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Internet Gambling Regulation and Enforcment Act: Winners and losers

2 May 2007

Rep. Barney Frank's (D-Mass.) proposal to regulate Internet gambling in the U.S. has received a mixed reviews from the online gambling industry.

Frank's plan calls for regulated companies to ensure gamblers are at least 18 years of age and in a jurisdiction that allows betting. Licensees would also need to demonstrate that they could combat fraud, money laundering and compulsive gambling, and ensure that all taxes and fees would be paid.

The bill would allow states and Indian tribes to control gambling activities within their borders, and sports leagues would be able to opt-out of allowing bets on their contests.

Frank, who serves as chairman of the House Financial Services Committee, has long been an opponent of legislation that limits the ability of Americans to gamble on the Internet.

"I think it's one of the worst laws we've ever passed," said Frank in an interview with Casino City. "I think a lot of people (in Congress) are starting to have second thoughts."

Former Senator Alfonse D'Amato, the chairman of the Poker Players Alliance, hailed the bill as "a common sense approach to Internet gaming."

But Eye On Gambling, a Web site focused on sports betting, railed at the Internet Gambling Regulation and Enforcement Act (H.R. 2046). "The Act is limited in scope, and by no means represents a green light to allow offshore gambling companies back into the U.S." a story on the site read soon after Frank unveiled the bill.

"(The bill) certainly is useful in that it brings up the issue for discussion," said Joseph Kelly, professor of Business Law at Buffalo State. "But do I think that there's much chance of passage? Absolutely not."

Kelly believes that Congress would not legalize Internet gambling without objective data. He says that commissioning a study on Internet gambling is the next logical step, and then, depending on the results, Congress could move to regulate Internet gambling.

"I think we need to put the horse before the cart," Kelly said. "(Congress) would like to see some objective data that the Internet can be regulated so that you can keep out the under aged, minimize compulsive gambling and make sure that all the licensees are suitable and solvent."

Regardless of the chances of the bill's passage, this is the first good news for U.S. based gamblers since the UIGEA passed last year. And with that it mind, it's worth taking a look the potential winners and losers if this bill passed in its current form.

Winners

  1. States
    That's right, the biggest winners aren't Internet gambling companies, nor is it the Internet gambler. It's states, and states' rights. Gambling has traditionally been regulated by states in the U.S., and this bill gives states the power to decide whether or not they will allow people within their borders to make wagers on the Web. More importantly for the states, it will establish a system that will provide revenue through taxes on licensees and winners.


  2. Sports leagues
    The NFL and Major League Baseball have been among the loudest in calling for a ban on Internet gambling. The leagues lobbied hard for the UIGEA while working to ensure that the bill included exceptions for fantasy sports leagues. The IGREA allows leagues to decide whether licensed sportsbooks can offer odds on their games. If the league decides against allowing bets on its contests (and it is very likely that all the major sports leagues and the NCAA would do so), then licensed sportsbooks must abide by that decision or they will lose their license.


  3. Internet poker rooms
    While the PPA originally sought an exemption for poker, the IGREA sets up a regulatory framework that will provide a permanent solution. Most of the popular Internet poker rooms have already gone through a lengthy regulation process to earn licenses in European nations and would likely already have most of the answers U.S. regulators would be looking for.


  4. Yahoo!
    The Internet giant launched a U.K.-facing Internet poker room last week. While it currently bars U.S. play, a regulated market would give Yahoo! access to a large number of customers, many of whom have yet to play online poker because they are worried they might be breaking the law. Yahoo!'s combination of trust and an enormous database of Internet users could have an enormous impact on the Internet gambling landscape if the U.S. began a licensing process.


  5. Banks, credit cards and PayPal
    Banks lobbied against the UIGEA, and for good reason. They do not want to be forced to monitor every transaction made by their customers to block Internet gambling purchases. PayPal, which paid $10 million to settle allegations that it knowingly did business with offshore Internet gambling sites, would be able to allow customers to use its service to gamble online.


  6. U.S. players
    American Internet gamblers would be able to conduct instant transactions directly with Internet casinos. Not only will they be able to avoid long lag times that are common with online e-wallet's like ePassporte, they will also be able to avoid fees that can become prohibitive for players who conduct numerous transactions. American players will also be able ensure that they are doing business with a reputable company when the sites are licensed by the American government.



Losers

  1. Internet sportsbooks and sports bettors
    There couldn't be a bigger loser in the IGREA than Internet sportsbooks. The clause that allows sports leagues to opt out would surely be used by the NFL and the NCAA, the two most gambled on leagues in the U.S.


  2. NETeller, ePassporte and other Internet gambling payment processors
    With the regulatory framework set forth by the IGREA, there would be no need for these payment processors to exist. Players would be able to fund their accounts using credit cards, bank accounts or PayPal.


  3. Sen. John Kyl (R-Ariz.) and Rep. Bob Goodlatte (R-Va.)
    These Congressmen were instrumental in getting the UIGEA through. But so was former Iowa Congressman Jim Leach, who did not get re-elected last year. According to the PPA, Leach's staunch support of the UIGEA helped cost him the election. Kyl and Goodlatte didn't face much opposition in their election bids last year, but an increased awareness of their involvement may increase political action by Internet gamblers.


Internet Gambling Regulation and Enforcment Act: Winners and losers is republished from Online.CasinoCity.com.
Recent Articles
Best of Aaron Todd
Aaron Todd

Home-game hotshot Aaron Todd was an editor/writer at Casino City for nearly eight years, and is currently the Assistant Director of Athletics for Communications and Marketing at St. Lawrence University, his alma mater. While he is happy to play Texas Hold'em, he'd rather mix it up and play Omaha Hi/Lo, Razz, Deuce-to-Seven Triple Draw, and Badugi.

Aaron Todd

Home-game hotshot Aaron Todd was an editor/writer at Casino City for nearly eight years, and is currently the Assistant Director of Athletics for Communications and Marketing at St. Lawrence University, his alma mater. While he is happy to play Texas Hold'em, he'd rather mix it up and play Omaha Hi/Lo, Razz, Deuce-to-Seven Triple Draw, and Badugi.