Frank Introduces Legislation to Undo the UIGEA

Barney Frank to Introduce Online Gaming Legislation Tomorrow
May 5, 2009
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May 7, 2009

Reps. Barney Frank, D-Mass., chairman of the House Financial Services Committee, and co-sponser Peter King, R-N.Y., unveiled legislation today that would enable Americans to freely gamble online.

“The government should not interfere with people’s liberty unless there is a good reason,” Frank said. “This is, I believe, the single biggest example of an intrusion into the principle that people should be free to do things on the Internet. It’s clearly the case that gambling is an activity that can be done offline but not online.”

The Unlawful Internet Gambling Enforcement Act (UIGEA) currently prohibits credit card companies and banks from processing bets placed on online gambling Web sites, though in actuality fails miserably.

The legislation will repeal language passed in 2006 and signed into law by President Bush that made it illegal for banks and credit card companies to process bets made on the Internet.

But Rep. Spencer Bachus, R-Ala., issued an opposition statement, trotting out his tired, “it’s for the protection of our youth,” argument, despite the fact that underage protections are rigorously enforced in the industry, and a recent study carried out by the Division On Addictions of the Cambridge Health Alliance, which is a teaching affiliate of Harvard Medical School, found that most individuals exhibit rational betting behaviour when playing online and do so moderately.

Yet, Bachus drones on, “If you put a computer in a teenager’s bedroom, or in a student’s dorm room at college, it’s a temptation that many fall prey to,” he said in his statement. “In fact, studies have shown that the earlier one begins gambling, the more likely it is he or she will become a compulsive problem gambler.”

But Frank said his bill will include safeguards to prevent underage or compulsive gambling and other illegal activity.

“The notion that a society should prohibit something entirely because of the possibility that children will abuse it is a terrible blow to liberty,” Frank said.

Among the safeguards in the bill is that any Internet gambling operator would be required to: ensure an individual placing a bet is of legal age (as defined by the law in the state or tribal area) and physically located in a jurisdiction that combats compulsive Internet gambling and money laundering, and protects privacy.

The Poker Players Alliance (PPA), chaired by former New York Sen. Alfonse D’Amato, supports the bill and said Wednesday in a press release that he is “grateful for Chairman Frank’s leadership and will be activating our grassroots army made up of over one million members to help him drive legislation.”

Read on for a summary of this legislation:

SUMMARY

The Internet Gambling Regulation Consumer Protection & Enforcement Act would establish a federal regulatory and enforcement framework under which Internet gambling operators could obtain licenses authorizing them to accept bets and wagers from individuals in the U.S., on the condition that they maintain effective protections against underage gambling, compulsive gambling, money laundering and fraud, and enforce prohibitions or restrictions on types of gambling prohibited by states, and Indian Tribes.

LICENSING

This bill would provide the Department of the Treasury with the exclusive authority to establish regulations and license Internet gambling operators. License applicants would be:

* Subject to review of their financial condition and corporate structure, business experience, suitability, and criminal background checks, and agree to be subject to U.S. jurisdiction

* Prohibited from accepting any type of bet or wager that is initiated or terminated in a state or tribal land that prohibits that type of Internet gambling, or any sports gambling or wager prohibited under the Professional and Amateur Sports Protection Act.

ENFORCEMENT

This bill would provide Treasury the authority to revoke or terminate the license of any operator who fails to comply with the bill’s provisions. Violators could be fined or imprisoned for up to five years, or both.

SAFEGUARDS AND PROTECTIONS

Any Internet gambling operator receiving a license would be required to have the appropriate safeguards in place to:

* Ensure an individual placing a bet or wager is of legal age as defined by the law of the State or tribal area in which the individual is located at the time the bet or wager is placed

* Ensure an individual placing a bet or wager is physically located in a jurisdiction that permits Internet gambling at the time a bet or wager is placed.

* Protect the privacy and security of individuals engaged in internet gambling

* Combat fraud and money laundering as prescribed by regulations issued by the Secretary of the Treasury or designee

* Combat Compulsive Internet Gambling