Reactions to Frank's Bill Signals Uphill Battle for Online Poker Players

The mixed reactions to H.R. 2046, the bill Rep. Barney Frank (D-MA) introduced last week to repeal the Unlawful Internet Gambling Enforcement Act (UIGEA), is a telltale sign of the uphill battle the bill will face to pass, and indicates how important it is for individual poker players to contact their legislators to indicate their support.

The UIGEA, passed last October, prohibits financial institutions to process transactions between US residents and any form of Internet gambling that is illegal under U.S. federal or state law. Details how financial institutions are supposed to enforce the bill are due by July 10.

The Internet Gambling Regulation and Enforcement Act of 2007 (IGREA) that Frank introduced last week would allow gambling companies to take online bets from US residents as long as they implement safeguards for compulsive gamblers or children.

Pressure is mounting on the US government from the World Trade Organization (WTO) over the issue can only help the bill's passage. The WTO ruled last month in the case Antigua brought against the US for protectionism, that the ban was illegal because certain domestic activities, including horseracing, were exempt, making it discriminatory against foreign companies.

Since the US is engaging the WTO in a case against China, the US can hardly ignore WTO's ruling in the Antigua case that they must take corrective action, if they want China to follow WTO's rulings in favor of the US. On April 9th the US announced they would file two formal complaints against China with the WTO. The US alleges that China's standards for the protection of intellectual property and its restrictions on imports of foreign media products are inconsistent with WTO rules.

The American Gaming Association (AGA) supports regulation of the online gaming industry. Following its Board meeting over the issue, in January 2007 Helen Thomsen of the association stated, "The AGA supports a study of online gambling in the US being congressionally funded. Such a study would look into how online gambling could be properly regulated and controlled. We are pursuing the matter with the new Senate and hopefully a study could begin in the next few months."

Also, 2008 Republican US Presidential candidate Ron Paul is on record as one of 17 Republicans who voted against the bill, and is the only Republican who voted against it now serving on the House Financial Services Committee.

A powerful plus for the bill's passage is that Frank's bill envisages a licensing regime enabling the US government to collect taxes on online gambling.

The Guardian quoted Investment firm Friedman Billings Ramsay saying it that taxing online betting could raise an estimated US$20 billion (about 10.04 billion GBP or 14.7 billion Euros) over five years for the US treasury. Because the US is seeking funds for projects such as the troubled Social Security funds, the tax revenues the bill can generate may allow both political parties to get behind the bill.

Dollars are definitely what is at issue here.

Pulitzer Prize-winning writer George Will pointed out in a Newsweek article last year that state governments are "America's most relentless promoters of gambling," and that "the strong racehorse lobby comes second by a nose" in supporting protectionist UIGEA's passage last year.

Will pointed out that "Forty-eight states (all but Hawaii and Utah) have some form of legalized gambling. Forty-two states have lottery monopolies. Thirty-four states rake in part of the take from casino gambling, slot machines or video poker."

So unless state governments can obtain some of the tax revenue that Frank's bill proposes to generate, they will strongly oppose the bill.

Additionally, Gordon Price, owner of several pro-online gaming portals, expressed his belief to the Guardian that the native American lobby was instrumental in pressing for the UIGEA as a way to protect revenues at casinos on tribal land. "Every day, new laws are being implemented allowing new slot parlours and casino games across the country" Price stressed.

So besides the strong horse betting lobby, opposition is expected from the equally strong native American lobby group.

Then there is the significant indifference to the bill which Frank anticipated would not make passage of the bill easy.

The Democrat leadership, including speaker Nancy Pelosi, have expressed little enthusiasm for Frank's bill. And as Harry Curtis, a leisure analyst at JP Morgan, points out, "Most politicians simply don't want to have their names associated with gambling."

This could be the biggest crippling factor to the bill's passage- that no politician wants to be perceived as publicly supporting gambling by supporting the bill.

It could also be precisely why Frank said he did not plan to actively sell the bill on the Hill and would instead rely on outside groups to sell it for him.

Frank revealed a major key for getting his bill passed is to have great numbers of online gamblers' voices heard by their legislators, when he said, "I'm going to let the voters do this one."

To that effect, the Poker Players Alliance (PPA) offers a template of a letter to modify and send to legislators, as well as talking points to support the bill.

Several online gambling sites have introduced petitions to sign to show support for the bill- such as one called thepetitionsite- click here to visit the site.

Online poker players are being strongly urged to voice their support of Frank's bill.

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