The Interactive Media Entertainment and Gaming Association, or iMEGA, did not receive the ruling it was hoping for in its last legal conflict with U.S. legislation and the UIGEA, but it was given some political clout with which it will continue to battle for the legalization of online casino gambling. iMEGA intends to launch a further attack on the UIGEA before the end of September.
iMEGA had filed notice on April 1st of this year in the Third Circuit Court of Appeal that which questions to dismissal of the suit iMEGA vs. Keisler (Acting USAG) among others, further challenging the UIGEA.
President Ed Eyden announced that iMEGA, an organization dedicated to the advancement of the internet, is preparing for its case. iMEGA intends to file another suit with the Appeals court before the limit for litigation expires.
iMEGA was founded in 2007 with the idea of continuing the growth of the internet and the online casino gambling industry by cooperating with the government at all levels as well as concerned citizens and corporations to make constructive and practical decisions in the industry. The organization promotes “improvement, openness and freedom as the path to even greater advantage of this medium for all.”
The upcoming suit is expected to run over well into 2009, due to other organizations who may wish to participate and ask for an extension. iMEGA is filing for an “amicus briefs” from third parties who have gathered crucial information to facilitate the eventual decision, and forcing judges to think practically about the subject.
Pete Session’s HR 6663 has gained the support of the Remote Gambling Association, contrary to the Poker Players Alliance having said that confuses the issue of internet gambling. The RGA has endorsed the Unlawful Internet Gambling Enforcement Clarification and Implementation Act of 2008, and in doing so, caused the European Union to launch an investigation into the discrimination against European online casinos by the U.S. Department of Justice.
The issue of U.S. discrimination has not been addressed by either side of the debate thus far, and the RGA feels that the internet gambling situation has been worsened by U.S. companies who remain open to the market without consequence. The European Union’s investigation is due to reach a decision by the end of this year which will decide whether or not to seek further arbitration with the World Trade Organization. There could be punitive action against the U.S. if the European Union wins, although as we’ve seen with many other countries involved in the same matter of dispute, it could be years before results are made.
If HR 6663 is passed, however, and prosecution against online casinos that withdrew from the U.S. market after the UIGEA was signed ceases, tensions could be considerably lessoned.The RGA’s chief executive, Clive Hawkswood states, “We took our case directly to U.S. legislators who have heard out message, understood the inequity of the Department of Justices’ stance, and appreciated both the unfairness in their enforcement policy and the risk to U.S. priority interests and its reputation if the policy was pursued further. This could be a major step in demonstrating that the rule of law and integrity of the WTO are still important in Washington.
“Although this is a good sign, unless and until the legislation is passed and comes into force, all EU operators who have ever taken business from the US market are potentially still under threat of prosecution and we will be forced to pursue this matter as far as it needs to go to obtain a sensible solution and fair justice,” said Hawkswood.
Hawkswood went on to express his assent to HR 6663’s supporters as he feels they are justified in their decision to avoid an unnecessary dispute with European countries, and to enforce the principles of fairness and decency in the trade relations between the U.S. and the European Union.
In addition to the UIGEA Clarification and Implementation Act, Congressmen Robert Wexler and Steve Cohen sent two separate letters to the U.S Attorney General, urging that prosecution of European Union companies for activities prior to the UIGEA be stopped, saying that it could lead to a dispute between the U.S. and the E.U.
Although the American Gaming Commission primarily favors land casinos, it has recently spent $400,000 in lobbying for internet casino gambling. The AGA’s top priority is to provide a better understanding for the casino gambling industry in bringing facts about gambling to the masses and to elected officials and media.
According to the Associated Press, the AGA has also invested in tax legislation that would affect online casino gamblers, such as Hurricane Katrina tax bills and employee tip tax compliance. Joined by MGM Mirage, Harrah’s, Wynn Resorts and Bally Techonologies, the AGA has made several attempts to create non-profit organizations that would promote travel to the United States.
Additionally, AGA seeks to educate the general public on the risks of problem gambling, and provides tips for responsible gaming. Since 2005, the AGA has introduced responsible gaming public service announcements via the Travel Channel in which they reminded casino gamblers “when you play for fun, you’ve already won,” as part of their “Keep it Fun” campaign. They raised over $115,000 for the National Center for Responsible Gaming.
