Proposed Online Poker Bill At Federal Level Unveiled

Proposed Online Poker Bill At Federal Level UnveiledThe federal online poker bill proposed by Senators Harry Reid and Jon Kyl seeks to prevent online gambling except for Internet poker and off-track horse racing.

“The Internet Gambling Prohibition, Poker Consumer Protection and Strengthening UIGEA Act of 2012”  aims to reinforce current legislation including the Illegal Gambling Business Act (IGBA) and the 1961 Wire Act that was found by the U.S. Department of Justice in December, 2011 to be applicable only to sports betting. While allowing a specific carve-out for online poker and off-track betting, the proposed legislation would prohibit online casino games. However, online lottery sales would be allowed by individual states.

An Office of Online Poker Oversight (OOPO) that would fall under the jurisdiction of the Department of Commerce would be formed to oversee online poker regulations. Regulators would be appointed to carry out various functions, including the issuance of licenses. Each state would have the choice to opt-in through a voluntary election plan that would require approval of each state’s legislature. Should a state fail to take action, the presumption would be that of opting out. Though many Indian tribes act as their own sovereignty, they would be allowed to opt-in only if the state in which they reside opts in as well.

For the initial two years, only licensed brick and mortar casinos will be allowed to obtain a license to operate Internet poker sites. And for the first five years, any companies that serviced players from the U.S. following the enactment of the Unlawful Internet Gambing Enforcement Act (UIGEA) in 2006 will be blocked from entering the U.S. marketplace. This will likely prohibit sites like PokerStars from participating by partnering with U.S. casino companies. However, the five-year “bad actor” provision does permit such operators to become involved if they are able to prove in court that no state or federal laws were violated by their actions post-UIGEA.

Businesses will be forbidden from allowing public access to online poker in Internet cafes or similar busines establishments. Strict penalties are in store for any illegal online site operators. The current proposal calls for online poker site operators to be taxed 16% for “online poker activity.” States and tribes will receive 14%, while the federal government will get 2%.

The Reid-Kyl plan prohibits international participation in player pools. This is certain to cause much controversy and debate as the increased liquidity and revenue afforded by allowing worldwide access to U.S. poker websites is undoubtedly highly regarded by players and potential site operators.