On September 30, 2006, the Unlawful Internet Gambling Enforcement Act (UIGEA) received a final vote of passage in the U.S. Senate and soon after was signed into law by President George W. Bush. This was the culmination of over a decade of attempts, lead by Senator John Kyl [R-AZ], Senator Bill Frist [R-TN], Congressman Jim Leach [R-Iowa] and Congressman Robert Goodlatte [R-VA], backed by the Religious Right, to make Internet gambling, and Internet poker, unlawful under U.S. federal law.
The UIGEA makes it illegal for any person or enterprise in the business of Internet gambling to accept money transfers for the purpose of "unlawful Internet gambling". Although the UIGEA and the related Treasury regulations do not actually make any Internet gambling illegal, they do give the U.S. Department of Justice additional tools to seize funds and indict companies related to Internet gambling and Internet poker.
Does the UIGEA make playing Internet poker illegal?
No, the UIGEA does not make it illegal to play Internet poker. Nor does it make any Internet gambling illegal. It only makes it illegal for a business to accept any sort of money transfer from the U.S. for the purpose of “unlawful Internet gambling”. However, the UIGEA does not itself define what is unlawful but rather relies on existing federal, state and local laws to determine if the player who transfers the money is making Internet bets or wagers that are unlawful in the jurisdiction where they are located.
Do any other federal laws making playing Internet poker illegal?
It depends on who you ask. The Wire Act does make it illegal to run an Internet business which accepts bets or wagers “on any sporting event or contest”. In 2001, the U.S. Fifth Circuit Court of Appeals [In re MasterCard Int'l, et al., 132 F. Supp. 2d 468, 472 (E.D. La. 2001)] ruled that the Wire Act is limited to sports betting. The Department of Justice did not accept this ruling, claiming that they were not a party to the court action, and takes the position that all Internet betting (including poker) by anyone in the U.S. is illegal and all businesses that provide Internet betting facilities to U.S. players are breaking U.S. federal law.
Update: In December 2011, the DOJ issued an opinion letter which states that the Wire Act applies only to sports wagering.
How does the UIGEA affect banks?
The UIGEA mandates that banks and other financial service providers must do “due diligence” to ensure compliance with the UIGEA regulations including:
* adopt a UIGEA compliance policy;
* develop a due diligence process at account opening to determine whether a commercial customer presents anything more than a minimal risk of engaging in Internet gambling;
* provide notice to existing commercial customers;
* obtain any necessary notice of compliance from a designated payment system (debit/credit cards);
* develop procedures for responding when the bank becomes aware of restricted transactions.
Banks are not required to have written policies and procedures to block ACH, check, or wire payments related to Internet gambling. However, they are liable to penalties for non-compliance and also cannot be penalized or sued for incorrectly blocking legal transactions in an effort to comply with the UIGEA. Therefore, overblocking by banks is not unusual, and some banks may block any transaction related in any way to Internet poker. They may also close all the accounts of a banking customer, personal or business, if they detect any Internet poker-related transactions.
Will implementation of the UIGEA prevent me from making deposits and withdrawals on the poker sites?
The final compliance date for the UIGEA is December 1, 2009. Starting on that date, financial institutions can be penalized for non-compliance. However, the regulations of the UIGEA do not require financial institutions to detect and block transactions related to unlawful Internet gambling, but rather to detect commercial accounts which accept such transactions and take appropriate actions to stop them, by either warnings or account closure.
The real threat of the UIGEA is the actions of the DOJ against payment processors and sites. The DOJ will continue to seize financial accounts belonging to payment processors and sites involved in Internet poker (and Internet gambling) where possible, and continue to bring indictments against them. Although the sites continue to provide deposit and withdrawal methods for U.S. players, and quickly restore any seized funds belonging to players, the sites may eventually find that it is too difficult and too costly to continue to offer play to U.S. players.
Also, banks are liable to penalties for non-compliance and also cannot be penalized or sued for incorrectly blocking legal transactions in an effort to comply with the UIGEA. Therefore, overblocking by banks is not unusual, and some banks may block any transaction related in any way to Internet poker. The worst that can happen is that the bank will return your account monies to you and close your account. For this reason, it is a good idea to have a bank account specifically for your poker transactions at a separate bank from your regular banking.
Why are some players complaining about troubles with poker transactions at their bank?
