New Online Gaming Law Likely to be Delayed

A new bill proposed by Senators Jon Kyl and Harry Reid to regulate the online gaming industry, seems to be in the red. ‘The Internet Gambling Prohibition, Poker Consumer Protection and Strengthening UIGEA Act of 2012′ calls for the prohibition of all forms of online gaming, excluding online poker and off-track horse racing. If approved, it is expected to create a huge source of income for casinos in participant states by legitimizing the online poker market.

The New Face of the UIGEA Act

‘The Internet Gambling Prohibition, Poker Consumer Protection and Strengthening UIGEA Act of 2012′ has been designed to strengthen the existing laws related to online gaming, including the ‘Illegal  Gambling Business Act (IGBA)’ and the ’1961 Wire Act’ created by the United States Department of Justice in December, 2011. The bill prohibits playing casino games on the internet, with the exception of online poker and off-track horse betting. Lottery sales in participant states would also be excluded from the bill. An Office of Online Poker Oversight (OOPO) would be established under and given the responsibility of managing regulations for online poker. Licenses for online poker would be issued by specially appointed regulators.

All states would have the freedom to choose whether to join or opt-out, by means of a voluntary election plan, which would first have to be approved by the legislature of the state in question. In case a state fails to inform the government of their decision, it would be excluded from the law by default. The bill also states that irrespective of their own laws, any interested tribe would be allowed to become a member only if their home state joined as well.

Implications for Casino Owners and Players

In the first two years, the bill would permit only licensed casino establishments to run online poker sites. In addition, for five years initially, companies that were involved in hosting and running online gaming activities after the enactment of the ‘Unlawful Internet Gambling Enforcement Act (UIGEA)’ in 2006, will not be allowed to operate their businesses in the U.S. This aspect of the bill is expected to affect players like ‘PokerStars’ by preventing them from partnering with American casinos. The only way out for such parties would be to prove in court that no state or federal offenses were committed by their business after the UIGEA was introduced in 2006.

Another fallout of this bill would be that casinos would not be allowed to host online poker games at internet cafes or similar establishments. If any individual or group is found to be in violation of this law, they would be fined 16% of their income for indulging in ‘online poker activity’. The state in which the offending party operates their business, along with tribes in that state, would receive 14% of this penalty. The remaining 2% would go to the federal government.

Calling the Clock: Will Supporters of the Bill Manage to get it Passed Anytime Soon?

Until two weeks ago, work on the bill was reportedly progressing well. However, in a matter of a few days, the issue seems to have taken a turn for the worse. The bone of contention seems to be the strategy for getting the bill approved.

Republicans have said that approaching the House before the senate is the only logical option. In the absence of proper scrutiny of the bill by a committee, Republican sources argue that the senate would be forced to vote without understanding the pros and cons of implementing the bill. However, Sen. Reid and his aides have refuted these claims and said that introducing the bill to the Senate first had been the plan all along.

The general perception is that House Republican leaders are not interested in taking up the issue of online gaming. In addition, it has been speculated that casino owners opposed to online gaming may have an influence on the way the bill has been side-tracked. The bill is also being opposed by over 15 states who were authorized by the Justice Department to run legalized gambling on their own. Moreover, a few Indian tribes and lobbyists for the lottery industry are also not keen to support a move that is considered to be partial to the economy of Nevada.

As senators squabble over the bill and its approval, the casino industry and its legions of players are waiting impatiently for the bill to be passed. The last chance for the bill to be introduced this year is coming up in November, when legislators are expected to gather again. With the year almost at an end, it remains to be seen whether supporters of the bill can succeed in getting it passed and end the stand off between online poker players, the casinos, and the government.