Monday, October 06, 2008

Bill Collector: Senator Introduces Internet Skill Game Licensing and Control Act of 2008 (S. 3616)

United States SenateLate last week, Senator Robert Menendez (D-NJ) introduced yet another bill intended to temper the effects of the Unlawful Internet Gambling Enforcement Act of 2006. His bill, called the Internet Skill Game Licensing and Control Act of 2008 (S. 3616), is designed to help fashion a licensing and regulatory framework for “internet skill games” such as poker.

The Poker Players Alliance has lauded the bill as “an exciting new development and welcome legislative proposal of which millions of American poker players can be proud.” Indeed, as far as online poker players are concerned, S. 3616 is a particularly attractive piece of legislation. No accident, as the PPA was in fact consulted in the drafting.

You can check out the 28-page bill here, or head over to PokerNews where Haley Hintze has already provided for us a useful summary and analysis of S. 3616. Also, the discussion over in the “Poker Legislation” forum at 2+2 is worthwhile, if yr lookin’ to learn more.

What is the significance of a bill being introduced in the Senate as opposed to being introduced in the House? Well, over in the House the 110th Congress has just about finished up all of its business. Meaning all of those bills still lingering in committees will have to be reintroduced (and thus renumbered) when the newly-elected 111st Congress reconvenes in January. That could well happen for some of the eight UIGEA-related bills currently on the table, but since all 435 seats of the House are up for grabs come November 4th, one never knows.

Meanwhile, the Senate is a so-called “continuing body” -- it never formally goes out of existence, so a bill introduced over there doesn’t fade away when Election Day rolls around.

All of which makes S. 3616 even more welcome, as it means all of these efforts we’ve seen in the House over the last year-and-a-half to counter the UIGEA won’t have been in vain. In fact, looking through S. 3616 one discovers how it seems to collect together various elements of several (not all) of the other eight UIGEA-related bills that have been introduced over in the House since the spring of 2007.

As the 110th Congress turns its attention away from legislating and toward campaigning, I thought it might be worthwhile to go back through and catalogue those House bills here, briefly noting along the way how the new Internet Skill Game Licensing and Control Act seems to relate to each.

UIGEA-related bills introduced in the House of Representatives (110th Congress)

1. The Internet Gambling Regulation and Enforcement Act (H.R. 2046), a.k.a. the IGREA, was introduced by Barney Frank (D-MA) in April 2007. That’s the one that proposes instituting a comprehensive system of licensing online gambling sites. (Full discussion here.) This new Senate bill certainly resembles Frank’s bill, although it pointedly excludes sports betting from its scope of “Internet Skill Games.” Like the IGREA, the new bill outlines in detail the process a site must go through to obtain a license to operate an online gambling operation, and like Frank’s bill this one also allows for states and Indian tribes to opt out and not allow its residents to obtain licenses (which certainly would be a concern for some us, depending on where we live). There are also the same provisions in there requiring licensed sites to prevent minors and problem gamblers from playing, to protect their customers from fraud, and to ensure tax obligations are met.

2. In early May 2007, Rep. Shelley Berkley (D-NV) introduced the Internet Gambling Study Act (H.R. 2140). This was the bill designed to fund a comprehensive study of online gambling by the National Research Council of the National Academy of Sciences. Such a study would likely be useful for gathering support for something like S. 3616, although if a bill like Berkeley’s were to come up again, it would likely take at least a couple of years for the study to be conducted.

3. In June 2007, Rep. Jim McDermott (D-WA) introduced the Internet Gambling Regulation and Tax Enforcement Act (H.R. 2607), designed to amend the IRS tax code to regulate and tax online gambling. The new Senate bill -- like Frank’s IGREA -- does specify that in order for a site to obtain a license it must institute “Reasonable mechanisms to ensure that all taxes relating to Internet skill games payable to Federal and State governments and to Indian tribes are collected as required by law.” Of course, as Haley points out, the extent to which these “skill games” are taxable is perhaps a matter for debate.

4. Also in June 2007, Rep. Robert Wexler (D-FL) introduced the Skill Game Protection Act (H.R. 2610) designed to create a “carve out” for skill games such as “bridge, mah-jong, backgammon, and poker.” This was the first UIGEA-related House bill to refer specifically to poker, and it is clear that the new Senate bill has borrowed the idea of creating special provisions for skill games from H.R. 2610.

Barney Frank (D-MA)5. In April 2008, following a House hearing in which representatives of the Board of Governors of the Federal Reserve System and the Department of Treasury made it clear that finalizing the UIGEA regulations looked to be a fairly hopeless task to achieve, Barney Frank introduced H.R. 5767, a bill specifically designed To prohibit the Secretary of the Treasury and the Board of Governors of the Federal Reserve System from proposing, prescribing, or implementing any regulation under subchapter IV of chapter 53 of title 31, United States Code, and for other purposes. This one gathered a little bit of momentum, but didn’t survive a vote of the House Financial Services Committee in June. The new Senate bill obviously takes a different approach. Of course, those regulations for the UIGEA are still waiting to be finalized, but if S. 3616 were to be made law, online poker would not be affected should that day come.

6. In July 2008, Jim McDermott tried again with something called the Investing in our Human Resources Act of 2008 (H.R. 6501). The idea here was to amend the Social Security Act in a way that allowed for online gambling to be regulated and taxed, with the created revenue then being used to bolster our social security system. Not really something that S. 3616 bothers to address, although I suppose it could come up as an amendment later on.

Clarification Bill?7. In late July 2008, Rep. Pete Sessions (R-TX) gave us the Unlawful Internet Gambling Enforcement Clarification and Implementation Act of 2008 (H.R. 6663) which ostensibly was intended to serve as a mechanism for sorting through some of the UIGEA’s general opacity. You might remember how this one seemed to want to draw some distinctions between the PartyPokers of the world who left the U.S. following the UIGEA’s passage into law and those other sites who remained. I responded to this one with a bit of cynicism, suggesting it actually clarified very little. (The PPA didn’t like it much, either.) For my money, the new Senate bill does a lot more clarifying than did H.R. 6663, especially from the online poker player’s perspective.

8. Finally, last month Barney Frank introduced the Payments System Protection Act of 2008 (H.R. 6870), which I thought was probably a more politically-savvy attempt at doing what his previous “UIGEA prohibition” bill (H.R. 5767) had tried to do. Again, this isn’t the tactic chosen by Menendez’ bill -- i.e., essentially to block the finalization of the UIGEA regs -- but as I say above if S. 3616 were to become law, we online poker players wouldn’t be worrying so much about the UIGEA anymore.

Something to look forward to, then, although we all know that if any bill like S. 3616 were to make it through the Senate and then the House, only one of our two presidential candidates could be counted on to sign the sucker into law. (For a clue, note the party affiliation of most of those proposing these bills.)

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