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Joe Barton reveals content of HR2366

After weeks of publicity prepping and industry speculation, the Republican representative from Texas, Joe Barton, launched his online poker legalisation proposal Friday, achieving massive mainstream media coverage from a press conference in Washington DC. Coded HR2366, the Online Poker Act of 2011 was introduced to the House of Assembly Friday through the House Energy and Commerce Committee, as had been widely predicted.

The bill has strong initial and bipartisan support from 11 representatives including Shelley Berkley (D-Nev.), John Campbell (R-Calif.), Steve Cohen (D-Tenn.), John Conyers (D-Mich.), Barney Frank (D-Mass.), Michael Grimm (R-NY), Mike Honda (D-Calif.), Peter King (R-NY), Ron Paul (R-Tex.), Ed Perlmutter (D-Col.) and Linda Sanchez (D-Calif.).

Introducing his bill, Barton commented: "Poker is an all-American game, and it's a game that requires strategy and skill.

"Millions of Americans play poker online. ... We want to have an iron-clad system to make sure that those who play for money are playing in an honest, fair system where they can reap the benefits of their winnings. To put it simply, this bill is about having the personal freedom to play a skill-based game you enjoy without fear of breaking the law."

Congressmen Campbell and Frank, who have their own and wider online gambling bill in progress, gave their approval to Barton's bill, reports Associated Press. The Poker Players Alliance, which assisted Barton in drafting the legislation, has also expressed its approval.

"I don't happen to gamble myself, but freedom is not about legislating what I like to do and making illegal what I don't," Campbell said in a press release. "Freedom is about allowing responsible Americans to do what they happen to enjoy."

The bill (again as predicted) seeks to form an Office of Internet Poker Oversight within the U.S. Commerce Department, tasked with overseeing state agencies empowered to issue licenses.

Many of the other provisions of the bill have been either leaked or speculated upon in past weeks, and include:

  • The bill is federal in nature, and automatically covers all US states, unless individual state legislatures decide to opt out. States retain the right to legislate their own intrastate online poker, but only if the state concerned has passed a law establishing such practices before the federal law is enacted.

  • An apparently protectionist provision that is bound to ignite controversy is a proposal that for at least the first two years, the only companies able to obtain a licence will be major land-based casinos, race tracks and card rooms located in the U.S. After the initial two week period the Commerce Secretary would have authority to widen this provision.

The bill sets out the requirements for licensees in those initial and advantaged years as: “For the first two years of the program, only current holders of state or tribal issued gaming or racing licenses who have substantial land-based gaming operations could be primary licensees.”

  • The Barton bill explicitly prohibits all other forms of Internet gambling that is not already legal under current laws.

  • Another provision that is likely to be criticised as impractical in an internet environment is a requirement that credit cards will not be accepted when players seek to deposit.

  • Minimum age limit to play online poker will be set at 21 years.

  • Self-exclusion facilities must be provided to players. “Each qualified state agency shall establish and maintain a list of persons self-excluded from playing internet poker through internet poker facilities licensed by the qualified state agency. Each week, each qualified state agency shall submit to the Secretary a current copy of the list,” the proposal stipulates.

  • Licenses will have a life of five years, with serious punitive measures applied to any unlicensed operators who offer their services to US residents.

  • Operators applying for licensing would have to prove that they are fair, able to screen out minors, ensure tax collection and prevent money laundering in order to secure licenses.

  • Stiff criminal and punitive measures will be introduced to guard against cheating and even the use of bots; these may include fines, imprisonment up to three years and exclusion from any further participation. It is not clear how these measures will be interpreted or implemented.

  • US licensees will have to locate servers and other internet hardware resources within the United States.

  • Where an operator's licence is revoked, player funds must be repatriated to them within 30 days.

  • Importantly, the bill also seeks to establish exactly which websites are regarded by the US government as illegal in terms of applying the Unlawful Internet Gambling Enforcement Act. It requires that the US Treasury Secretary publish a list of unlawful Internet gambling sites. Whilst this puts pressure on the government to more clearly define what it regards as illegal, it should make the task of enforcement by banks and financial institutes easier and avoid 'over-blocking' by confused banking officials.

  • In a related provision, the bill also requires the Financial Crimes Enforcement Network to create a list of illegal offshore Internet gambling operators that would be blocked from receiving transfers from U.S. financial institutions in terms of the UIGEA.

The political publication The Hill commented that the two year advantage given to large US gambling companies effectively means that the corporations that currently control the U.S. gambling industry will likely dominate online in the short term.

The trade body that represents the interests of the major American land-based operators commented: "Although the American Gaming Association has not endorsed any specific legislation on this issue, we are pleased that Rep. Barton wants to protect American consumers and understands the need for regulating online poker in our country.

"The millions of Americans who are playing poker online deserve to know they are playing safely with law-abiding operators, but strong enforcement of illegal operators and unambiguous U.S. laws governing online gambling are equally vital."

It is not at present known how the Barton bill will integrate with online gambling taxation proposals introduced earlier this week by Rep. Jim McDermott in bill HR2230.

HR2230 appears to require US-licensed online poker operators to withhold 28% of all net winnings. To ensure tax is withheld, poker sites would be required to provide the names, addresses and tax identification numbers of all players to the government.

In addition, licensed operators will have to provide tax-relevant information on gross winnings, gross wagers and gross losses on each person for every calendar year, and the amount of tax withheld on these winnings.

There is also a 2% tax on the online poker operator, and individual states are permitted to tax at up to 6%.

These rather draconian taxation requirements are unlikely to sit well with internet players accustomed to a more economical and free-wheeling environment.

Representative Barton's staff thoughtfully included a "talking points" addendum to the official statement launching HR2366.

One of the interesting nuggets of information in this addendum implies that certain states with the most history in regulating the most gaming - Nevada and New Jersey - regulated more than 5% of total U.S. gaming for three of the previous five years, and would therefore be eligible to issue federally-appoved licenses, whereas other states would have to make application.

Nevada recently passed legislation tasking the Nevada Gaming Board with preparing regulations for online poker subject to federal legalisation.

However, in what seems to be something of a contradiction, the Barton bill also notes: “Notwithstanding any other provision of law and subject to the provisions of this title, a licensee may accept a bet or wager with respect to internet poker from an individual located in the United States.”

How major online poker operators offshore will fare under the Barton bill is also open to argument; consider this guide for the approval of licensees: “In carrying out a suitability analysis of a person…a qualified state agency shall consider whether such person operated an internet gambling facility before the date of the enactment of this Act and the scope of such person’s activities with respect to such operation.”

Licensing bodies are also enjoined to demand highly detailed information from prospective licensees, such as financial records, criminal history, and business and regulatory compliance plans.

Source: InfoPowa News

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