1. Paranoia
Some players are worried about depositing their cashout checks, especially in the aftermath of the recent DOJ funds seizures. This leads some players to be paranoid at simple things like a teller saying "that's an unusual looking check", which was just a conversational comment by the teller but taken by the player to be some sort of inquisition. To avoid such face-to-face situations, players can simply use an ATM to deposit cashout checks. Using an ATM for deposits doesn't trigger any red flags at a bank.
2. Suspicious Transactions
Banks are required to file a Suspicious Activity Report (SAR) on any transactions which seems suspicious, i.e. possibly related to illegal activities. Note that it is not illegal under the UIGEA for a player to receive a cashout payment for "internet gambling". (Nor is it illegal under the UIGEA for the site to send a cashout to a player.) However, some players, in an effort to avoid detection, will structure their payouts into multiple bank wires. For a bank, it is much more suspicious to see multiple foreign wires of smaller amounts come into an account in a short period of time than to receive one large foreign bank wire, as it looks like the depositor is trying to hide something. This is the most likely reason that a bank calls up a player to inquire as to the nature of the bank wires. Don't structure your payouts that way.
3. Misinformed Bank Employees
It is not part of the UIGEA regulations, nor proper bank procedures related to the UIGEA, for bank employees to try to detect player transactions related to "online gambling". However, some bank employees and perhaps some bank policies may be misguided in this respect, and therefore may give the player trouble. Under the UIGEA, banks cannot be penalized or sued for blocking transactions that are not restricted, so they are free to overblock. The worst that can happen is that the bank will return your account monies to you and close your account. For this reason, it's a good idea to have a bank account specifically for your poker transactions at a separate bank from your regular banking. Using a small neighborhood bank or a credit union for this purpose is recommended as there are less bank personnel with idle hands.
Overall, the direct effect of the December 1, 2009 deadline for implementation of the UIGEA regulations should have minimal impact on players. The main difficulties will be for the sites to be able to maintain banking relationships with financial institutions and the much greater risk for the sites of DOJ interference (seizures and indictments) with their operations. This will in time translate to more difficult transactions for the players. Also, the media coverage of the implementation of the UIGEA and any related DOJ actions will further squash the interest of casual players to open or maintain any online poker accounts.
Will implementation of the UIGEA stop Internet poker for U.S. players?
Only time will tell. Although federal law does not make Internet poker illegal for either the player or the sites, the DOJ continues to take actions against Internet poker sites through seizure of funds and indictments of payment processors. However, these DOJ actions are designed in such a way to avoid any actual court trials which gives no opportunity for the interested parties to legally challenge the actions of the DOJ or their application of the laws in U.S. federal court.
In the meantime, the sites have to replace seized funds out of their own pockets, and regularly change their financial processor accounts to avoid detection. As the full implementation of the UIGEA goes into effect, the sites will likely find it harder and harder to find ways to process transactions. In addition, there are many casual players who have stopped playing Internet poker or won’t open a new account as they now believe it is illegal due to the UIGEA, or they find the deposits and withdrawals too risky or troublesome.
All of this translates to more expenses and less profits for the Internet poker sites. Eventually a threshold might be reached where the sites find it is too costly or too risky to continue to offer Internet poker to U.S. players, and they decide to cashout all U.S. players and close their U.S.-facing business.
What deposit and withdrawal methods are still available to me?
The answer to this question changes regularly and depends on the site. The sites are still able to offer deposits and withdrawals by check, money order and bank wire. Some also currently have options for electronic funds transfers (echecks) and money transfers (Western Union, MoneyGram). Some credit/debit cards work; many don’t. (Check with your site before you attempt to use a credit card to make sure that you won’t be charged a cash advance fee.) Visit the cashier at your site to see which options are available to you. Note that each site have minimum and maximum deposit limits for the various methods. There may also be fees for some of the withdrawal methods, depending on your site.
What do I say if my bank asks about my cashout deposit?
Don’t lie. The worst they can do is return your monies and close your account. Most likely they aren’t trying to find out if the deposit is from Internet poker, but rather are looking for other types of suspicious activity. You can say something unspecific such as you have an online business or you are being paid for some online work. If they press for more information, you can refuse to answer and, if necessary, take your business elsewhere.
What do I say if my bank or credit card company asks about my credit card usage or puts a security hold on it?