The AGA continues to lobby for online casino gamers and during April through June of this year, they lobbied Congress, the Interior Department, the IRS, the Treasury Department and the White House. Among the officials registered to lobby for the AGA was Democratic Brett Hale who at one time worked under Representative Ed Whitfield. The AGA keeps its US trade doors open to not online many top land casinos, but online casinos as well.
Online casino gamblers are forced to wait another full month before it is made known whether or not Representative Shelley Berkley’s proposal to lead an independent study of online gambling fairs well in the House Judiciary Committee. HR2140, or the Internet Gambling Study Act, has gained the support of the online casino industry in its attempt to determine the true effect of internet gambling on the American public and economy.
A full roster of 12 other bills, including one that encompassed deliberations on Karl Rove’s activities, are responsible for the delay in Berkley’s bill. The American Gaming Association along with several Congressmen feel that Berkley’s proposal provides a practical means of determining the pros and cons of regulating and taxing internet casino gambling. The study would take place over a full year, giving researchers more than enough time to thoroughly examine the effect the industry has in the U.S.
Internet gaming has lead to much heated debate in Congress this year. Many politicians have not given solid reasons for their opposition to legalized online gambling. Others, ignoring the separation of Church and State, claim that their objections are a question of religious morals. Some believe that due to the addictive qualities of casino games, online gambling will have a negative impact on the American public. While Barney Frank’s efforts to legalize online casino gambling fell short of being implemented because of several Republican votes, many feel that HR2140 will be received well in the Committee. Even those in favor of land casino gamblers as opposed to internet gaming, like the American Gambling Association, have voiced their support for the bill.
It seems online casino gambling is the hot topic in U.S. government legislation this year, as yet another Congressional bill has been proposed in opposition to the UIGEA. HR6663, or the UIGEA Clarification Act, is Representative Pete Sessions attempt to limit prosecution of online gambling activity prior to 2006.
The new bill would certainly prove beneficial to online casino companies that had been active in the U.S. gambling market prior to the passing of the UIGEA. Many online gambling establishments and third party payment processors were forced out of U.S. revenue after the Unlawful Gambling Enforcement Act was signed in late 2006, but still faced criminal charges. HR6663 seeks to prohibit any further federal prosecution, based on internet gambling or the financing of such, on any company or individual that no longer accepted U.S. wagers after October 13, 2006.
Online casino, sports betting, and poker websites like Party Gaming, 888.com, as well as NETeller and Citadel, who withdrew from the U.S. Market when the UIGEA was introduced, still faced punitive action. Since the signing of the UIGEA, there have been numerous reports that major online gambling companies have met with American authorities to try to avoid criminal charges for pre-UIGEA violations, and therefore would receive the new bill with enthusiasm.
HR6663 does not protect online sports betting companies that accepted wagers before or after the UIGEA’s enforcement. Officials believe that the new bill entails a “sense of Congress” provision that the implementation of the UIGEA should be focused on sports betting.
The bill states that “prior to the passage of the Unlawful Internet Gambling Enforcement Act of 2006, Public Law 109-347, on October 13, 2006, Federal law was both vague and outdated regarding Internet Gambling activities, as Federal criminal gambling statutes were passed decades before the commercial use of the Internet. To date, all Federal Internet gambling prosecutions have involved sports betting, creating a lack of authoritative court decisions on the applicability of other federal criminal statues to Internet poker and casino-style gambling.”
It goes on to say that sports betting is viewed as particularly harmful to the gambling community because of its “impact on the integrity of professional and amateur sports.” Sports betting, which is illegal in 49 of 50 states seems to be the whipping boy of the gambling community. The bill does not however, address the issue of horse racing, which is the only legalized form of sports wagering both online and off.
HR6663, like many other bills introduced, also calls for clarification of the UIGEA and what is considered illegal. The bill referred to the House Committee on Wednesday, but further action will be delayed because of the August recess of Congress. The same recess has help up Representative Shelley Berkley’s proposal for an independent study of internet gambling. It is thought to be unlikely that anything will happen with HR6663 until September.
Further concerns about the Unlawful Internet Gambling Act have been voiced following the tied vote failure of bill HR5767. HR5767 proposed that the implementation of the UIGEA be halted until more specification was made as to what forms of online casino gambling and sports betting violate the Act. On Monday, four Republican representatives sent out a letter to Federal Reserve Board and U.S. Treasury officers, seeking a more deliberate approach to making regulations for such Act.
