Support building for legal online gaming

Apr 28, 2009 5:10 PM
by David Stratton |

Harrah’s said to have hired Internet guru

Although it can hardly be called a groundswell, the movement to legalize online gambling in the U.S. seems to be gaining momentum.

Harrah’s Entertainment reportedly has hired the former top executive of an online poker company, apparently in anticipation of the possible repeal of the current ban on Internet gambling.

According to published reports, Mitch Garber, the former CEO of Party Poker, was hired to head Harrah’s Internet Operations and World Series of Poker Division.

Before the current crackdown on Internet gambling, Party Poker was a title sponsor of the World Series of Poker.

In the U.S. Congress, Rep. Barney Frank may introduce as early as this week legislation that would effectively repeal the Unlawful Internet Gambling Enforcement Act (UIGEA) and create a complete licensing and regulatory framework for the online gambling industry.

The UIGEA was passed in late 2006 and requires U.S. financial institutions to block payments from U.S. citizens to Internet gambling companies. It didn’t go into effect until this year.

In California, elected officials aren’t waiting on Congress to act. They’re putting together a rough draft of a bill, The California Online Poker Law Enforcement Compliance and Consumer Protection Act, which would establish an intrastate, online poker network for California players.

But the critical legislation is Barney Frank’s Internet Gambling Regulation and Enforcement Act, which he originally introduced in 2007, but it was never acted upon.

In an interview with The Hill, Frank said he planned to re-introduce the bill "definitely" in April. Frank is chairman of the powerful House Financial Services Committee, whose industry members are banks and credit card companies that have been charged with the nearly impossible task of interpreting how to enforce the UIGEA.

Although a final text of Frank’s bill has yet to be released, political insiders have said his bill would remove the ban on Internet gambling, and would regulate the practice as well as tax it, providing new revenues for the federal government.

A recent study released by PricewaterhouseCoopers revealed that taxing and regulating the Internet gambling industry could bring up to $52 billion in revenue for the U.S. government over a 10 year period.

The amount, however, would be contingent on whether professional sports leagues choose to allow betting on their games. Historically, the NFL, NBA and NCAA have been vehemently opposed to any form of betting on their contests.

Because of the opposition from college and most professional sports, some have argued that a bill that legalizes only online poker would stand a better chance of being passed than blanket legislation like Frank’s bill.

In 2007, Rep. Robert Wexler of Florida introduced the Skill Game Protection Act, which would have exempted poker, bridge, chess, mah jong and other player versus player games from the UIGEA and the Wire Act.

The bill underscored a key distinction between online casinos, in which the betting is mostly the player versus the house, and online poker, where contestants battle each other. Like Frank’s bill that year, Wexler’s bill was not acted upon.

The regulations of the UIGEA went into effect on Jan. 19, 2009, but the banks and other financial institutions have until Dec.1 to come into compliance.

Some members of the banking and credit card industry have complained that they’re not equipped to serve as a law enforcement agency, and that it’s nearly an impossible task determining which payments are legal and which aren’t.

For instance, the blocking of Visa and MasterCard payments has led to complications for state lotteries in North Dakota and New Hampshire, where customers trying to buy lottery tickets are often declined.

Question? Comment? E-mail me at: David Stratton