What Next for Online Gaming in the U.S.?

30th November 2009 9:46 am GMT

With Friday's confirmation of a six-month delay in the full implementation of the Unlawful Internet Gambling Enforcement Act (UIGEA), Gaming Intelligence asked some of the industry's leading figures about their hopes for a more liberal U.S. market.

"This will give us a chance to act in an unhurried manner on my legislation to undo this regulatory excess by the Bush administration and to undo this ill-advised law," was the response from online gaming champion Rep. Barney Frank to the statement by the Federal Reserve and Treasury Department.

But while lobbyists such as the Poker Players Alliance hailed the news as a sea change in government policy, there is little in the two agencies' joint statement to suggest their attitude towards online gambling has changed. Internet gambling remains illegal but those banks, credit card companies and other financial institutions, which were most affected by UIGEA, will breathe a sigh of relief.

Whether this is the starting shot in a period of momentous change or just a short delay to allow some tweaks to a flawed act, Gaming Intelligence used the opportunity to look beyond Frank's internet poker bill to a more liberal US market. We asked some of the industry's leading figures: What would be your fantasy gaming bill? And back on planet earth, what do you think will happen?

Clive Hawkswood, chief executive, Remote Gambling Association
"Ideally we want a central licensing system covering online gaming and online sports books with a non-discriminating licensing regime where anyone can get a licence if they meet certain standards.

"Unfortunately, there's no short term prospect of a full licensing regime for sports books. We'll get online casinos and online poker but we'll have to wait for sports betting. It's disappointing but you get a toe in the door and make the right noises and try and impress the regulators and politicians then a few years after you can look at sports betting."

Mark Davies, managing director and co-founder Betfair
"Clearly, in an ideal world we would like to see the US market open up for all the products Betfair is currently offering to consumers around the world, but realistically we understand that it is likely in the first instance that poker will be covered by legislation rather than anything else.

"From our side, we believe that our job is to educate policymakers about how to craft a legislative, regulatory and fiscal environment that will do what government actually wants: protect consumers, and at the same time raise millions of dollars of badly-needed tax revenue for federal and state government. Ultimately, the current position sees everyone lose out: consumers are forced to black markets where they aren't protected; operators like us don't get to play; and the government gets no benefit and solves none of the potential problems it would want to address.

"It is not clear at this point what the prospects are for getting such legislation passed during this Congress. What is clear is that millions of US residents are playing poker today by accessing sites that are located outside of the US, depriving consumers of social and financial protections and depriving US government entities of their fair share of tax revenue. The US is in critical need of legislation and Betfair will do our part to drive such legislation."

Anthony Cabot, partner and practice group leader of the gaming law practice, Lewis and Roca, Las Vegas
"My bill would be relatively straight forward. Any state or Native American gaming authority could license either operators or backend providers. There would be no licensing at the federal level.

"There would be a single federal tax. The tax, however, would be shared between the federal government and the state where the player is physically located (a source market fee). This would require that the backend providers adopt standard protocol for geo-location verification as well as for age verification, prevention of problem gambling, player protection etc.

"The standard protocols would be set by federal regulations. Any state or native American gaming authority that fails to enforce the regulations could lose their rights to license and regulate internet gambling. This would occur by the federal government initiating procedures in federal court to revoke such rights.

"Gaming authorities that license operators and backend providers can collect licence fees set by federal statute for licensing and regulation. Licensed backend providers can only service licensed operators. Non-licensed operators cannot advertise in the United States or provide services to persons located in the United States.

"All forms of gambling would be permitted - sports, casino, lotteries and poker. States could opt-out and licensed operators could not offer their services in those states."

Kevin de Haan QC, barrister Francis Taylor Building, London
"The Frank bill still leaves it to state legislatures to decide regulation. It disapplies the UIGEA to any enterprises that are licensed but it will only open the market to poker players. Why stop there?

"The economy is driving everything. There is a growing realisation that tapping into the global online gambling market will unlock massive sources of hitherto untapped tax revenue. Why let the mob have it?

"Other changes militate in favour of liberalisation. Firstly, Democrats now dominate the executive and legislature. But even Republicans are waking up to the idea that US policy on internet gambling is a mess and needs to change. And the domestic gambling industry is waking up to the idea that liberalisation of the internet market may give a much-needed boost to the land-based industry and grow the overall cake.

"But lots of questions remain. Are the Democrats more pro (or less anti) gambling or just opportunistic pragmatists? Is the Influence of the Religious Right waning?

The influence of the domestic industry lobby remains strong but it is possibly waning. Is the New York Campaign over or just on hold?

"If at first you don't succeed - Frank's second legislative attempt looks more promising. This Bill offers the best prospect for hobbling the UIGEA but is unlikely to be implemented (if at all) before 2010."

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