Reid Online Gambling Bill: Inside The Draft

UIGEA strengthened; foreign sites wanting US license must obey

by , Dec 3, 2010 | 3:47 pm

As word that Harry Reid was authoring his own poker/casino-friendly bill repealing UIGEA filtered through the press today, people in the poli-poker world have been itching for a look at the draft filtering around Capitol Hill.

Fortunately, the global gaming consultants at Gambling Compliance have not only had eyes on this constantly-changing document, they also have had ears on Capitol Hill itself.  The analysis of the Reid Online Gambling Bill by folks in-the-know is available on their website for paying subscribers.  Although a portion of the document summarizes stuff we learned from the Wall Street Journal article posted late yesterday, there is is a huge amount of new (and compelling) info from what we had available last night.  Probably the biggest surprise is a strengthening of the UIGEA mentioned the text of the leaked Reid bill, and not the complete repeal per early reports.

Top Ten Facts From Inside The Draft ->

1.  The “entities controlled by” casinos, race tracks, and slot makers would be “immediately eligible” to get licenses for online poker.  How soon is not clear.

2. The bill prohibits new US licensees initially from “pooling any player liquidity from any international poker networks.”  I’m not exactly sure what this means, but my take is that US licensees would not be able to pull in bankrolls from Full Tilt, Poker Stars, UB, or any foreign poker gambling site for some period of time.

3. US Department of Commerce would oversee regulation, but “the most well established” state and tribal authorties would gain power over “licensing, investigatory, and enforcement” issues.

4. US online poker operators would need to pay a ostentatious rake licensing fee on monthly customer deposits, “possibly as high as 20 percent.” Revenue to be split between feds, state that the poker player lives in, and the state the company operates from.

5. Spoiler! Bill wants “beef up enforcement” of UIGEA by requiring Financial Crimes Enforcement Network to submit a blacklist of “unlicensed Internet gaming enterprises” to the US Secretary of the Treasury.  Wasn’t this supposed to be an anti-UIGEA bill?

6. All current sites accepting bets from US resident better stop doing it upon bill passage if they ever “wished to participate in a legal US market.”

7.  In the draft version Gambling Compliance saw, the first US online poker operators could not get their licenses for at least 15 months.  After the 15 month period, there would be a 2 yr period where the US Department of Commerce could decide if they even wanted to open up the market to include those beyond established US gaming entities.

8. Collegiate scholarly types think there is some *serious* preferential treatment in this draft given to the largest state agencies such as Nevada and New Jersey, giving them automatic qualification and a jump on prospectives.

9. Tribals are pretty unhappy with the language of the draft, touting an analysis around around DC which states the bill is “rigged to ensure that Nevada immediately becomes the licensing hub, and that tribal gaming authorities will never be able to qualify.”

10. Clarification is given that both online betting for horse races, and intrastate internet sales of lottery tickets do not violate the 1961 Wire Act.

Keep in mind this bill is a rapidly “moving target”, peeps.  The lame duck session is set to continue at least through the end of next week; final draft of the Reid bill seems unlikely until the end of Congressional session.

In the words of John Pappas, Executive Director of the PPA, “Anyone who says he knows what the bill will be doesn’t know anything.”

7 Comments to “Reid Online Gambling Bill: Inside The Draft”

  1. Michael

    So current US-facing sites would have to pull out on day 1 or risk never being licensed, but legal sites can’t start for 15 months? This is a disaster.

  2. Dan Michalski

    dude, nothing’s a disaster. ever heard of a rough draft?

  3. Michael

    To be correct I guess I should say “in its current form, this is a disaster.” Of course, any bill that passes could be completely different from this draft.

  4. traction

    Bacchus and Kyl are disasters.

  5. Grange95

    As The Hitchhiker’s Guide to the Galaxy says:

    “Don’t Panic.”

    It’s far too early in the process to know what will get added, dropped, and revised. There’s a lot to like in this bill, not least of which is that it recognizes poker as distinct from gaming, and it sets up a framework for legal, licensed online poker with regulation and oversight. Once in place, online poker regulation and taxation could always be tweaked and cleaned up for players’ benefit, but it will be near impossible to end online poker. Finally, with switch of control of Congress, this might be the last best chance for online poker for 2-4 years.

    Let’s be cautiously optimistic, and see what the PPA and gaming industry lobbyists can do to improve the bill while also keeping it in shape that can realistically pass.

  6. Scarlet Robinson

    Love the The Hitchhiker’s reference.

    And agree.

    Watching sausage being made may be fascinating and informative, but pretty ugly.

  7. Scott Diamond

    If this bill passes I have a group of 10 cops that will start a company and offer our srvices to be the onlice Police! What do you think of that Mr Dan? Seriously we are looking into a business of this sorts if online gaming becomes legal in California.