Most likely they are just concerned that your credit card isn’t being used by someone who has stolen your card number. When you use your credit card to make a deposit to a poker site, the transaction may be blocked (based on the credit card coding system), or the transaction may get flagged as unusual as it doesn’t fit your ordinary purchasing patterns. In either case, the fraud department of your bank or your credit card company may put a hold on your credit card and try to contact you to verify that you initiated the transaction. Once you verify the transaction as yours, they will remove the hold and you can start using your card again. Do not tell them that you were making an Internet poker deposit; just verify that you were making an Internet purchase.
Can I deposit my poker site cashout check if it shows a foreign bank name and address?
If the check has an ABA routing 9-digit number followed by the bank account number imprinted along the bottom [MICR encoding] it can be deposited in your bank account without the need for it to be sent for collection. Checks in US$ issued by a foreign bank are usually written on either their U.S. branch or a U.S. corresponding bank. As long as it has those numbers imprinted on the bottom, the check can be deposited without any collection procedures or fees required even if the bank name and address printed at the top of check is foreign. Sometimes a teller will not be well trained and will assume that a check written on a foreign bank needs to be sent for collection, even when it has the imprinted information. To avoid this problem, it is best to deposit such checks through an ATM.
As a basic practical matter, while no one knows just how much things are going to change, even the most optimistic of the experts expect the ability to move money will get at least somewhat worse after 12/1/09. But even the most pessimistic experts do not expect things to stop completely; there will always be some way to get your money and the bigger sites will always honor those commitments. It will just get more inconvenient to one degree or another.
Accordingly, the ones who really should worry and do something in advance of 12/1/09 are those grinders who need a regular withdrawal to keep up with their bills. I do believe that includes many who post on 2+2, though far from all.
You folks who rely on steady withdrawals need to make contingency plans. No one can predict just how much more difficult moving money is going to become after 12/1, just that it will get more difficult to one degree or another. So relying on an ability to get regular and swift withdrawals is dangerous. Make adjustments to your situation so that you will not suffer if you find yourself having to go a few weeks without withdrawing at some time.
Similarly, those casual players who make frequent deposits might want to consider loading a little extra between now and 12/1. Again this is not because you are likely to become completely unable to deposit or play, only that you may well find yourself having to go through periods of not being able to deposit before an option becomes available to you again.
And for those who really like playing it safe, have 2 bank accounts and only use one for poker money. Some banks will discover poker play, and some of those banks will have a policy of simply closing any account used for "gambling." If you are unlucky enough to find yourself in that still relatively rare circumstance, you want to have another account to use for personal finances while waiting to create a new account for poker.
What can I do to help keep Internet poker available in the U.S.?
Note: This was the Federal Bills Licensing FAQ for the 111th Session of Congress, which ended January 4, 2011. I have left this old FAQ in this thread as it still applies to what is now HR 1174 in the 112th Congress.
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Spoiler:
What federal bills will license and regulate Internet poker?
The main difference between the Barney Frank bill (BFB) and the Menendez bill (MB) is that the BFB would license and regulate both online casino gaming and online poker while the MB would license and regulate only skill games such as poker. The McDermott bill is just an add-on to the BFB for taxing licensed sites and would eventually be incorporated into the BFB before passage.
Quite often new federal legislation goes through a multi-year process of bills being introduced multiple times in the House and the Senate in various forms until a final wording is achieved that makes it through committees and to the floors for a vote and passage. This process flushes out the legislation with more thorough and complex wording that makes the new law comprehensive and unambiguous. The MB is the most recently introduced bill on this issue and contains the most comprehensive provisions. Most of the MB language is likely to survive and be incorporated into the final legislation.
For purposes of this FAQ, the three bills will be considered as one combined bill utilizing the most advanced language and provisions as found in the MB. The questions of this FAQ are answered for online poker gaming, but could be applied to online casino gaming as well.
What does “license and regulate” mean?
After the legislation is passed and signed into law, there will be a process where federal regulations are developed by the Department of the Treasury to implement the provisions of the new law. Once the regulations are completed, Internet poker sites will be required to apply to the Secretary of the Treasury for a U.S. federal license to legally offer Internet poker to players located in the U.S. The licensed sites will be liable to U.S. jurisdiction and must follow all of the regulations.
The regulations will include protections against consumer fraud, underage participation and problem gaming. The licensed sites will be required to make regular reports on their activities to the government regulators, and appropriate individual taxpayer reports for the IRS. Fees for licensing and fees on player deposits will be paid by the sites. Consumers (players) will be able to use the government regulatory agency and the U.S. court system to redress any wrongs committed by any licensed site, including those that are located in foreign countries. There will also be extensive background checks of all the site owners and principals before a license is granted.
