Democratic representative Jim McDermott (Washington)has made a proposal to, by amending the Social Security Act, spend $40 billion on job training and educational assistance for foster care youth over the next ten years. The new legislation would be financed via revenue generated by online gambling. The bill, known as the Investing in our Human Resources Act, or H.R. 6501, is the second written by McDermott in an attempt to regulate internet casino gambling websites.
“We have an ideal opportunity to invest billions of dollars in American workers and our struggling economy without increasing the federal deficit,” said McDermott. “IHRA would utilize a funding stream that would become available should Congress decide to legalize and regulate internet gambling, which would protect consumers and collect tax revenue that is currently offshore.”
The IHRA calls for funds from the Transitional Assistance Trust Fund, attributable to internet gambling, to be transferred and invested into job training.Additionally the legislation would require more awareness of unsafe online casino practices and responsible internet gambling behavior. Section 3 of the IHRA states that the Secretary of Health and Human Services would have to complete a national program, known as the Safe Internet Gambling Practices Program in order to implement such policies into the regulation of internet gambling. This policy has been well received by problem gambling officials.
Keith Whyte, Executive Director of the National Council on Problem Gambling said, “I believe that the McDermott bill could be a positive step to help raise awareness about the dangers of unsafe gambling practices and the availability of addiction treatment.”
The IHRA is currently co-sponsored by Representative George Miller (Democrat, California), who is the chairman of the House Democratic Policy Committee, and John B. Larson (Democrat, Connecticut), vice chairman of the Democratic Caucus. The introduction of this bill shows that there is a growing support for the online casino industry in Congress. Safe and Secure Internet Gambling Initiative spokesman, Jeffery Sandman said, “We need to change the current oath, where the prohibition of internet gambling allows for billions of dollars to be lost in an underground, uncontrolled marketplace ripe for criminal exploitation.”
Billions of dollars is right. The market is said to generate revenue of between $8.7 billion and $42.8 billion over the next ten years. This revenue would be distributed to individual states based on their population percentages.
McDermott’s previous proposal, the Internet Gambling Regulation and Tax Enforcement Act of 2007, or H.R. 2607, is currently waiting to be reviewed by the House Committee on Ways and Means. H.R. 2607 would amend the Internal Revenue Code to establish licensing requirements and fees for internet gambling operators. As such, online casino, poker and sportsbook operators would be forced to meet set criteria of safe and fair business practices, and pay the Director of the Financial Crimes Enforcement Network a monthly license fee of 2% of all bets and wagers placed.
Although the Payment Systems Protection Act (H.R. 5767) failed last month, this is certainly not the end of the road for internet gambling advocates. The fight for online gaming regulation continues in the form of four other Congressional bills, H.R. 2046, H.R. 2140, H.R. 2610 and H.R. 2607.
When the Payment Systems Protection Act was presented before the House Financial Services Committee, all but four Democrats and three Republicans voiced their support. Incidentally, there were six Democrats and six Republicans absent from the voting process.It is possible that these missing votes could have launched the bill forward.
The bill would have given a more clear definition to the banks asked to enforce the UIGEA of what constitutes as illegal internet gambling. Neither the proposed rules written by the U.S. Treasury Department and Federal Reserve Board nor the UIGEA define which types of transactions the financial institutions are to stop. However, because of the scare tactics used by the opposing argument, including moral objections and “child safety,” H.R. 5767 is dead. Online casino gamblers are left wondering where we go from here.
H.R. 2046 or the Internet Gambling Regulation and Enforcement Act, proposed by Representative Barney Frank, currently has 48 cosponsors. This bill was introduced in April of 2007 and under its jurisdiction individual states would be permitted to determine what types of internet gaming they will or will not allow. It would also force online casinos or other gaming sites to be monitored and regulated under specific guidelines. H.R. 2046 was last introduced to the Subcommittee on Commerce, Trade and Consumer Protection on April 30th, 2007.
Representative Shelley Berkley proposed H.R. 2140 in May of 2007. The bill requests a comprehensive study of Internet gambling to be conducted by the National Academy of Sciences to determine the U.S. response to online gambling. With 73 cosponsors, it was last referred to the Subcommittee on Crime, Terrorism and Homeland Security in June of 2007.
