Internet Gambling Regulation Bills H.R. 2267, H.R. 2268 and H.R. 4976

Internet Gambling Regulation Bills H.R. 2267, H.R. 2268 and H.R. 4976

I have an idea. Myself and many others who follow these things are betting that H.R. 4976 that Congressman Jim McDermott (D-WA) has introduced, and was testified on Wednesday; a 'companion bill' to Congressman Barney Frank's (D-MA) H.R. 2267 and H.R. 2268 is not going to go anywhere. We'll look at some reason why later.

Assuming they can actually get rid of ludicrous modifications like the McDermott bill which would tax not only income but actually levy a percentage onto each bet, and assuming that the good Representative Frank can return his bill to its original purpose which was ostensibly to let Americans do as they see fit with their own money without being afraid of arrest and to regulate online gambling so people don't have to be afraid of getting ripped off or taken advantage of… if they can clean it up and make it right… Here's my idea and it's fighting fire with fire.

We can assume that a banking bill will be passed before the 4th of July. Representative Frank who heads up the Committee on Financial Services has assured us that he has cleared his calendar for June to make sure this happens. This is must pass legislation, much as the Security and Accountability For Every Port Act of 2006 (or SAFE Port Act) was a couple of years ago. See where this is going? Yup!


Let's just play the same slimy game that Leach, Goodlatte, Frist, and Kyl played on that fateful night in 2006 when they inserted the UIGEA earmark as Congress was on the eve of recess. Right before they convene for their patriotic (campaign) trips home lets slip a little earmark into the Banking Bill that looks a whole lot like Rep. Frank's undiluted original Internet Gambling Regulation and Tax Enforcement Act of 2009, but lets spiff it up a bit to patently legalize any form of gaming transaction at the interstate and international level unless it is prohibited by State law.

Problem solved! No need to repeal the UIGEA as it only applies to illegal gambling, which at present is sportsbetting. (According to Federal Law and Federal Court Case Law as far as anyone knows.)

Now back to why H.R. 4976 isn't or at least shouldn't go anywhere. It sucks. Plain and simple. First the Feds would collect a 2ax on any bet I placed at a licensed casino, and my state would collect another 6f they chose to and they would choose to. Please note I'm not talking about taxing income; the bill would apply a levy, a fee, on each wager… where is that 8oing to come from? You guessed it, straight off the Return to Player percentage (RTP) and straight onto the House Advantage. Is that a wolf in sheep's clothing? I can easily see on-land casinos supporting this portion as it effectively cripples the online competition's ability to compete.

Of course the bill would tax my winnings as well… I wouldn't mind that too much as long as I could 'income average' my casino wins and losses over a three year period… but that's another matter all together.

The 8enalty for operating online is of course in addition to the income taxes any US based (and possibly facing) operation would be forced to pay. (Under the current Frank bill casinos must agree to be under US jurisdiction to be licensed so we might assume that means they would be subject to US taxation.) The current players on land who will move into the online sector would surely be glad to absorb or pass on the 8oss for a couple of years until they get established and figure out how to get their exemptions - protectionist measures for good American Corporate Citizens.

And then there is the ludicrous provision that taxes an unlicensed (read offshore) casino 50f my deposits. Lovely, just lovely!

I really do applaud Rep. Frank's efforts but I'm afraid they just aren't going to come to much for the little guy who likes to play online - and diluting the original intent of his bill with this companion bill by Congressman McDermott may pick up a vote here and there (there were 70 on board as of Wed, 05/19/10) but it seems to be just another chip chip chip away catering to the existing on-land Moguls.


The following is Chairman Frank's testimony as prepared for delivery:

"Chairman Levin, Ranking Member Camp, thank you for the opportunity to testify today. H.R. 2267, the Internet Gambling Regulation, Consumer Protection and Enforcement Act, creates a legal framework for licensing and regulating online gambling and is designed to work in tandem with Mr. McDermott's bill, the subject of today’s hearing.

In 2006, the Unlawful Internet Gambling Enforcement Act (UIGEA) was enacted, which restricted the use of the payments system for Americans who sought to gamble online. I believe that it is an inappropriate interference on the personal freedom of Americans, and should be undone.

H.R. 2267, is designed to protect consumers without restricting their freedom. I have always believed that it is a mistake to tell adults what to do with their own money. Some adults will spend their money foolishly, but it is not the purpose of the Federal Government to prevent them legally from doing it. We should ensure that they have appropriate consumer protections and information, but otherwise allow people to pursue activities that they enjoy which do not harm others. As John Stuart Mill said in his essay, On Liberty in 1869:

"The only freedom which deserves the name is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs, or impede their efforts to obtain it. Each is the proper guardian of his own health, whether bodily, or mental or spiritual. Mankind are greater gainers by suffering each other to live as seems good to themselves, than by compelling each to live as seems good to the rest."

I am encouraged to have the strong support of my lead Republican cosponsor on this legislation, Congressman Ron Paul of Texas.