How will Internet poker be taxed?
The MB proposes a 10% fee on all player deposits. This tax will be paid by the sites and cannot be deducted from player deposits. Half of the fee will go to the federal government and half will go to the state where the player is located. It is not expected that this fee will affect the amount of rake charged by the sites as this licensing program will lower other current costs for the sites such as payment processing fees and legal fees. The program will also increase the number of players, bringing in more revenues for the sites. There will also be more sites competing in the U.S. market, forcing the sites to keep their rake charges competitive. Due to this competition, players will likely also see more promotional offers such as better rakeback, more bonuses, etc.
There is currently no cap in the bill on this player deposit fee, so sites will probably have to put a cap on player deposit amounts (~10K), which could put a damper on online high stakes play. However, this may be corrected with a fee cap added to the wording of the final legislation or to the Treasury regulations.
Can the fees be increased by the government later?
The licensee fees on player deposits will be fixed. It will take another act of Congress (passing a new bill to amend the licensing program) to increase the fees.
Will I have to pay taxes on my Internet poker winnings?
This legislation does not change the answer to this question. Poker winnings and losses are currently reportable to the IRS as gambling winnings and losses (see here for more details). Licensed sites will be required to make appropriate individual taxpayer reports each year for the IRS. The provisions in the current bill do not properly lay out correct definitions of all these items to be reported, but this will likely be sorted out by the time the bill comes to a vote or in the development of the Treasury regulations after passage. The sites will also be required to do income tax withholding on player net winnings, but only if the player fails to provide a valid Taxpayer Identification Number (e.g. Social Security Number).
Will the current offshore sites be allowed to get a U.S. license?
Yes, under the provisions of the current bill there is nothing to prevent them from being licensed. The only exception is any site which has previously accepted any sports wagering. Sports wagering on the Internet is prohibited under U.S. federal law, and will be prohibited to licensed Internet gambling sites. Although the bill does not prevent the current sites from being licensed, the door is still open for the regulations to include some sort of prohibition against them. In this unlikely event, sites that are denied a license could either sell their company to a casino corporation looking to enter the U.S. online gambling market, or sell back-end software services to such a company, allowing the players to continue to play on their favorite sites.
Is there a grace period for current sites to become licensed?
Yes. Under the MB, current sites have 90 days after passage of the bill to state their intention to apply for a license and 90 days after publication of the final Treasury regulations to submit their application for a license. During this period and until their license application is either granted or refused, a site can continue to allow U.S. players.
Will any states be excluded from the federal licensing program?
No state will be automatically excluded. The bills do include a provision that gives each state the opportunity to opt out of the program, which is a necessary provision for states’ rights. It is unlikely that a bill would be passed without such a provision.
Who will decide if my state will opt out?
The state opt out provision allows the state Governor to opt out by written letter to the federal Secretary of the Treasury. However, this does not automatically imbue the Governor with the authority to make the decision for his state. Each state Governor has their powers of office defined by the constitution and laws of his state. In some states the Governor may have the authority, but it is more likely that the state legislature will have to weigh in on the issue. This also makes it more likely that most Governors will initially opt out of the program to avoid forcing Internet poker on the state without the action of the state legislature. This deficiency in the bill is known, and the language of the opt out provision is likely to change before it is brought to a vote to ensure that most states do not initially opt out unless their state legislature takes specific action to do so.
What if it is currently illegal in my state to play poker online?
The MB contains a provision that any current state law cannot be construed to require the state to opt out of the program. Under this provision, if a state does not opt out, the federal licensing bill will make Internet poker at licensed sites legal in the state, superseding any current state law.
What happens if my state opts out?
In states that opt out, both federally licensed and unlicensed sites will be illegal. An opt-out state could adopt its own intrastate licensing program, which would make state-licensed sites which operate only within that state’s borders legal.
There will probably still be some unlicensed sites that stay open to players in the opt-out states. The penalty in the bill for unlicensed sites operating in the opt-out states (or in any state) is a 50% fee on player deposits. Since these sites will not be located in the U.S., it is unlikely that the government will be able to collect this fee from the sites. However, they will be operating illegally under U.S. law, and will be subject to seizure of funds, blocking of financial transactions, indictments, etc.
Currently, the penalty provision makes both the site and the player liable for this 50% penalty. However, it is unprecedented in law to make the consumer liable for the illegal commerce of a business enterprise, so this language is unlikely to survive to the final version of the bill.
