Net gain
by Andy Holtmann
Columns
Net gain
The IGREA, while not the ultimate answer, is an important first step
In late-April, U.S. Rep Barney Frank (D-Mass.), chairman of the House Financial Services committee, introduced a bill that, on its surface, would seem to repeal the widely controversial Unlawful Internet Gambling Enforcement Act (UIGEA). H.R. 2046, or the Internet Gambling Regulation and Enforcement Act of 2007 (IGREA) as it has been largely referred to, would create an exemption to the UIGEA, which passed last year. It would allow licensed online gambling operators to function in the United States, while allowing American bettors to wager online with licensed sites. But some of the bill’s other provisions—such as restrictions, federal licensing and licensing fees—have critics up in arms, and it’s unlikely that the bill will be approved in its current form.
Now, before dissecting Frank’s bill further, I think it is appropriate to laud the congressman for his efforts. He’s taking an important stand on a practice that has proven very unpopular with this nation’s key authorities and decision-makers. And before the online gaming community ultimately winds up shooting itself in the foot by thundering down nothing but criticism, I suggest Frank’s bill be looked to as a starting point toward an end-goal that can benefit all.
So why does Frank’s bill have everyone bent out of shape? First, from the perspective of those who are anti-gaming, or who support the current ban on Internet wagering in the United States, IGREA is little more than a thumbing of the nose to “the will of the people” (or last year’s congressional support by passing the UIGEA). For those in the online gaming world who have been fighting the ban, the provisions in Frank’s bill are tantamount to legalizing Internet gaming for only the “big boys” by regulating the industry to the point of becoming unprofitable for smaller operators.
Under H.R. 2046, the entire licensing process for U.S.-approved Internet casinos would fall to one person—the director of the Financial Crimes Enforcement Network (FCEN)—and that person can make licensing decisions based solely on his or her opinion.
The bill also essentially leaves the decision of online wagering up to states, by prohibiting operators from offering bets to residents of states where land-based forms of gaming don’t already operate. Further, the state’s governor or other executive officials can inform the FCEN director of any prohibitions or restrictions the state has in place for online gambling, which would ultimately prevent online operators from doing business in that state. However, Indian casino operators could operate online gaming sites, regardless of the state—a provision that online operators in other countries are arguing would shut them out of legalized action. Sporting leagues would also have an opportunity to “opt-out” of online wagering, preventing Internet gaming operators from taking any action on sporting events associated with those leagues.
Before being licensed, online operators would have to pass extensive background checks, as well as prove the security of their technology and show that safeguards are in place to prevent unauthorized gamblers (such as minors and adults in restricted locations) from accessing the site to gamble. The bill would also exempt financial institutions from any liability for online wagers or disputes.
Many in the online gaming world, upon hearing that Frank was working on the bill, were expecting an effort that would repeal the UIGEA, returning the online gambling climate to where it was pre-ban. That’s simply not the case. Nor should it be. While Frank’s bill does have holes, the direction is right. Online gambling in this country should be legal, and it should be regulated to ensure consumer safety and fair play.
Frank himself has admitted to the media that his bill would likely not stand a chance as written. Even if it were to pass both the House and Senate, the likelihood of a veto by President Bush is very high. Yet, we should use this effort as the base on which to build a real and viable solution—a framework consisting of compromise and consistency. Frank has said that the UIGEA was “the stupidest thing I ever saw.” I agree. At least someone is trying to do something about it.
