King moves on U.S. internet gambling legalisation

The speculation in recent weeks that Republican Representative Peter King was about to launch a fresh federal online gambling legalisation bill was realised Thursday when the veteran Congressman introduced his Internet Gambling Regulation, Consumer Protection and Enforcement Act of 2013 to the House.

Interestingly, it covers the legalisation of all online gambling with the exception of sports betting…an inclusive effort that is likely to increase opposition to its passage.

King’s bill, which is available in full on the Poker Players Alliance and Quadjacks websites, references the US Department of Justice’s policy switch in December 2011 which conceded that the Wire Act applies only to online sports betting, an admission that set off a chain of events at state level that has seen Delaware, New Jersey and Nevada all introduce legalisation laws, and at least ten other states consider the possibilities.

Previous federal attempts to legalise online poker have failed due to political infighting, time constraints and opposition from states and tribal groups determined to protect their sovereignty.

King says his measure will help states and players to navigate the world of online betting with confidence.

“A common federal standard will ensure strong protections for consumers, protect against problem and underage gambling, and make it easier for businesses, players, lawmakers and regulators to navigate and freely participate,” he said in a statement.

“It [online gambling] is not uniformly regulated, the operators are not licensed, and consumers lack protection from fraud and abuse. With states approaching this issue piecemeal, it can lead to conflicting or inconsistent laws from state-to-state, varying levels of consumer protection, and a perverse incentive for a race-to-the-bottom on standards to attract gaming operators and revenues.”

King says the bill is designed to “…apply tough penalties to unlicensed operators… to put them and their off-shore, untaxed, unregulated services, out of business, forever” and to “shut down money launderers and criminals seeking to use internet gambling to move funds.”

The bill proposes the creation of an Office of Internet Gambling Oversight within the  US Treasury Department, and seeks to impose uniform safeguards against underage and compulsive gambling, and facilitate and control interstate online wagering.

King acknowledges the sensitivities around state’s rights, and has included provisions that enable individual states and tribal groups to opt out of the federal solution if they wish to do so.

Other provisions of the bill deal with regulations already in place in states like Nevada, Delaware, and New Jersey, which would be “grandfathered” into the federal framework, along with states that have existing regulations for online horse-race betting.

The American Gaming Association, which represents the major US land gambling groups, has pushed hard for a federal solution, albeit an exclusively online poker one. Its argument is that a federal framework is more efficient than what it has called a “patchwork” of different regulatory requirements in different states.

However, the King bill goes further than the Association previously envisaged, looking to legalise online gambling in general, with the exception only of sports betting.

Outgoing CEO Frank Fahrenkopf said that support for such a change would require reconsideration by his members, but the pace of developments at state level is already leaving the AGA behind.

The King bill is the latest, but not the sole, attempt to legalise online gambling at federal level; Rep. Joe Barton from Texas has his second online poker bill attempt in preparation for submission to the House at the end of June, and staffers of Nevada Senator Harry Reid have confirmed that he is working on a third attempt at legalising online poker and is trying muster Republican support.

Morgan Stanley predicts that by 2020, online gambling in the U.S. will produce the same amount of revenue as Las Vegas and Atlantic City markets combined: $9.3 billion.

The Poker Players Alliance action group consulted with Rep. King in preparing the legislation, and it is therefore hardly surprising that they have come out in support, applauding the politician for his initiative.

PPA spokesmen say the bill proposes similar arrangements to the Frank-Campbell legislative proposal which failed several years ago, albeit in a radically different political and enforcement environment.

Initial industry reaction appears to be that the attempt at federal control comes too late to stem the flow of states exercising their right to legalise if they wish, and that any federal attempt will now face strong opposition.

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