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US Moves to Legalize Some Forms of Internet Gambling
Americans are celebrating with the news that a House Committee has just passed legislation which would make some internet gambling legal, and would mean that they would be able to place online bets with companies which are licenced by the US Treasury Department.
This legislation was sponsored by Representative Barney Frank, who is the Chairman of the House Financial Services Committee, and would overturn a four year old law, UIGEA, which prevents banks from processing payments to offshore gambling websites.
Frank, a Massachusetts Democrat said; “My primary goal is Americans ought to be free to do what they wish without this kind of intrusion. The intrusive regulation is a problem for the financial institutions.” His committee passed the legislation, 41-22, with one lawmaker voting “present.”
Frank and other supporters, such as the Poker Players Alliance, believe that licensing and regulating online gambling will protect consumers who are increasingly placing bets with offshore operators. A different measure, which is dependent on the House passing Frank’s plan, would lead to taxes being introduced for internet gambling. According to a congressional analysis this would earn the federal government up to $42 billion over 10 years.
Michael Waxman, a spokesman for the Washington-based Safe and Secure Internet Gambling Initiative said; “This is money sitting on the table.” The group represents financial services companies such as the UK-based payment processor UC Group.
Opponents of the new legislation, such as Representative Spencer Bachus, the top Republican on the Financial Services Committee, believe that legalising such betting will harm society, and Congress should concentrate on other issues. Bachus, from Alabama, has said the measure would “fleece” Americans by removing restrictions on online gambling and exposing them to “unwise and harmful financial choices.”
He said; “With this bill, in one broad stroke, we will allow every child in America to gamble on their home computer or in their dorm room.” He also believes that the revenue estimates for the proposed gambling taxes are inflated, as they are based on all states participating.
The committee passed amendments which will ban operators which have violated US laws from getting licences, and prohibit betting on sports, such as football. There were also amendments to prohibit advertising to minors, and to prevent them from gambling online. Representative Brad Sherman, a California Democrat said; “I have opposed this bill for years, but I am slowly changing, the best reason for this bill is the prospect for revenue.”
According to UK-based H2 Gambling Capital, which supplies data on the industry, the American offshore internet gambling market is expected to climb from $5.4 billion last year to $5.7 billion in 2010. They think that the market could grow to $24 billion in 5 years if the US makes gambling legal. That figures excludes most sports betting, which would not be allowed under House proposals.
According to H2 the largest offshore gambling sites for American players include Full Tilt Poker, based in Ireland, and PokerStars, based in the Isle of Man and this proposed bill would pave the way for US Bingo sites to become fully legalized, thus removing some of the gray area that exists under the current laws.
Opponents of the 2006 law barring wagers say it doesn’t distinguish between legal and illegal online wagering. Some states for example do allow online betting on dog and horse racing. Under Frank’s proposal licenced gaming companies would have to protect against compulsive and underage gambling, and would have to prevent players from placing bets online in the states that prohibit it. This would also help protect consumers from identity theft, fraud and other crimes.
Representative Jim McDermott, a Washington Democrat and member of the tax-writing Ways and Means Committee is sponsoring the bill to tax online gambling. His proposal would require Internet gambling operators to pay a 2% tax to the federal government on betting deposits and a 6% tax to states. The federal treasury would collect taxes on gaming-company profits, and there would be taxes to pay on winnings.
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