BUSINESS

Rep. Peter King’s federal online gambling bill ambitious, but likely stillborn

TAGs: igrecpa, internet gambling regulation enforcement and consumer protection act, Online Gambling bill, Peter King

peter-king-online-gambling-billAs promised last month, Congressman Peter King (R-NY) has introduced the Internet Gambling Regulation, Enforcement and Consumer Protection Act of 2013 (read it here). Unlike Sen. Harry Reid’s aborted 2012 Nevada-centric online poker bill, King’s bill aims to “foster a level playing field” among all potential online gambling stakeholders, including casinos, Indian tribes, state lotteries and horseracing outfits. Also unlike Reid’s poker-only bill, the ambitious and acronym-unfriendly IGRECPA (gesundheit!) would allow all forms of gambling except sports betting, a clear case of overreach that effectively dooms this bill to the ash heap of history even before its merits have been debated.

The bill gins up the urgency behind its introduction, citing the 2011 Department of Justice Wire Act flip-flop as having pushed states like Nevada, New Jersey and Delaware to pass intrastate online gambling legislation. King’s bill is described as the antidote to the infamous ‘patchwork quilt’ of regulation currently stitching up America. However, the bill would allow states and tribes that have already begun offering online gambling as of the bill’s enactment to choose not to participate in the federal scheme and carry on with their intrastate programs.

DEVIL IN THE DETAILS
If passed, the bill would require disinterested states and tribes to opt-out of the federal scheme within 120 days, which isn’t likely to sit well with state legislators who rarely seem capable of conducting a roll call within that time span. However, more assertive state governors and tribal leaders have the option of simply notifying the Treasury that they want no part of this amoral plan to destroy Amurica.

Tribes located in states that opt-out can still choose to offer online gambling, but players using such an online offering would have to be located “wholly within the boundaries” of tribal land. No provision of King’s bill would have any impact on non-internet gaming under the scope of the Indian Gaming Regulatory Act (IGRA) and tribes wouldn’t need to renegotiate tribal-state compacts.

King plans to set up an Office of Internet Gambling Oversight within the Treasury department to oversee qualified state and tribal agencies issuing online gambling licenses. The Office would also handle license applications for any entity in a state or on tribal land lacking its own gambling agency. The Office would also be able to unilaterally suspend or revoke licenses issued by a state or tribal agency if it feels the operator doesn’t meet the suitability sniff test. After one year of online play, the Office would have the authority to yank a local agency’s designation as a qualified body if its oversight was found lacking.

GIVE US YOUR POOR, YOUR TIRED, YOUR HUDDLED MASSES YEARNING TO GAMBLE
It wouldn’t be a federal online gambling bill without a side order of hypocrisy, so licensees would only be prohibited from accepting wagers from customers outside the US if such a transaction “is not lawful in the jurisdiction in which the individual is located.” Also, should a licensing agency choose to suspend an operator’s license for whatever reason, the operator would only have to cease taking wagers from persons located in the United States while it applied for a new license from some other agency.

There is no traditional ‘bad actor’ provision, but King’s bill would bar anyone determined to be “delinquent in the payment of any applicable Federal or State tax, tax penalty … owed to a jurisdiction in which the applicant or person operates or does business.” That conceivably opens up companies like PokerStars to a potential barrage of state and federal tax claims over their US activities pre-Black Friday. King’s bill would also bar any license applicant that “knowingly accepts or knowingly has accepted” sports wagers from US residents, or “has affiliated with any person” that has done so, which could leave companies like Bwin.party – whose Bwin half did accept US sports wagers pre-UIGEA – vulnerable to legal challenges.

Unlicensed operators would face fines equal to the total amount of wagers accepted from US gamblers, plus $1m for each day the unlicensed operation continues accepting said wagers, not to mention up to five years in prison. But King’s bill allows for an “orderly cessation of unlicensed activity,” giving unlicensed operators 30 days after enactment to wind down their operations, after which the operator must “promptly return” US players’ outstanding account balances. Sadly, that last clause leaves the Ponzi scheme currently operating as Lock Poker out in the cold.

MISCELLANEOUS
The identities of gambling affiliates would have to be submitted to the licensing agency. ‘Sweepstakes’-style internet cafés would be expressly illegal under King’s bill. The use of ‘bots’ would be prohibited. The bill would also bar any “electronic, electrical, or mechanical device or software or other program or tool which is designed, constructed, or programmed specifically for use in obtaining an advantage in any game … where such advantage is prohibited or otherwise violates the rules of play.” So it seems using a heads-up-display to prey on poker fish could earn you up to three years in prison, although there’s an out so long as the device is registered with and approved by the licensing agency.

The American Gaming Association has yet to take a formal position on King’s bill, but the Poker Players Alliance (PPA) has expressed its unqualified support. (While the PPA has yet to meet a gambling bill it didn’t like, Global Gaming BusinessRoger Gros reminded his Twitter followers that King’s son is a partner in the lobbying firm run by PPA chairman and former GOP senator Al D’Amato.) The PPA also supported the 2011 online gambling bill introduced by Reps. John Campbell (R-CA) and Barney Frank (D-MA), on which King’s bill is largely based. That bipartisan bill was in turn largely based on Frank’s 2010 bill. Past isn’t always prologue, but it’s worth noting that none of these bills ever came up for a floor vote.

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