Many criticisms have been made by politicians and the banking industry that the UIGEA is neither practical nor precise in leaving its enforcement to the financial institutions. The Act, which does not criminalize online gambling but rather the financing of such, has been the subject of many complaints made by federal legislators since its passing.
Representatives Judy Biggert, Christopher Shays, Jim Gerlach and Kevin McCarthy maintain that a more formal definition should be made as to what unlawful internet gambling is. While none of the four support online casino gambling, they are concerned that the “vague language” in the regulatory act will burden the banks in charge of enforcing it.
The letter says, “As proposed, these regulations do not provide clear guidance to the public, in particular those that engage in online skill games or regulated industries regarding what constitutes ‘unlawful internet gambling.’ We believe that implementing such vague law and regulations, while holding the public related industries liable for non-compliance, is an abdication of the federal government’s responsibility to both the public and unregulated industries.”
The letter also suggests that the drafting process should require a more specific project backed by an Administrative Law Judge and that there should be a Regulatory Flexibility Analysis on the financial impact created by the UIGEA’s enforcement.
While the United States claims it exercises no discrimination against foreign nations in its implementation of the UIGEA, Ohio has announced that it intends to allow online and televised keno as early as August of this year.The legalized form of online casino play will add to the state’s lottery revenue and is expected to reach $70 million a year. U.S. Representatives might as well just approach WTO officials with a slap in the face in the next hearing with Antigua. Online keno in Ohio is obviously an important step toward removing the ban on internet gambling, but adds to the long list of double standards in the U.S.
Ohio state Spokesman, Joe Caputo was very direct when telling reporters his motivation in allowing the internet casino gambling. He said that the introduction of online keno was Ohio’s response to player demand and that it creates much needed funding for education and balancing the state budget during the country-wide economic crisis. “It’s just another shot to keep us afloat with the way things are going,” said Caputo.
Some are in awe as to how the U.S. government would permit such activity, when it clearly has a hostile position on online casino gambling and sports betting. However, most of us are not surprised to learn that U.S. legislation can be generous in making exceptions to the UIGEA. Take horse racing, state lotteries, fantasy games and the World Series of Poker for example. Each of these forms of gambling promotes and contributes to online gaming. The announcement to launch internet keno comes right on the heels of Representative Jim McDermott’s bill to regulate internet gambling.
The online keno that will now be available to Ohio citizens will draw winners every four minutes, and there have been many enthusiastic responses for sales venues, including bar owners whose business have decreased since the current public smoking ban.
Paypal, possibly the most widely used third party payment processor, was found to have sold its users to the IRS. Several online casino gamblers use Paypal to put money into their accounts, and this news could have a large impact on the gaming community.
An announcement has been made that the company has opened their supposedly secure client account information to the IRS, creating quite the quandary for online casino users. There is already a substantial limit on the methods for payment to these websites, and the disclosure of this information may make it very difficult for online gamers to gamble online altogether.
Paypal stopped accepting payment to and from U.S. players in 2002 due to a fine they received by Attorney General Elliot Spitzer.
It should be noted that any online casino gambler report all earnings to the IRS to avoid repercussions from findings like this. Any online winnings that are not reported can and most likely will lead to legal action, including hefty fines and jail time.
Speculation is that the IRS is investigating more than just internet gambling. This information could provide the IRA with banks that are allowing transactions that violate the UIGEA to occur. From there, the crackdown on internet gambling could be detrimental.
"Even if they had kept themselves away, there was no reason for them to sell out the many people who gave them money and trusted them with private information," said online gambling analyst, Gordon Price.
The announcement has panicked the online gambling market. The move to share this information with the IRS is highly unethical and may very well lead to civil lawsuits against Paypal. With this finding, people feel that there has been a violation of security agreements
Online gamblers are shocked to learn that Nevada officials have already stated their opposition to Representative Jim McDermott’s Investing in our Human Resources Act of 2008, despite the state potential to pull over $300 million in online casino gambling taxes.
According to the Las Vegas Review-Journal, McDermott has provided statistics from a PricewaterhouseCoopers study that shows that the IHRA would generate $40 billion for the U.S. over the next ten years, the revenue from which would be put toward job training and educational assistance for foster care youth. The bill was presented as an alteration of his previously proposed bill that calls for the Department of Treasury to tax, license and regulate online casinos and other forms of internet gambling. The motivation behind the more recent proposal is invest the money into much need social security reform, and to justify the legislation to anti-gamers.
