Momentum grows for federal online gaming regulation

21 June 2011
By Chris Sieroty

WASHINGTON, D.C. -- If Rep. Joe Barton had his way, it would be legal for Americans to bet money on online poker.

The Texas Republican, senior member of the House Energy and Commerce Committee and an avid poker player, is readying a bill that would legalize online poker and create a new federal regulatory agency to oversee the websites.

But Barton isn't the only lawmaker pushing the issue on the federal level.

Rep. Jim McDermott, D-Wash., will reintroduce legislation to tax licensed Internet gaming in the United States. His measure is a companion to legislation introduced by Rep. Barney Frank, D-Mass., that would legalize and regulate online gambling.

"Legalizing, regulating and taxing Internet gambling just makes sense," McDermott said. "Right now, the U.S. loses billion of dollars to off-shore gambling and illegal gambling rings because of an unrealistic and virtually unenforceable policy."

A spokesman for Barton on Monday said the bill is still being drafted and he expects it to be released next week, at the earliest.

"He is very serious about getting something done," said Sean Brown, communications director for Barton, who has faced angry, poker-playing constituents upset by the U.S. Department of Justice's April crackdown on PokerStars, Full Tilt Poker and Absolute Poker.

Federal officials claimed the websites violated a 2006 law banning payments for online gambling and requiring payment processors to block payments for online wagers.

Online poker is not illegal in the United States, but processing payments is.

While the bill would legalize online poker, other forms of Internet gambling and wagering would remain illegal. Barton describes his measure as a "consumer protection bill."

Under the legislation, online poker sites would have to be registered in a state where gambling is already allowed, such as Nevada. The Nevada Gaming Commission would be in charge of ensuring the sites operate within state guidelines.

Barton's bill would also create a new regulatory body to oversee Internet poker at a federal level.

"The current prohibition of online gambling has failed and made countless American vulnerable to fraud, identity theft and money laundering," said McDermott, who first introduced his legislation in 2009.

His revised bill's provisions include an incentive for states and tribes to participate in the form of a 6 percent tax on gambling deposits; two new revenue set-asides designating 25 percent of the funds for foster kids; and 0.5 percent reserved for historic preservation and the arts.

Tax incentives would be used to encourage illegal sites to operate within the law, while Internet gambling would not be part of the current tax exemptions given to the horse and dog racing as well as jai-alai.

McDermott said the revised legislation "would help states collect much-needed revenue."

Momentum grows for federal online gaming regulation is republished from