New Federal Internet Gambling Proposal Introduced

Posted on June 7th, 2013 by Todd Wilkins

Peter King Proposes New Federal Internet GamblingRep. Peter King has introduced a new federal online gambling bill that aims to satisfy all gaming interests involved by permitting equal participation.

Casinos, racetracks, Indian tribes and state lotteries would all have the same opportunities to operate online gaming websites under the New York Republican lawmaker’s proposal. King’s 134-page Internet Gambling Regulation, Enforcement, and Consumer Protection Act of 2013 would regulate both online poker and a full menu of casino games. Sports betting has been left out of the mix pursuant to the DoJ’s 2011 ruling.

Congress will now formally consider online gambling, which is already a step ahead of the last legislative effort. Many will recall that the Reid-Kyl proposal bandied about in late 2012 never was introduced despite receiving a substantial amount of press coverage. This marks the first time that federal lawmakers will debate Internet gambling since new legislators took office following the November 2012 elections.

The bill calls for all 50 states to be included in the plan. Those who wish to exclude themselves from participation need only to opt out within 120 days of enactment. Utah is thus far the only state that has taken the bold step of already opting out of any federal online gambling regime by passing legislation more than a year ago. Other traditionally conservative states are likely to follow. But it is believed that a majority of states will elect to follow the federal government’s framework.

Opting out will not prevent states or Indian tribes from offering online gambling. The freedom to operate Internet gaming regimes of their own within the confines of their particular state is still permissible. California lawmakers have previously discussed such a scenario, much to the chagrin of the rest of the country. With over 38 million residents, California would be the crown jewel of any federal plan that encompasses the entire country.

While states would work together to increase player pools for online poker under King’s proposal, the bill does not permit international participation. Rest-of-world players would be left out of the loop, which is at least one provision of the bill that is bound to receive considerable opposition. Perhaps an amendment to the statute can be approved somewhere down the road.

Nevada, Delaware and New Jersey have already been hard at work at enacting legislation at the state level. Their efforts will not be for naught, as King’s proposal calls for such states with existing regulations to to be grandfathered into the federal scheme. Any states who are currently considering online gambling legislation and happen to approve such regulations prior to the enactment of the federal plan would also receive the grandfather status.

An Office of Internet Gambling Oversight would be created to oversee that regulatory standards are met. Said office would issue licenses for five-year periods. In order to avoid another Full Tilt fiasco, the account balances of players would be required to be segregated from the operating accounts at each site. The bill also calls for substantial fines to be thrust upon site operators found to be operating without proper authorization.

Federal funding will be earmarked for gambling addiction programs. Safeguards to prohibit underage online gambling and cheating are also in place under King’s proposal. The tax rate assessed to online gaming operators has not yet been established, with details of a financial nature likely to be worked out in subsequent bills.

Many may be wondering the prospects of King’s bill finding approval in Congress. It is difficult to gauge how the proposal will fare so early after its introduction. What is known is that the measure will need Republican support. The GOP has stalemated past efforts at online gambling legislation. The latest bill differs from previous proposals in that it goes beyond poker-only to include all casino games. Whether that may sway or continue to deter Republican legislators will be determined following debates on the proposal.

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