“The gamblers want it; the poker players want it because they want a system in the United States, run in the United States, governed by our laws rather than floating out there in the world of the Internet,” said McDermott. Many non-gamblers agree that the revenue could be put toward vital government aid.The Las Vegas Review-Journal reports that Nevada officials, the least expected to oppose the bill, are not supportive of this new proposal. According to Representative Jon Porter, a Republican of Nevada, the bill would “set a harmful precedent.” Porter had previously suggested that studies for online gambling legislation be conducted. Many Nevada officials agree that the legislation is a “frivolous attack on the gaming community to pay for services that local governments, states and the federal government should already be providing.” The problem with this logic, however, is that the government is already struggling to finance housing, job training and educational aid and other forms of social security. The U.S. is facing a trillion dollar deficit and is running out of much needed resources for such programs.
Democratic Nevada Representative, Shelley Berkley, who also advocates for a one-year study of internet gambling, calls the new bill “a classic case of putting the cart before the horse.” The American Gaming Association, supporting Nevada land casinos and Berkley’s bill in favor of gaming research, claim that McDermott’s bill would “seem to be at odds with one of the core principles of the AGA, which is to protect states’ rights to individually tax and regulate gambling.”
McDermott disagreed. “My experience has been that, generally, studies are a way of wasting a year,” he said, “We need the money. We know what the issue is.” He went on to explain that his proposal is meant to supplement Barney Frank’s H.R. 2046 which calls for the regulation of online casinos. “Without his bill, my bill doesn’t go anywhere.”
Because McDermott does not expect that his bill will pass through the next series of committees, he has announced that he is prepared to re-introduce the bill in 2009. While it is unlikely that officials will move to regulate online casino gambling anytime soon, it is thought that perhaps putting the revenue to practical use might sway the decision.
It would appear that there is no end in sight for the Antigua, Barbuda and World Trade Organization’s dispute against the U.S. Last year the WTO’s arbitration panel announced that trade sanctions would be dispersed among the small nations to compensate for U.S. withdrawal from overseas online casinos.Still, U.S. Trade Representatives are involved in ongoing meetings, discussions and negotiations to avoid resolution, passing many extended deadlines.
A team of six Americans lead by Deputy US Trade Representative Ambassador John Veroneau, have delayed the process even more, according to Antigua Finance Minister Dr. Errol Cort. Cort told the Antigua Sun that the negotiations might continue for another two to three months, regardless U.S. delegation’s intent to return home on Tuesday. The new set deadline for U.S. compliance is August 1st, the third rescheduling this year. U.S. Trade Reps plan to keep negotiations open for a settlement on the internet casino’s issues. The negotiation timelines set for discussion, however, are much shorter than those set for settlement.
The U.S. has made previous settlement agreements with Antigua that have gone ignored. Dr. Colt has suggested that the short deadlines are meant to keep the talks productive, but that they were also keeping matters from being resolved in a timely manner. Because several U.S. governmental agencies are involved in the negotiations, the resolution process has been slow and painful for Antigua officials. It is thought by some that the new deadlines are set as a means for the U.S. to continue to shrug off their responsibility to overseas online casinos, and to prevent revenue from leaving America.
“I am not suggesting for one moment that on August 1st, 2008 the parties would have signed off on an agreement. I won’t want it to be misunderstood and misconstrued that we set these deadlines and we are breaking these deadlines. The deadlines are really set to keep the parties at the negotiating table, but they are not set thinking that on the particular date these issues will be resolved,” said Dr. Colt.
He also mentioned that at any time during the discussions, either party involved could abandon the negotiation process and request further World Trade Organization arbitration. “If you ask me realistically how much longer I think it would take to really come to some agreement that could be signed off on both sides, to fully flesh out and ventilate the issues on the table, I would say that the period would be perhaps over the next two to three month or so, if I had to put a frame on it,” Dr. Colt continued, “Could it happen before? Yes, it’s possible, depending on how quickly certain inter-agency discussions could take place and some sort of consensus be reached, but practically and realistically, having regard to how governments function.”
Some feel that the negotiation process might continue for years down the road, based on the progress so far. The U.S. has continued to tap dance around the issue for over a year now, with little to no results seen. In the meantime, offshore online casinos continue to face discriminatory prosecution by the U.S. without consequence.