H.R. 2610, proposed by Representative Robert Wexler in June of 2007, advocates for online casino games like poker, chess, bridge or mahjong that require more skill than chance. The bill would exempt certain online games from the UIGEA to the extent that “the game provides for competition only between and among participants and not against the person operating the game; the operator is in compliance with federal regulations governing games of skill.” It too remains in the Subcommittee on Crime, Terrorism and Homeland Security and has 22 cosponsors as of June 7th, 2007.
Finally, there is H.R. 2607, proposed by Representative Jim McDermott in June of 2007 with just one cosponsor. If passed it would amend the Internal Revenue Code of 1986 in order to establish licensing requirements and fees for Internet gambling operators. The latest major action taken on behalf of the bill was its introduction to the House Committee on Ways and Means.
Online casino players can watch progress on these bills at pokerplayersalliance.org or govtrack.us. It is hoped that these bills will be well received by Congress in the future.
North Carolina has put tighter restrictions on internet casino gambling. This week legislators voted on a bill that would apply the state video poker ban to any game resembling a slot machine played in online sweepstake websites. The games themselves are said to be mere contests in which participants are awarded prizes for the purchase of telephone or internet service cards. However those in opposition to these games claim that it is a loophole around the video poker ban.
Officials have expressed their intent to specify the internet gaming laws. Representative Ray Rapp argued to the judiciary panel, “Just when we think we’ve gotten it taken care of in terms of video poker and gaming, it pops up again. There is an effort to close the loophole there.” Hhe later went on to say that lawmakers should be more consistent with their stance on video poker. “We considered it bad public policy then and we consider it bad public policy now,” he said.
The video poker ban is enforced by state Alcohol Law Enforcement agents who say that there has been a slew of illicit activity taking place on computer terminals where video poker was once popular. Here a phone card is purchased that holds a limited amount of calling time minutes. To determine if they’ve won a prize, customers may either ask an operator to swipe the card or use the terminal to play a “slot-like game” similar to those seen on video poker machines and online casino websites. The terminal acts as a sort of virtual scratch-and-win lottery ticket.
Representative Melanie Goodwin tells us, however, that players may use any earnings to play the game continuously and win more cash prizes and this may cause them to spend excessive amounts of money on phone cards. North Carolina had legalized video poker for 14 years in an ongoing experiment. In July of 2007 the ban was put in place because lawmakers made complaints that low-income families were spending too much money on games of chance and that the machines were, God help us, offering big cash jackpots.
Theresa Kostrzewa, lobbying for the ban to be delayed, seemed to have made to only valid argument. Kostrzewa questioned whether the passage of the bill would give the North Carolina Education Lottery a monopoly on games of chance. “This is an issue that if we move too quickly,” she said, “will open the gate up to unforeseen consequences.” She went on to compare the sweepstakes games to many other products like soda that have codes placed under the cap or on the label which customers can use to visit the websites and place games to determine if they’ve won a prize.
Recently a state judge has approved an injunction which would temporarily delay the enforcement of the bill until the court has been provided with more clarity on the subject. Since then, however, another more specific bill has been proposed that will only prohibit those sweepstakes that make use of the computer terminal. As North Carolina has always been clear on its anti-gambling principles, many believe that we will see the bill passed within the next year.
The online casino industry suffered a devastating hard blow this Wednesday as the delayed vote in HR 5767, the Payments System Protection Act did not pass to Congress. The Bill was put in motion by Barney Frank and Ron Paul in an attempt to cease UIGEA related arrests.
The debate went on for some time, with valid arguments presented on behalf of the bill. Representatives of the Poker Players Alliance attended the meeting, as well as Congressmen. PPA’s Chairman and former U.S. Senator, Alfonse D’Amato showed concern that the UIGEA has not to date been able to provide gamers with what technically is considered unlawful internet gaming. D’Amato has expressed his disappointment in the opponents’ inability to see the true intent of this bill. He also stated that the UIGEA would not effectively be able to address its supporters concerns with online gambling, and that the actions it seeks to prohibit will continue regardless. It seemed that the “moral” issues that republican Congressmen have with internet gambling outweighed the arguments that the bill’s supporters were making.
