations of the UIGEA. Frank told the Financial Times that the UIGEA regulations may be “included among the measures Congress will look to rescind.” The new Congress is overwhelmingly Democratic.

HR 2046 included a provision that would have allowed professional sports leagues to opt out. League commissioners had 90 days from the date of enactment of HR 2046 in order to express their desire to be exempt. A study by PricewaterHouse Coopers estimated that up to $40 billion could be generated from the internet gambling industry over a 10 year period. However, the figure’s actual total hinged on whether all sports leagues would opt out as well as whether states would embrace internet gambling. Fantasy sports have an explicit exemption from the UIGEA.

The UIGEA regulations were officially enacted on January 19th, 2009, one day prior to the swearing in of President Barack Obama. The financial services industry must come into full compliance by December 1st, 2009, about one year after the regulations were approved by the U.S. Treasury and White House Office of Management and Budget (OMB). At issue in November was the role of William Wichterman, a Special Assistant to former President George W. Bush. Wichterman was a lobbyist for the National Football League (NFL) as late as 2008. Congressman Steve Cohen (D-TN) authored a letter to the White House Counsel questioning his influence in pushing the UIGEA regulations through to fruition.

Other bills that may see similar versions reintroduced during the 2009 Congress include the Skill Game Protection Act, which was proposed by Congressman Robert Wexler (D-FL). The bill would have exempted poker, mah jong, bridge, and other player versus player games from all federal legislation, including both the UIGEA and Wire Act of 1961. Shelley Berkley introduced the Internet Gambling Study Act, which attracted 73 Co-Sponsors. The legislation called for the examination of regulation of the industry as well as the effects of the UIGEA.

The passage of the UIGEA caused mammoth online poker rooms such as Party Gaming’s PartyPoker, Pacific Poker, and Mansion to vacate the U.S. market. A variety of payment processors also departed, including Neteller and Citadel Commerce, with many players having money tied up in the former. All told, despite its vagueness, the UIGEA’s effects have been long-lasting in the United States. The effect that its regulations will have on the industry remains unknown.