Does the bill overturn the UIGEA?
No, it does not overturn the UIGEA (Unlawful Internet Gambling Enforcement Act). The UIGEA makes it illegal for sites to accept money for "unlawful Internet gambling". If a federal licensing bill is passed that says online gambling is lawful on licensed sites, the UIGEA would no longer apply to those financial transactions. The UIGEA would still apply to unlicensed sites.
Will U.S. players be able to play with non-U.S. players?
There is nothing in the bill which prohibits a player base which combines play for both U.S. and non-U.S. players. However, there is also nothing in the bill which expressly permits this either. For ease of compliance with the federal licensing program and regulations, the sites will likely make separate skins for their U.S. players and move their current U.S. players to these new skins. If wording is not added to the bill to expressly allow a combined player base, there is a chance that the Treasury regulations developed after the bill passes will prohibit it. This issue is being addressed and hopefully wording will be added to the bill itself that expressly allows combined player bases.
Certainly none of the major sites, including any new sites developed by U.S. casino corporations like Harrah’s, will want combined player bases prohibited. This makes it less likely that the Treasury regulations will prohibit combined player bases.
Can the government dictate games and limits allowed?
Except in regards to self-exclusion options for players who suffer from compulsive gaming, there are no provisions in the bill for the federal government to specify game selection, buy-in limits, stake limits, betting limits, etc. The bill does leave the door open for these limits to be introduced by the Treasury regulations, although there is no requirement for them to do so.
Unfortunately, the bill does allow each state to set such limits as part of the state opt out provision. The sites would have to apply any such limits on a state-by-state basis, based on the location of the player at the time of play.
What will be the age limit for players?
The BFB leaves the age limit to be determined by each state. The MB sets the age limit at 21. Since it will likely take a couple of years to pass and implement this legislation, all current players will be at or close to age 21 by the time the age limit goes into effect anyway.
Setting the age limit according to state laws rather than explicitly at age 21 would make compliance much more complicated for the sites. Besides verifying the age of each player for each U.S. player account, the sites would have to keep track of all the state and tribal laws as well as the current location of each player while they are playing. For instance, if an 18-year-old player lives in a state that allows 18-year-olds to play poker but travels to a state where the age limit is 21, the site has to block their play while they are in that state. And what if a site offers both poker and blackjack, and a state has two different age limits for these different games (e.g. Florida)?
In addition, some states don't currently have age limits set for gambling or poker. The state legislatures in these states would likely introduce a state bill to set an age limit, which would open the door in these states to act more quickly or more aggressively to opt out of the licensing program altogether.
The preferred option would be to set the age limit in the bill explicitly at age 18 instead of age 21. However, this would likely make the bill unpalatable to many lawmakers and a much tougher sell due to the opposition of those that want to “protect our children”. Changing the age limit to 18 might make the difference between success and failure in getting the bill passed.
When will the bill come before Congress for a vote?
The Secretary of the Treasury and the Chairman of the Federal Reserve granted a 6-month delay to the final implementation date of the UIGEA (to June 1, 2010) to give the legislature time to move the licensing bill. It was originally BF’s intention to start action on this bill in April of 2009, but he has had to repeatedly delay any action due to other more pressing political issues like financial bailouts and healthcare reform. It is currently anticipated that the BF bill will move in committee and possibly to the floor for a vote during these six months. We might see action begin in December 2009 or January 2010 and it is possible it will come to the Congressional floor for debate and a vote in the spring of 2010. An additional six-month delay for the UIGEA implementation may be granted as long as serious movement on the bill is being achieved by June 2010.
The current bills remain active through the end of the 111th Congressional Session in December of 2010. If not acted upon by then, new bills will have to be introduced in the 112th Congressional Session.
Send this letter to your friends, family and co-workers:
Quote:
Dear _________,
Please take a few moments to help me and fellow American poker players fight for our right to play Internet poker. Although it is currently still legal in most of the U.S. for anyone to play poker online, the current policy of our federal government is to interfere with our access to the sites and to attempt to block all related financial transactions.
Please help us lobby our federal and state government leaders and representatives to pass legislation to license and regulate Internet poker so all U.S. citizens will have unhindered access to licensed sites, as well as needed consumer protections. By using the link below, you can send pre-formatted e-mail letters through the Poker Players Alliance. It should take you only two or three minutes to send all the letters, and only requires that you enter your name, address, e-mail and phone (enter 999-999-9999 if you don't want to use your real one).
