New bill would legalize, regulate online poker

WASHINGTON -- A drive to make it legal for casino corporations to embrace the lucrative business of Internet poker was given a fresh boost in Congress when lawmakers introduced a bill Friday to legalize and regulate poker betting online.

Sponsors said it would cast sunlight on the gray areas surrounding the $6 billion online industry that have not stopped millions of Americans from playing poker on their laptops.

While the casino industry did not immediately endorse the 101-page bill, the American Gaming Association applauded it as a step forward and said it would continue to take part in negotiations.

"The millions of Americans who are playing poker online deserve to know they are playing safely with law-abiding operators, but strong enforcement of illegal operators and unambiguous U.S. laws governing online gambling are equally vital," the association said in a statement.

The main sponsors are Reps. Joe Barton, R-Texas, and Shelley Berkley, D-Nev.

"People are entitled to play poker from the privacy of their own homes," said Berkley, whose constituents include Las Vegas casinos that have approached online poker as a potential revenue source with varying levels of interest.

At a news conference, Barton, Berkley and other sponsors said the bill will ensure that online games are run fairly, are screened to prevent minors from taking part and contain protections for compulsive gamblers.

They also said it will reverse the 2006 law that make it illegal for U.S. banks from processing payments for online gaming, an effort that has caused confusion in the financial services industry.

Under the new bill the U.S, Department of Commerce would issue regulations and empower states that want to issue online gaming licenses. States could "opt out," which would block their residents from playing.

A spokesman for Sen. Harry Reid, D-Nev., who is negotiating a potential poker bill with other senators, said the House measure "does not address a number of key issues," including how companies that have been operating illegal sites should be penalized.

However, spokesman Zac Petkanas said, "It's another indication that there is growing consensus that it's time to take our collective heads out of the sand and recognize that Internet poker is here to stay."

The Commerce Department was chosen as the federal regulating agency partly for strategic reasons. It allows the poker bill to be assigned to the House Committee on Energy and Commerce, rather than the House Committee on Financial Services, where similar bills have stalled in the past two Congresses.

Barton, who is a senior member of the Commerce Committee, said committee leaders have not yet committed to hold a hearing but want to see what kind of support there is.

"(The new bill) is a clear indication that there is interest in moving forward on this issue, and I'd expect it to be moved through the Commerce Committee," said Michael Waxman, spokesman for a pro-poker group, the Safe and Secure Internet Gambling Initiative.

"I would have to believe that Rep. Barton would not be addressing this issue unless he feels it has a chance to get through," Waxman said.

Waxman said, however, that a provision in the bill that would prohibit the use of credit cards for Internet gambling activity may be going too far.

"If someone is interested in using funds from their credit card to gamble online, they are not going to be stopped from doing so," Waxman said.

Left unsaid in the bill is whether or how the online games would be taxed as a revenue source for the federal government and strapped states.

Barton said the tax issue will be confronted sometime, but lobbyists say that is sore point in the industry and it may be avoided as long as possible.

The debate in Congress follows the April indictments against the owners and founders of the three largest online poker sites -- PokerStars, FullTilt Poker and Absolute Poker -- on bank fraud and money laundering charges.

Rep. Barney Frank, who has sponsored bills to legalize online gaming, argued the indictments prompted a backlash as company assets were frozen and gamblers in some cases had trouble recovering money they had deposited with the sites.

"There was a great deal of unhappiness and unpleasant surprises that the U.S. attorney in New York of all places had nothing better to do than to harass people who want to play poker," Frank said. "That gave some energy to our move."

There are pitfalls ahead, according to a gaming industry executive who sees the future of legalized poker happening on the state level, and not set from Washington.

Richard Bronson, chairman of U.S. Digital Gaming, a California-based online gaming vendor, predicted fights over states rights, taxation of online poker and over how long overseas-based poker companies may be barred from entering the U.S. market.

"I have met with countless governors, legislative leaders, lottery directors, chairmen of Indian tribes and I cannot find one who is thinking there should be a federal bill," Bronson said.

"Do I think they are going to pass national gambling bill in our country, No I do not," Bronson said. "Do I believe there will be legalization of online poker in various states? Without a doubt.

"Here is a certainty," Bronson said. "Nothing is going to happen quickly. This is something that needs to be held under a bright light of public scrutiny. This is not going to be a quickie backroom deal."

Contact Stephens Washington Bureau Chief Steve Tetreault at stetreault@stephensmedia.com
or 202-783-1760.