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HomeNewsFeaturesUseful LinksAbout Subject: PokerBarton’s iPoker Bill Released
June 24, 2011
By Noah Stephens-Davidowitz
Representative Joe Barton has released the current full text of his proposed bill to license and regulate online poker in the United States. If passed, the bill, named the “Internet Gambling Prohibition, Poker Consumer Protection, and Strengthening UIGEA Act of 2011,” would allow for the licensing and regulation of online poker alone.
The bill as currently written would amend federal laws that relate to online gambling to explicitly allow licensed sites to spread online poker. It would provide federal and state governments with regimes to license and regulate such sites. It would also make some minor changes to federal law to more strictly enforce the prohibition of forms of internet gambling other than poker. The bill has not yet been introduced to committee, but Barton is expected to do so soon.
Below is Subject: Poker’s early analysis of the bill:
Contents
1.Regulations
2.Timetable
3.State Opt-Outs
4.Difference from Previous Legislation and Chance of Success
5.Tougher Laws on Other Internet Gambling
Regulations
As is common in regulatory legislation, the bill is quite vague in many respects, leaving much of the detail of how licenses would be granted and what regulations would be in place to the various regulators. The actual licensing and regulating is largely handed off to state regulatory bodies, and the Secretary of Commerce is given the task of choosing these agencies and overseeing them through a new Office of Internet Poker Oversight. It provides only vague guidance as to how state regulatory bodies should be selected.
However, the bill is not silent on all regulatory matters. Here are the matters where it does weigh in:
1.Cheating. The bill would require licensing agencies to approve sites’ practices for catching cheaters, and it would make violating the rules of the site to gain an advantage a federal crime, punishable by a fine and/or up to three years in prison. It would explicitly outlaw the use of bots and collusion, but it does not mention other forms of cheating. Contrary to popular belief, it would not outlaw the use of tracking software, HUDs, or similar software unless the rules of the site ban them explicitly.
2.Eligibility for licensing. Though the regulatory agencies are largely responsible for deciding who would be eligible to get a license, the bill does require that anyone receiving a license in the first two years after the licensing begins have run an appropriately large licensed gambling facility in the US for five years prior to their licensing. A facility is appropriately large if it has at least 500 gaming devices (e.g. slot machines or video poker), is licensed to operate at least 250 poker tables, or processed at least $200 million in bets on horse racing during any three-year period. So, for the first two years after the bills passage, only very large and established gambling companies would be allowed to receive licenses. After two years, the Secretary of Commerce can amend these rules as he sees fit.1
3.Age requirement. Only people over the age of 21 would be able to play poker online under the terms of this bill. Younger players would not be able to collect any winnings if they did play and were caught, but they would remain responsible for any losses.
4.Self-exclusion. The bill would allow players to self-exclude themselves and it would create a master self-exclusion list so that a player who requests that he not be allowed to play on one site would not be allowed to play on any licensed site. As with underage players, self-excluded players who someone managed to play and were caught would not be able to collect any winnings but would still be responsible for any losses. Self-exclusion would be allowed permanently or for a limited time.
5.No child support delinquents. People who owe money for child support would not be allowed to play online poker on licensed sites. As with underage players and self-excluded players, if they did manage to play, they would be responsible for any losses but would not be allowed to collect any winnings if caught.
6.No credit cards. The bill would explicitly ban the acceptance of credit card payments by licensed online poker sites. It would further ban them from accepting deposits from a payment processor that accepts credit card payments.2
Timetable
If passed in its current form, the bill would set up a remarkably fast timetable. After passage, the Secretary of Commerce would have at most 180 days to prescribe final regulations. The Secretary of the Treasury would also have at most 180 days to amend various Treasury regulations to account for online poker, and the Director of the Financial Crimes Enforcement Network would have at most 120 days to establish a list of unlicensed gambling sites. After those three tasks finish, licensing of online poker sites could in theory begin, and this could conceivably happen even before the 180 day deadline. However, because the bill gives the Secretary of Commerce complete control over which state agencies would be allowed to license sites and when they would be given this ability, the Secretary ultimately would decide when licensing would begin.
State Opt-Outs
As is the case with all such federal legislation, the bill ultimately allows individual states to decide whether they would participate. Under the terms of this bill, each state would automatically be included unless its governor chose to opt out. If a governor does so, residents of his state would not be allowed to play on licensed sites. Since state governments are not guaranteed to act on all issues, this “opt-out” method is more favorable to gamblers than an “opt-in” method, which would require state governments to explicitly allow their residents to participate. However, other bills would require state legislatures to pass laws in order to opt out. That form of opt-out is generally considered to be more favorable to gamblers because it is much easier for a governor to act than a legislature.3
Difference from Previous Legislation and Chance of Success
The bill is distinct from the Campbell-Frank bill in that it explicitly legalizes, licenses, and regulates online poker only and contains provisions to increase enforcement on the prohibition of other internet gambling. This approach is widely believed to have a higher chance of success. Some congressmen, including staunch gambling opponent Senator John Kyl of Arizona, have expressed a willingness to compromise on poker in exchange for tougher laws on other forms of internet gambling.4
Representative Barton is a Republican from Texas’s six district, and has been in Congress for over 26 years. He is the second most senior Republican in the House Energy and Commerce Committee, which is chaired by Representative Fred Upton, a Republican from Michigan. While the Campbell-Frank bill was introduced in the House Financial Services Committee, the Barton bill is expected to be introduced in Energy and Commerce. Financial Services is chaired by Representative Spencer Bachus, an opponent of online gambling, so many believe that Barton’s expected path will have a higher chance of succeeding. Barton has stated that Upton is willing to give his bill a hearing in committee, but it is not clear what Upton’s view of online poker is.5
In addition, many of the less popular aspects of the Reid bill are not present in Barton’s bill. For example, Reid’s legislation would have explicitly banned foreign players from playing on US licensed sites, but the Barton bill makes no mention of foreign players playing on licensed sites. So, presumably, the bill as passed would allow for this, although both the Secretary of Commerce and state regulatory agencies could presumably ban foreign players from participating. The bill would explicitly make running unlicensed sites illegal (see next section), so it does contain a “blackout period” similar to that of the Reid bill. However, this would only take effect thirty days after the bill is passed, and as explained above, the timetable for this bill is much faster than Reid’s proposed fifteen months. So, such a blackout period would presumably be much shorter under Barton’s legislation.
The bill does not provide for additional taxes on licensed online poker sites. Other proposed legislation, such as the Campbell-Frank bill, came with a companion tax bill and the Reid bill included tax provisions. Subject: Poker is working to learn if additional tax provisions will be included in this bill or in a companion bill.
Tougher Laws on Other Internet Gambling
In addition to its wide-ranging effects on online poker, the bill would strengthen other federal gambling law. While many argue that the current online gambling law is vague, this bill would make running an online gambling site without a license explicitly illegal. It would require the Director of the Financial Crimes Enforcement Network to identify illegal unlicensed online gambling sites, and it outlines an extensive procedure for doing so. It would then fine unlicensed gambling sites $1 million for each day during which they allow US players to play or the gross amount of wagers for US players accepted, whichever is larger. It also would establish an up-to-five-year prison sentence for operators of unlicensed gambling sites.
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This article is about the first publicly released draft of Representative Barton’s proposed online poker legislation. The bill is not law, and indeed, it has not even been introduced to committee. If it does pass, it will likely be modified quite heavily beforehand.
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