I have also been very pleased to have strong support for this legislation from the Ranking Republican and former Chairman of the Homeland Security Committee, Peter King, whose concern for public policies that protect us against terrorism is well known to many of us. His support for this bill is very important.
American consumers who wish to gamble online are currently without safeguards against fraud, identity theft, underage and problem gambling and money laundering. Some operators adhere to rigorous regulatory regimes in foreign jurisdictions, but U.S. customers have no local recourse if they have a problem.

And, more to the point for today's hearing, billions of dollars in taxes – both under existing law and those that would be established under Mr. McDermott's bill – remain uncollected. Enacting these bills would bring this industry out of the shadows, benefit consumers and ensure that all of the revenue does not continue to exclusively benefit offshore operators."

According to a press release by the House Financial Services Committee, Barney Frank Chairman;

Laudable efforts, but this writer is no where near convinced that Mr. Frank's side of the Rotunda can prevail as there are actually far more pressing things for Congress to be addressing and the other side of the House has nothing to lose by blocking this legislation.

I suggest they craft a workable earmark and slip the willy into the Banking Bill at the last minute before the 4th of July, or just before summer recess on August 9th. We'll just call it 'fair is fair' and the House edge.

Contributing Article Writer: lojo


Editorial Comment:
Summarization Of Current Internet Gambling Regulation Bills:

H.R.2267 - Internet Gambling Regulation, Consumer Protection, and Enforcement Act


Official Summary
5/6/2009--Introduced.Internet Gambling Regulation, Consumer Protection, and Enforcement Act - Grants the Secretary of the Treasury regulatory and enforcement jurisdiction over the Internet Gambling Licensing Program established by this Act. Prescribes administrative and licensing requirements for Internet betting. Prohibits any person from operating an Internet gambling facility that knowingly accepts bets or wagers from persons located in the United States without a license issued by the Secretary. Requires the Secretary to assess:
(1) fees against licensee institutions to cover the cost of administering this Act; and
(2) specified civil money penalties upon licensees or other persons for willful violation of this Act or related regulations. Cites safeguards required of licensees, including:
(1) tax collection related to Internet gambling;
(2) safeguards against fraud, money laundering, and terrorist finance; and
(3) safeguards to combat compulsive Internet gambling. Requires the Secretary and any qualified state or tribal regulatory body to prescribe regulations for:
(1) development of a Problem Gambling, Responsible Gambling, and Self-Exclusion Program;
(2) a list of persons self-excluded from gambling activities at licensee sites; and
(3) a program to alert the public to the existence, consequences, and availability of the self -exclusion list.Prohibits a person who is prohibited from gambling with a licensee from collecting any winnings, or recovering any losses that arise as a result of prohibited gambling activity.Shields a financial transaction provider from liability for engaging in financial activities and transactions on behalf of a licensee, or involving a licensee, if such activities are in compliance with federal and state laws. Permits states and Indian tribal authorities to opt-out of Internet gambling activities within their respective jurisdictions. Prohibits electronic cheating devices. Subjects violators of this Act to civil and criminal penalties.

H.R.4976 - Internet Gambling Regulation and Tax Enforcement Act of 2010


Official Summary
3/25/2010--Introduced.Internet Gambling Regulation and Tax Enforcement Act of 2010 - Amends the Internal Revenue Code to:
(1) impose an Internet gambling license fee on Internet gambling operators and an additional tax on unauthorized bets or wagers;
(2) require such operators to keep daily records of gambling deposits and file informational returns identifying themselves and the individuals placing bets or wagers with them;
(3) require operators to pay state and Indian tribal governments a 6ee on gambling deposits;
(4) require withholding of tax on net Internet gambling winnings and on the gross amount of winnings of nonresident aliens; and
(5) extend the excise tax on wagers to include wagers placed with the United States or any commonwealth, territory, or possession by a U.S. citizen or resident. Directs the Secretary of the Treasury to make grants to states to carry out an American Heritage Program through state arts agencies. Allocates .5f the tax revenues attributable to Internet gambling to the American Heritage Block Grant Fund to finance the American Heritage Program. Amends the Social Security Act to establish the Transitional Assistance Trust Fund to finance state plans for transitional education and job training assistance to individuals who are, or were formerly, in foster care. Allocates 25f the tax revenues attributable to Internet gambling to the Trust Fund.

H.R.2268 - Internet Gambling Regulation and Tax Enforcement Act of 2009


Official Summary
5/6/2009--Introduced Internet Gambling Regulation and Tax Enforcement Act of 2009 - Amends the Internal Revenue Code to:
(1) impose an Internet gambling license fee on Internet gambling operators and an additional tax on unauthorized bets or wagers;
(2) require such operators to file informational returns identifying themselves and the individuals placing bets or wagers with them;
(3) require withholding of tax on net Internet gambling winnings and on the winnings of nonresident aliens; and
(4) extend the excise tax on wagers to include wagers placed within the United States or any commonwealth, territory, or possession by a U.S. citizen or resident.

Interesting stuff, thanks for posting.



:-*