P.S. Please forward this message to your friends and family, too.
Note: I have written a revised version of the Menendez bill which corrects the major deficiencies. You can download this PokerXanadu Bill (in pdf format; corrections in bold type).
HR 2267 went through markup in the House Financial Services Committee on July 28, 2010. The following amendments were adopted by the committee, and then the bill received a 41-22-1 passing vote by the committee to send it to the full House for debate and vote:
Amendment by Mr. Sherman,no. 2, was AGREED TO, by voice vote.
Adds to the license applicant requirements a certification by the applicant and all related business entities that they have never violated Federal or State gambling laws and have done due diligence to prevent any US person from placing an internet bet that violated Federal or State gambling laws.
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Amendment by Mr. King and Mr. Meeks, no. 3, was AGREED TO, by voice vote.
Adds a provision that licensees cannot accept any bets or wagers on sporting events, except for pari-mutuel racing as permitted by law.
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Amendment by Ms. Kilroy, no. 4, was AGREED TO, by voice vote.
Gives the Treasury the authority to prohibit inappropriate advertising activites by licensees, such as spamming or Internet advertising campaigns directed at vulnerable populations (children, problem gamblers).
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Amendment by Mr. Campbell, no. 8, was AGREED TO, as modified, by voice vote.
Clarifications of some provision wordings to make sure the Treasury can delegate licensing and regulation to state or tribal authorities.
Adds a requirement that the licensee facilities for US players are located within the US.
Adds a requirement that anyone involved in the operations of the sites, including the software developers, meet the same suitability requirements as the licensee.
Adds stricter provisions for consumer safeguards, including excluding players under 21 years of age; excluding any play per state opt outs; making information available for problem gamblers; making opt out options available for each player (loss limits, play time limits, deposit limits, etc.); requiring all players to set their limit options (at the player's discretion); privacy and security for players; protections against fraud; dispute resolution procedures for players; protections against money laundering; specific requirements for integrity and fairness of the games (including RNG protocols).
Gives the Treasury the authority to update the safeguards above according to evolving technologies.
Instructs the Director of the Financial Crimes Enforcement Network to maintain a list of Unlawful Internet Gambling sites, which will be made publicly and privately available by the Treasury for use by anyone mandated with compliance with the UIGEA. This eliminates the ambiguity of the UIGEA, and will probably eliminate overblocking. Includes an appeals and court process for anyone appearing on the list, to contest.
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Amendment by Mr. Sherman, no. 9, was AGREED TO, voice vote.
Changes the initial state opt out period from 90 days to the end of one full state legislative session following enactment of the law. A very good amendment for us! This essentially implies that the states need to resolve the opt outs by state legislative action. It also means that the licensed sites can operate in all states until a state legislature takes action otherwise.
Interestingly, there is no grace period following the end of the first state legislative session. So, if a state legislature passes an opt out or other limitation and the legislation isn't signed into law by the governor until after the end of the session (or the notice the governor gives the Treasury takes place after the end of the session), then the opt out/limitation doesn't go into effect on the sites until at least the first January 1 that comes at least 60 days after the first notice to the Treasury. And any change in opt outs/limitations by a state after the initial period has that same waiting time.
Bottom line: opt outs/limitations aren't going to be easy and fast for the states.
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Amendment by Mrs. Bachmann, no. 10, was AGREED TO, by voice vote.
A licensee can lose their license if they target advertising at persons underage according to State laws.
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Amendment by Ms. Bean and Ms. Kilroy, no. 11, was AGREED TO, by voice vote.
Gives the Treasury the authority to ensure each licensee's software and systems to prevent minors from wagering are effective, and to levy penalties or license revocation if not.
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Amendment by Mr. Frank, no. 12, was AGREED TO, by voice vote.
Gives the Treasury the authority to consult with the Indian tribes on development of regulations.
Adds to the problem gamblers self-exclusion list provisions a statement that the licensees can't accept wagers from anyone who put themselves on this list (which this provision should have said in the first place). This list is maintained by the Treasury, and putting yourself on the list will get you excluded from all licensed sites.
Specifies that this law doesn't affect existing Indian tribal gaming operations or compacts, and that tribes can get a license under this law without affecting their land-based gambling operations.
