Going All In: US and EU Tussle Over Cybergaming

♠ Posted by Emmanuel in , at 2/24/2009 12:53:00 PM
This is probably the first and last time I'll feature something from an outlet called Poker News Daily. For obvious reasons, though, I have found consistently informative coverage of the current state online gaming regulation in the US from these sites. Before I get to that, a bit of history. The 2006 SAFE Port Act was crafted largely in response to security concerns that terrorists may load US-bound cargo with explosive material or the like. At the last minute, the Unlawful Internet Gaming (UIGEA) was tacked on as a largely unrelated measure by the then-Republican majority. Basically, Internet gaming Stateside by offshore gaming companies came to an abrupt halt after the SAFE Port Act was signed into law by President Bush.

For many reasons, UIGEA does not pass muster, the obvious one being that it has opened up the US to potentially costly complaints from trading partners, the most notable being Antigua and Barbuda thus far. Of course, their case is just small fry compared to what may come next. Europe-based firms including the ironically named Ladbrokes have been applying pressure on the US to get rid of this reeking piece of legislation. Less masochistic Democrat Barney Frank has been pushing to clarify UIGEA to make it conform with WTO law, although the current financial crisis has diverted attention from this matter. However, expect the US to pay it more attention as the EU lines up the Land of the Free in its crosshairs. As with Antigua and Barbuda, it will be like shooting ducks in a barrel if the US doesn't change its wretched ways.

From Poker News Daily (I can't believe I wrote that):
A spokesperson for Frank told Reuters that the Congressman will be introducing “legislation to repeal the UIGEA” next month [in March]. Many in the industry have been speculating as to what form the new internet gambling legislation would take. During the previous Congressional session, Frank introduced HR 2046, the Internet Gambling Regulation and Enforcement Act. The bill, which was introduced on April 30th, 2007, called for a complete licensing and regulatory framework for internet gambling in the United States. It garnered 48 co-sponsors, but did not see time on the House floor.

At the close of 2008, HR 6870, which was introduced by Frank and co-sponsored by Congressman Peter King (R-NY), was approved by the House Financial Services Committee by a 30-19 vote. However, the September vote was followed immediately by the collapse on Wall Street, which diverted attention away from internet gambling. HR 6870 would have clarified what is legal and illegal under the UIGEA, a question many banks will now face when compliance is due in December.

The enactment of the UIGEA also prompted an investigation by the European Commission into potential violations of World Trade Organization (WTO) obligations by the United States as a result of its stance towards internet gambling. A separate Reuters article revealed that the Commission is likely to recommend that the WTO act next month. However, the report added, “Sources said the E.U. executive, which oversees trade policy for the 27-nation bloc, would try to find a solution with the new U.S. government before taking any case to the global trade watchdog.”

In September, trade officials from the European Union traveled to the United States on a fact-finding mission in order to determine whether WTO obligations were being trampled on. The complaint to the Commission was brought by the Remote Gambling Association (RGA). The organization’s membership includes 888 and Party Gaming, which are both publicly-traded companies on the London Stock Exchange (under the symbols “888″ and “PRTY,” respectively). Upon the passage of the UIGEA, their online poker sites were forced to abandon the U.S. market out of deference to shareholders...

The industry will now wait and see what the text of Frank’s bill will include. Although in the September mark-up hearing of HR 6870 Frank declared that he seeks to repeal the UIGEA entirely, many have speculated that a poker-only bill may take shape during this Congressional session. In 2007, Congressman Robert Wexler (D-FL) introduced HR 2610, the Skill Game Protection Act, which exempted poker, mah jong, bridge, and other player versus player games from all existing federal legislation, including the Wire Act of 1961 and the UIGEA.
Let my people go; let the wheels of fortune spin once more in American cyberspace.