The opposing side went on to explain their viewpoints on the issue, singing the same “protect the children” song. The argument made by Spencer Bachus of Alabama, was that underage gamblers were at risk of becoming addicts, and that one third of college students who use online casinos and poker rooms have attempted suicide. Yet he failed to address the fact that the UIGEA should be subject to more specification. These supporters don’t realize that gambling addictions, according to the psychiatric field, are classified as an impulse control disorder and could be easily detected in other vices. It is typical of the Republican Party to make a martyr out of the children in order to obtain support. Bachus’s slogan is “You just click your mouse and you lose your house,” which is permitted in the U.S. providing that house is lost in horse-betting transactions.
The bill’s representatives tried to argue that enforcement of internet gambling laws should be left to government rather than banking facilities and in that sense was not a gambling issue. Pete King, a republican of New York argued, “This is a banking amendment, not a gambling amendment. I hope this will be considered in a non-partisan way; not whether you are opposed to gambling or not. Let’s take our time and have regulations that mean something.” He was unfortunately unable to sway the republican vote with this logic.
It was hoped by those supporting the bill that the House Financial Services Committee would be able to establish a guideline of which types of internet gambling would be legalized. Should it have passed through the committee, it would have ceased further UIGEA implementation and forced the Treasury Department , the Justice Department and the Federal Reserve to give a thorough description of unlawful internet gambling. The vote, however, tied at 32-32 and regulation was denied. Because of this, banking institutions are still left with responsibilities they are unequipped to enforce without certainty of which financial transactions are considered illegal.
Since the implementation of the Unlawful Internet Gaming Enforcement Act there have been representatives throughout the U.S. arguing to have it discontinued. The UIGEA, in a nutshell, was put into play in order to keep offshore online casinos from tapping into the American gaming community. HR 5767 is a bill proposed by Barney Frank and Ron Paul on April 11th of this year that addresses the issue of the ban on internet gaming. The bill has been pushed into the mark-up stage, where it will be reviewed by the House Financial Services Committee to determine if there are any necessary amendments to add to it before it is considered by the House of Representatives.
As of yet, the new bill that Frank is pushing for, with the support of 20 other representatives, is in a very primitive form. It states, “The Secretary of the Treasury and the Board of Governors of the Federal Reserve System, whether acting jointly or separately, may not propose, prescribe, or implement any regulation under subchapter IV of chapter 53 of title 31, United States Code [UIGEA], or otherwise give effect to such subchapter or any such regulation, including the proposed regulations published in the Federal Register on October 4, 2007.” Essentially this is requesting the right of Congress to overturn the UIGEA. There has been much controversy surrounding the Act since its introduction. Much of this stems from feelings of unfairness surrounding the Act, in that it is discriminatory to other countries, it is not practical and difficult to enforce, and puts a responsibility on banking institutions that are not equipped to handle it. Frank has been able to provide several legitimate arguments that favor his bill. He feels that enabling internet casino gambling will result in an extreme economic boost. Barney Frank has instead created an alternative to this UIGEA, known as the Internet Gambling and Regulation Enforcement Act. Rather than outlawing internet gaming, Frank seeks to monitor and regulate these facilities in order to protect gaming users’ finances and provided a hefty revenue in the process.
There are two more representatives that intend to express their support for HR 5767 this week. Neil Abercrombie is a liberal Democrat representing the state of Hawaii, and had voted against the UIGEA when it was first brought to Congress for consideration. Abercrombie had also voted on the Internet Gambling Regulation and Enforcement Act, known also as HR 2046.
Lynch, a democrat as well, is a member of the Finances Committee that the bill is being brought before. He voted for the UIGEA when it was introduced but has now expressed concern over the financial burden that the Act has put on the country. Lynch represents the state of Massachusetts.
While the outcome looks hopeful for the HR 5767 bill, there does not seem to be as much support for the gaming regulation act. It seems that the U.S. may be voting in favor of online casinos in order to avoid any further scrutiny for the discrimination of other countries via the UIGEA.