Clarifies the safe harbor provision for financial transaction providers so that they are not liable for processing transactions under this law as long as they didn't have specific knowledge that the transactions were conducted in violation of the law. This goes hand in hand with the list by the Financial Crimes Enforcement Network mentioned above. If a site appears on the list, an FSP doesn't have safe harbor, but does have it for any other transaction for Internet gambling. Better than the original wording of this provision, which would have laid the responsibility for determining if transactions were compliant with this law on the FSP instead.
Prohibits the use of credit cards for Internet gambling. Prepaid cards, gift cards and e-wallets (PayPal, Moneybookers, Neteller, etc.) are not prohibited, as long as there is no charge to a credit card involved.
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Second Degree Amendment by Mr. Frank to Bachmann Amendment, no. 13a, was AGREED TO, as amended, by voice vote.
If a federal or state court, or an appropriate state agency notifies the Treasury that someone is delinquent in child support payments, the person is automatically added to the self-exclusion list (and sites can't accept wagers from them) until the Treasury is notified that they are no longer delinquent.
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Amendment by Mrs. Bachmann, no. 13, was AGREED TO, as amended, by voice vote.
Sites have to verify for each of their players that they are not delinquent on child support payments. This one would have been a mine field except the amendment above clarified how to implement it.
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Amendment by Mr. Peters and Mr. Hodes, no. 14, was AGREED TO, by voice vote.
State and tribal lotteries don't have to get a license under this law to operate Internet gambling that is legal under the UIGEA (i.e., any intrastate or intratribal gambling other than sports betting) and makes such expressly legal. And it clarifies the Federal Wire Act to specify that it doesn't apply to such Internet gambling run by state or tribal lotteries. Bottom line - state lotteries will be able to offer any intrastate internet gambling they want, legally and without federal licensing and regulation.
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Amendment by Mr. Bachus and Mrs. Bachmann, no. 15, was AGREED TO, by voice vote.
This one disqualifies sites from getting a license if they offered or facilitated illegal Internet gambling after passage of the UIGEA. This amendment declares anyone unsuitable for licensing who:
1. Knowingly participated in any illegal Internet gambling activity since passage of the UIGEA including:
the taking of an illegal Internet wager.
the payment of winnings on an illegal Internet wager.
advertising of any illegal Internet website or service.
collection of payments to any illegal Internet gambling website.
2. Knowingly been owned, operated, managed or employed by any person participating in any of the above four points.
3. Received financial or other assistance from anyone who has knowingly accepted bets or wagers from a person located in the US in violation of Federal or State law.
4. Provided financial or other assistance to anyone who has knowingly accepted bets or wagers from a person located in the US in violation of federal or state law.
5. Has purchased or obtained from any other entity who has accepted bets or wagers in violation of US law:
the entity itself.
the customer mailing list of the entity.
some of the equipment or services of the entity.
I don't see anything here that excludes sites like PokerStars or Full Tilt Poker. We already know the many valid legal arguments about these sites not violating any US federal laws, which covers #1, #2 and #5.
The only points where State laws come into play are in regards to receiving or giving assistance to persons accepting bets that violated state or federal gambling laws, #3 and #4. These provisions do not address accepting wagers, facilitating wagers or such. They only address giving assistance, financial or otherwise, to someone who illegally took such bets. That's a whole other matter, and not applicable to the poker sites. These two provisions covering state laws are anti-money laundering provisions, not anti-Internet gambling site provisions.
Sites that participated in sports betting won't be eligible for licensing under this amendment. Poker-only sites are not affected, imo.
---
Amendment by Mr. Sherman, no. 16, was AGREED TO, by voice vote.
Requires sites to locate their operations for US players in the US, including:
Establish a US corporation or other US business entity, with majority US officers and majority US board members.
The facilities for US operations located in the US and open to regulatory inspection.
The majority of employees, and employees of affiliated business entities, are US residents or citizens.
So, if a site wants to run a US licensed site, they have to set up a US branch, incorporated in the US, located in the US, with majority US persons of officers, board members and employees, for this licensed US entity only. Their non-US operations aren't subject to any of these requirements. I expect sites like FTP and PS to transfer their US players to a new US skin, with a combined international player pool with the non-US skin(s).
---
Amendment by Ms. Kilroy, no. 17, was AGREED TO, by voice vote.
The sites have to make anonymized player data available to the Treasury, and the Treasury has to publish it on their web site, including gaming frequency, gaming duration, the amount wagered, the number of bets placed, and net losses.
