Frank Gaming Bill Prospects Bleak, Gaming Lawyers Warn

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Frank Gaming Bill Prospects Bleak, Gaming Lawyers Warn
by No Luck Needed member ttwna2k for NoLuckNeeded.com

Renewed moves by Congressman Barney Frank to overturn the United States’ ban on online gambling face long odds of gaining traction in Washington DC, a gathering of international gaming law experts was told yesterday, with state-by-state regulation considered a more likely way forward.
A new federal measure expected to be introduced in the coming weeks by House Financial Services Committee chairman Barney Frank remains a long shot to gain passage in Congress, warned Pat O’Brien, a Florida-based internet gambling law expert with the firm Greenberg Traurig.

State-level moves to regulate online lotteries and poker games within state borders remain more viable proposals - with incumbent operators in those states’ land-based gaming sectors also likely to be permitted to move online ahead of offshore competitors, O’Brien told the International Masters of Gaming Law (IMGL) Spring Conference held alongside the Canadian Gaming Summit in Windsor, Ontario.

Congressman Frank told reporters on Tuesday that his latest legislative measure to counter the Bush administration’s 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) could be unveiled as early as next week . It remains unclear whether his promised bill will signify a full repeal of the UIGEA, which effectively bans payments to and from online gaming websites, or whether it will propose a federal licensing and regulatory system for internet gambling activities – with the possible exemption of sports betting – along the lines of that first proposed, unsuccessfully, by Frank in July of 2007.

Regardless, the measure is unlikely to succeed where Frank’s previous moves against the UIGEA have failed, according to Greenberg Traurig’s O’Brien. “I don’t see Barney Frank’s bill going anywhere,” O’Brien told delegates. “I see [legalization of online gaming] happening state-by-state, with one or two states then getting together and saying let’s share poker players and let’s share lottery players.”

A federal move to regulate internet gambling would have to overcome the ever-thorny issue of states’ rights, noted Mark Clayton, Las Vegas-based attorney with Lionel, Sawyer&Collins.

In the wake of Frank’s 2007 proposal, forty-five state attorneys general wrote to House and Senate leaders urging them not to pass a federal online gaming bill, but O’Brien said that the increasingly parlous budgetary positions of state governments meant there were fewer obstacles to internet gambling moves at the state level.

“It all comes down to money... when legislators’ need for money surpasses any morality issues, then they legalize,” O’Brien said, adding that internet gaming is thus likeliest to be approved first in those states where budgetary constraints are tightest including Nevada, California and possibly New York.

Proposals oriented towards the possible legalization of online poker have already been mooted in California and in Florida, but O’Brien said that he thought the charge online would begin first with internet lottery sales, followed by “more imaginative lottery products,” and then on to bingo, poker and possibly also casino-style gaming, with incumbent operators within the individual states likely to be licensed ahead of any foreign firms.

“What already exists offline is what will be allowed to exist online,” O’Brien told Canadian Gaming Summit delegates. “States do not want to create a new bureaucracy by regulating a whole new industry, so it will be the existing operators. If people currently offshore think that they’re going to come onshore then they’re dreaming.”

Legalization in just one or two US states would likely produce a domino effect, he added, which could then prompt some degree of limited action at a federal level similar to the framework currently in place for internet horserace betting, which is specifically exempted from the UIGEA. Individual states would still be able to control which games were available online within their borders, as well as set their own regulations on playing limits, he added.

The imminent legislative action announced by Congressmen Frank was nevertheless welcomed by representatives of the Canadian gaming industry, who continued to cite the knock-on impact the US government’s position on internet gaming had had north of the border.

Constance Ladell, director of legal services at the British Columbia Lottery Corporation (BCLC), said that BCLC’s own internet lottery sales had taken a hit due to over-zealous blocking on the part of “risk-averse” payment processing firms. “Our biggest challenge comes from south of the border and the UIGEA,” Ladell said. “We’ve got caught up in that and have suffered as a result of the UIGEA as well as the risk-averse nature of the payments industry.”

“If Congressman Frank gets his way then that will help us, too,” Laddell added, echoing criticisms of the US and Canadian governments’ failure to address online gaming via regulation. “Ignoring the internet is like holding on to the notion that the world is flat,” she said.

Maggie McGee, vice-president in charge of business innovation for the Nova Scotia Gaming Corporation, said that the US and Canada both suffered from a lack of political desire to regulate. “The business imperative to do so is clear, yet no jurisdiction in North America regulates,” she said. “The problem is political will.”

“Show me a justice department lawyer that wants to make that leap in either this country or in the United States... there aren’t any.”