Federal online gambling legislation clears big hurdle

Aug 7, 2010, 10:23 pm (13 comments)

Online Gambling

Maybe there are some teeth in the push for legalization and sensible federal regulation of the Internet gambling industry after all.

Sponsored by Rep. Barney Frank (D-Mass.) — chairman of the House Financial Services Committee — HR 2267 is a bill designed to establish federal oversight of an online gambling industry that currently resides in murky legal waters for U.S. players.

It passed overwhelmingly 41-22 via committee vote last week, advancing the legislation to the House floor, where it hopefully will be voted on before the end of the 2010 session. If it gets that far, it will be the deepest penetration of online gaming law at the federal level in history.

"The good news is this is significant progress," said Michael Waxman of the Safe and Secure Internet Gambling Initiative. "Last week's vote showed the bi-partisan support is there."

HR 2267 has the potential to open an enormous revenue stream in an era where cash is badly needed at all levels of government.

One analysis completed by the Congressional Joint Committee of Taxations concluded that regulated online gambling could generate $42 billion in revenue over the first 10 years of HR 2267 implementation at the federal level.

At the state level, a 6 percent deposit fee could generate an additional $30 billion.

"Those figures assume you are starting with an industry where millions of players are already engaged," Waxman said. "And with regulation, there is an expectation that many more will take up and enjoy this form of recreation. There is a strong possibility that this bill would be included in a larger legislative package as a way to offset the cost of other programs."

If HR 2267 is signed into law, sites will have to apply for federal licensing. There's no language about a cap on the licenses, but in a regulated environment, safeguards against such things as identity theft, compulsive gambling behavior and underage gambling would have to be in place in order to secure one.

Sites able to comply and secure licensing will strike oil. Those that cannot will fade away.

"It's up to the feds to determine how this is going to work," Waxman said.

Even though poker players make up the bulk of the online gaming industry, the legislation isn't poker specific. HR 2267 would also regulate online casino games such as blackjack, slots, table games, etc.

It doesn't include online sports betting.

The major benefit to regulation for players resides in personal and legal security of funds. In the current market, there is no legal recourse for such things like frozen money and cheating outside of negotiation with the site itself.

Your average U.S. player isn't going to get a court to hear a case in Costa Rica.

According to Waxman, players shouldn't expect a lengthy delay with regulation if HR 2267 becomes a reality.

"The idea of online gambling regulation is not new," Waxman said. "The activity is successfully regulated in many countries throughout the world. It should not be a difficult lift to take on this job. A much more difficult task is trying to enforce a prohibition on the activity, which will ultimately fail."

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Comments

louise black

I am glad this is a good ideal that way, we can play in all those states we have been seeing all our numbers pull.Thumbs Up I am happy about this news.Hurray!

Jack-C's avatarJack-C

This is great IF they allow lotto betting with the offshore accounts.  Hopefully they will.  This will also put a big hurt on those bookies in the Bahamas.

Grovel's avatarGrovel

Legalize my marijuana fist then worry about gambling!

js1237's avatarjs1237

Let's hope that it don't get dragged out for years to come....

rdgrnr's avatarrdgrnr

I support the legislation but with Barney Frank sponsoring it I just naturally get that dirty, sleazy, slimy, filthy, creepy feeling that permeates everything he touches.

rdgrnr's avatarrdgrnr

Quote: Originally posted by Grovel on Aug 8, 2010

Legalize my marijuana fist then worry about gambling!

Like wow dude, wrong website, man. Heavy, far out.

TnTicketlosers's avatarTnTicketlosers

So does this mean I can get on line and play any other states numbers?????????   So is this why Tennessee has let players win the last couple days????????  It will be low payouts coming up..

four4me

Quote: Originally posted by louise black on Aug 7, 2010

I am glad this is a good ideal that way, we can play in all those states we have been seeing all our numbers pull.Thumbs Up I am happy about this news.Hurray!

Don't count on them allowing people who live in the USA to play numbers online on offshore betting sites or any other sites.

Individual state lottery's don't want their revenue going anywhere else but in their home states.

GASMETERGUY

I hate to nit-pick (not really but it sounds good) but the article said this law has gone deeper into the process than any other gambling law.  Did not the law prohibiting online gambling go a bit further?  Like all the way to the President's desk?

Todd's avatarTodd

Quote: Originally posted by GASMETERGUY on Aug 8, 2010

I hate to nit-pick (not really but it sounds good) but the article said this law has gone deeper into the process than any other gambling law.  Did not the law prohibiting online gambling go a bit further?  Like all the way to the President's desk?

That was not a law either legalizing online gaming or even making it illegal.  It was a law that prohibits any kind of banking transaction for financing online gaming.  There has never been a USA law ever passed in any way affecting online gaming directly.

The feds say that the Wire Act prohibits online gambling, but I personally think that's a big stretch.  I think they know it's a stretch, because they have never attempted any kind of law enforcement for anything except sports betting online.  The only thing that affected most online gaming (like poker, etc.) was the bill I first mentioned, which affects financing of online gaming, not gaming itself.

pamelab

North Carolina recently banned internet "sweepstakes", do anyone have an idea of what the ramifications would be for North Carolina if this new bill (HR2267) is passed?  Seem like NC jumped the gun with banning these internet sweepstakes.

Delta Draw

This is a good thing especially the money part and consumer protection. No doubt the Debit card will be used by the consumer so the funds gambled are guaranteed to the ‘house’. Bad thing is if someone gets into that debit account and drains it, there is little one can do, in fact there is nothing you can do. If someone has the key to your piggy, it’s all over. The more protection there is for the consumer, the better the whole thing is. 

Get the card’s info and a card can be duplicated and drained. The pin number is on the magnetic strip. Credit cards too.

I’ll tell you what, if someone had a site with live drawings you could watch it would be a winner for player confidence. They would disclose all the information on the quality assurance that each ball does not have a bias. That site with a live feed on the internet would way oversell the computerized draws. Any overhead to do live draws would be money well spent.

The vacuum left by the states getting away from live draws and balls will make a live draw Keno or Lotto, P3, P4, P5 a real industry. If the states are smart, they would jump the gun and deliver what will be their downfall in lost revenues if they do not. I would imagine this is a double edged sword for the states who would want to be ready for online and they have to choose wisely or lose big.

I myself would not participate in on-line computerized drawings. No way! I can get computerized drawings right now and I don’t trust them one bit.

DD

pamelab

Just read all the amendments to the bill and here is one that is important to me,

"10. An amendment (No. 14) clarifying that state lotteries aren’t part of the scope of that which is covered by H.R. 2267."

End of comments
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