U.S. officials have essentially ignored a questionnaire presented to them by the European Union concerning U.S. discrimination against internet casino gambling. Americans are scheduled to meet next month with European Commissioner Peter Mandelson to deliberate complaints previously made by the Remote Gaming Association. That they have shrugged off this questionnaire shows that the U.S. is not prepared to consider any indiscretion on their part.
In addition to further disputes with the U.S. that involve the World Trade Organization this year, the Remote Gaming Association requested that the European Commission investigate complaints made by overseas online gaming establishments. The basis of these complaints are that European online casino gambling facilities are facing scrutiny from U.S. gambling laws in order to protect domestic operators, including websites run by the American horse-betting industry.
When U.S. Trade Representative Susan Schwab was presented with the questionnaire, she responded, “[There is] no basis for any allegation of ‘discriminatory enforcement’ of U.S. gambling laws.” She went on to say that the concerns brought to the U.S. were based on “mistaken assumptions” because legislation this year did not change which types of gambling were legal. She claims that nationality played no part in charges made by the U.S. against internet gambling establishments. This is apparently why there have been no results from numerous other disputes brought against the U.S. by other overseas nations for the same reasons.
The nonchalant response given by Schwab illustrates an unwillingness of U.S. officials to address the issue at hand. There are obvious discriminatory arrests made against European operators as the U.S. enables domestic internet gambling like horse racing betting and national lottery. Financial transactions made by domestic gamblers to European companies are no different than those made to U.S. establishments. Yet arrests are made on those that take advantage of overseas gaming facilities. It may be that the U.S. legislation that allows some gambling activities and not others is discriminatory in itself. Because of the Unlawful Internet Gambling Enforcement Act, a great deal of major European gaming sites has closed their gambling market to U.S. citizens, depriving themselves of billions of dollars in revenue. The fear of these European companies now is that they may now be prosecuted by the U.S. for past “violations” of U.S. legislation and forced into punitive settlements, as was the case with third party payment processors like NETeller and Citadel. The Remote Gaming Association’s chief executive states that the U.S. is guilty of “unfair and discriminatory treatment of the EU gambling industry and the continuing threat of prosecutions cannot be allowed to go unchecked.”
Next week legislators will gather to discuss the further enforcement of the current gaming legislation, and a bill proposed by Barney Frank and Ron Paul that seeks to regulate online gambling facilities. Frank has recently gained the support of two U.S. senators, Neil Abercrombie of Hawaii and Stephen Lynch of Massachusetts, amounting to a total of 20 representatives that sponsor the bill. We will see if this discussion will hold any water against the UIGEA, working in the favor of the European Commission’s fair trade agreements.
Things are not looking up for the online casino industry. Along with the U.S. there is a multitude of overseas nations that are cracking down on the use of internet casino gambling. Norway and the Ukraine have both struggled to come to a final conclusion on its stance on gaming regulation.
While the Ukrainian government still allows its expanding online casino gaming industry to continue, they have announced their intentions to put certain restrictions on its advertising. These restrictions have apparently been designed to prevent the spread of under-aged gamers and there are strict penalties that have been put in place for sites that refuse to comply. These new policies strongly resemble those put in place by the UK that dictate the time and place when online casinos are permitted to advertise for their websites. Officials must give these sites special permission to advertise in newspapers, on billboards and on television. The good news is that the Ministry of Finance in the Ukraine is encouraging citizens to share their response to the new regulations that are to be put in place next month.
Norway, however, is more on the fence on the subject. Its government has been fighting for protectionist legislation with the European Commission prompting them to take a completely opposite action. The protectionist legislation seeks to keep Norway as an online casino monopoly, denying access for foreign gaming sites to state land. Currently state sponsored land does not control internet casino gambling, but has put more laws in effect to restrict land gambling. The idea is to allot a certain amount of time and money for gamers to use slots machines in order to prevent gambling addictions in its country. For this reason, Norway is seeking to keep out the online casino industry. The government will continue to monitors its citizens and restrict their playing time with the use of a pre-paid card that all of its land casinos must now use. Norwegian officials feel that online casinos will promote further gambling addictions in its country. The European Commission is pressuring Norway to comply with their free-trade policies. This does not promise to amount to much, as we have seen with the many World Trade Organization disputes with the U.S. With the recent gaming restrictions and attempts at protectionist legislation, it does not look like Norway will cave to the European Commission.
It is without wonder that the world over continues to turn its nose at the online gaming industry and the benefits that come with it. Gambling regulation has certainly become one of the leading international controversies. With all of the recent restrictions put in place by various countries, it seems that the venues to internet gamers will continue to dwindle. It is uncertain whether the international free-trade policies will ever be successfully enforced. There is still hope as the European Commission continues its struggle against nations that refuse to comply. There are also several sites and e-processors that are making further advancements to ensure gamers their rights to play.
It seems that the online casino industry is gaining support daily. In a recent briefing to state legislators, Frank Cantania spoke on behalf of the gaming community, arguing that internet gambling is an inevitability that we should embrace before all of its revenue is sent overseas. If you can’t beat them, join them is the mentality of former Assistant Attorney General and Director of New Jersey Division of Gaming Enforcement.
"The United States is going one way, and the rest of the world the other," said Catania, "The online gaming market will continue to expand regardless of any decision to regulate. Consumer demand and industry will force governments to act." Catania currently works for eCOGRA and is an independent gaming consultant. He was joined this Friday by a handful of other gaming expets including Ken Kirchner, a former senior Vice President of the National Thoroughbred Racing Association, and John Pappas of the Poker Players Alliance. The team was able to establish thought provoking arguments in an assesement made that showed the possible consequence of the UIGEA. The evaluation looked into the 5 year dispute between the US and Antigua, in which the American government has lost a significant amount of money in recompense. The thought is that the UIGEA is an impossible bill to enforce, as the gambling community has only increased since its passing, although its business sent to countries where it is legal. Aside from this, the government has put financial institutions in charge of enforcing this act. Banks are required to screen every transaction completed by its clientle for suspicious activity like internet wagering, which is an unreasonable task on their end.These establishments are handling millions of transactions daily, and are unable to keep up with its federal obligations.
The team has predicted that the 2008 election would lean in favor of the gaming community. Pappas noted that since the federal prohibtion of internet gaming PPA’s membership has increased from 75,000 to over one million members. The team favors gaming regulations rather than restrictions which would include an age requirement. Those in favor of online gaming wish to make the conditions of online casinos the same as legalized land casinos. Catania argues that this responsiblity be put in the hands of State government as it has had more success in regulating gamnling than the federal government. "Keep out those that do not have good character and provide fair and honest games as a means of protecting the public from unscrupulous operators," Catania said.
Reverend Jim Butler of the California Coalition Against Gambling Expansion presented the opposing arguement that internet gambling would exacerbate the gambling problems in this country. To that State Denator Geller responds, "We may end up with internet gaming whether we like it or not. It’s an incredibly complex area that seems to change each week.
Having state officials on our side is a step in the right direction. With any luck we will see the opposing side of the online casinos dwindle as legislators are starting to understand the financial benefits that will come from gaming, and the cost of prohibiting gaming. Statistics show that the general public in favor of internet gaming is increasing significantly. Perhaps our upcoming elected officials will act on behalf of its people.
by Casino Intensity Senior Editor, Hillary LaClair
Despite popular belief, the United States bill known as the Unlawful Internet Gambling Enforcement Act does not actually restrict its citizens from internet gaming. The bill itself in actuality was passed to prevent financial establishments from transferring funds to online gaming websites. This is why many online casinos bring in a third party payment processor such as an eWallet to collect payments from its members.
The U.S. government is not satisfied with this solution, however, as they have begun attacking these organizations.In March of last year, the U.S. launched its first attack on Neteller, freezing the accounts of U.S. citizens who chose them as a payment option. Two former founders were forced to face criminal charges. In the end, the court ruled in favor of the U.S. and Neteller had to pay a substantial fine of $136 million.
The insanity presses on, as now a third party Canadian organization, known as Citadel Commerce has faced intense scrutiny over similar charges. The company had ceased handling U.S. transactions after Neteller was found guilty under charges of conspiracy. Still U.S. officials claim that there were laws in place while Citadel was offering its services to its citizens. Rather than subject themselves to the same prosecution as Neteller, Citadel Commerce’s owners, Entertainment Systems Inc. has agreed to a settlement of $9.1 million. The company was also forced to agree to cease U.S. gaming transactions within the next eighteen months.
Many wonder whether these recent charges were made a year after Citadel’s supposed indiscretion to fund the settlements that the U.S. now owes to several different countries. Overseas nations like Antigua and Costa Rica are in the process of collecting on billions of dollars in recompense for the unlawful arrests against their internet casino establishments and users. Other countries have since started taking action against the U.S. has well, with the enlisted aid of the World Trade Organization.
Where does this leave U.S. online casino users? If U.S. users wish to participate in online gambling, there are still payment options that will allow them to do so, assuming that they are not also brought into question. There is still the option of credit cards, money orders, cashier’s checks, CentralCoin and many others. That is not to say that they should not concern themselves with the idea that the government may soon find a way to keep them from the internet casinos altogether.With the way things are going, it seems officials will stop at nothing to infringe upon the rights of their citizens.
We should consider the organizations fighting to lift the UIGEA or enforce internet gaming laws. These organizations, such as iMEGA and the Poker Players Alliance are always in need of more support. In fact, the PPA made an appearance at this year’s World Series of Poker, allowing them televised exposure. In the meantime, play like there is no tomorrow, because there may not be if the U.S. continues to crack the whip on these payment processors.
Online casino aficionados will be pleased to know that the struggle to legalize internet gambling continues. For the eleven states that cater to the UIGEA (Unlawful Internet Gambling Enforcement Act), representatives from top online casinos have enlisted the aid of defense attorneys from the Department of Justice and the American Banking Association. Those advocating for internet gambling rights have made a vital advancement in the Supreme Court ruling.
A main concern expressed by prohibitionists is that internet gambling, financed wirelessly via credit cards, encourages American citizens to spend money that they haven’t got. The thought is that this sort of activity would impede on our economy, when in fact iMEGA (the Interactive Media Entertainment and Gaming Association) was able to illustrate the financial inefficacy in the UIGEA. Currently, research shows that due to the UIGEA, the United States is being deprived of anywhere from $7 to $43 billion dollars of potential revenue. Congress Representative Jim McDermott has cited that when the act was passed, initially signed with the SAFE Port Act, the US suffered a much more substantial loss. The value of stocks in internet gaming took a nose-dive, thousands of jobs were lost, and banks were suddenly left to enforce new laws that they were never financed to handle. Instead we are forced to observe as other countries cash in on what could save our taxpayers billions. The latest court ruling stated that the bill’s criminal penalties do not apply to banks and financial transaction companies. In essence, your banks and credit unions have been given the legal right to turn the other cheek should they stumble upon a transaction made on a gambling site. That in itself is the greatest victory that the defense could have hoped to achieve. Gambling citizens everywhere eagerly await the next step.
Straying from the political spectrum of things, what is the general American consensus on internet gambling? According to an article written by Steven Crist in Washington times, in 1998 56% of Americans were shown to endorse gambling, and a mere 25% of non-gamblers claimed to have moral objection to it. Current estimates show that Americans will generate $600 billion in gambling wagers. iMEGA suggests that these extra finances could be used toward under funded social reform programs.
Because of the abundance of American gamblers, it will become increasingly difficult to enforce the UIGEA. Foreign internet gambling sites provide an indisputable loophole for gamers, as they are not obligated by law to prevent Americans from making use of their institutions. Again, the business will more than likely be sent overseas. If ever there were an appropriate time for the American sense of capitalism to surface, it’s now. In the meantime, if you are unfortunate enough to live in Michigan, Illinois, Louisiana, Oregon, Washington, Wisconsin, Indiana, Nevada, South Dekota, New Jersey or New York, there are organizations awaiting your support in the good fight.
In short, the future for online casinos bodes well. The organizations that fight for your virtual liberties are gaining support daily, and the resources for additional information can be found swarming the internet. The increasing need for an economic stimulus certainly does not hinder this concept. The hope lingers that eventually our elected officials will no longer dictate how its citizens spend their already taxable income.