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Last edited by PokerXanadu; 11-26-2011 at 08:24 AM.
Reason: at request of PX
HR 2267 went through markup in the House Financial Services Committee on July 28, 2010. The following amendments were adopted by the committee, and then the bill received a 41-22-1 passing vote by the committee to send it to the full House for debate and vote:
Spoiler:
Amendment by Mr. Sherman,no. 2, was AGREED TO, by voice vote.
Adds to the license applicant requirements a certification by the applicant and all related business entities that they have never violated Federal or State gambling laws and have done due diligence to prevent any US person from placing an internet bet that violated Federal or State gambling laws.
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Amendment by Mr. King and Mr. Meeks, no. 3, was AGREED TO, by voice vote.
Adds a provision that licensees cannot accept any bets or wagers on sporting events, except for pari-mutuel racing as permitted by law.
---
Amendment by Ms. Kilroy, no. 4, was AGREED TO, by voice vote.
Gives the Treasury the authority to prohibit inappropriate advertising activites by licensees, such as spamming or Internet advertising campaigns directed at vulnerable populations (children, problem gamblers).
---
Amendment by Mr. Campbell, no. 8, was AGREED TO, as modified, by voice vote.
Clarifications of some provision wordings to make sure the Treasury can delegate licensing and regulation to state or tribal authorities.
Adds a requirement that the licensee facilities for US players are located within the US.
Adds a requirement that anyone involved in the operations of the sites, including the software developers, meet the same suitability requirements as the licensee.
Adds stricter provisions for consumer safeguards, including excluding players under 21 years of age; excluding any play per state opt outs; making information available for problem gamblers; making opt out options available for each player (loss limits, play time limits, deposit limits, etc.); requiring all players to set their limit options (at the player's discretion); privacy and security for players; protections against fraud; dispute resolution procedures for players; protections against money laundering; specific requirements for integrity and fairness of the games (including RNG protocols).
Gives the Treasury the authority to update the safeguards above according to evolving technologies.
Instructs the Director of the Financial Crimes Enforcement Network to maintain a list of Unlawful Internet Gambling sites, which will be made publicly and privately available by the Treasury for use by anyone mandated with compliance with the UIGEA. This eliminates the ambiguity of the UIGEA, and will probably eliminate overblocking. Includes an appeals and court process for anyone appearing on the list, to contest.
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Amendment by Mr. Sherman, no. 9, was AGREED TO, voice vote.
Changes the initial state opt out period from 90 days to the end of one full state legislative session following enactment of the law. A very good amendment for us! This essentially implies that the states need to resolve the opt outs by state legislative action. It also means that the licensed sites can operate in all states until a state legislature takes action otherwise.
Interestingly, there is no grace period following the end of the first state legislative session. So, if a state legislature passes an opt out or other limitation and the legislation isn't signed into law by the governor until after the end of the session (or the notice the governor gives the Treasury takes place after the end of the session), then the opt out/limitation doesn't go into effect on the sites until at least the first January 1 that comes at least 60 days after the first notice to the Treasury. And any change in opt outs/limitations by a state after the initial period has that same waiting time.
Bottom line: opt outs/limitations aren't going to be easy and fast for the states.
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Amendment by Mrs. Bachmann, no. 10, was AGREED TO, by voice vote.
A licensee can lose their license if they target advertising at persons underage according to State laws.
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Amendment by Ms. Bean and Ms. Kilroy, no. 11, was AGREED TO, by voice vote.
Gives the Treasury the authority to ensure each licensee's software and systems to prevent minors from wagering are effective, and to levy penalties or license revocation if not.
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Amendment by Mr. Frank, no. 12, was AGREED TO, by voice vote.
Gives the Treasury the authority to consult with the Indian tribes on development of regulations.
Adds to the problem gamblers self-exclusion list provisions a statement that the licensees can't accept wagers from anyone who put themselves on this list (which this provision should have said in the first place). This list is maintained by the Treasury, and putting yourself on the list will get you excluded from all licensed sites.
Specifies that this law doesn't affect existing Indian tribal gaming operations or compacts, and that tribes can get a license under this law without affecting their land-based gambling operations.
Clarifies the safe harbor provision for financial transaction providers so that they are not liable for processing transactions under this law as long as they didn't have specific knowledge that the transactions were conducted in violation of the law. This goes hand in hand with the list by the Financial Crimes Enforcement Network mentioned above. If a site appears on the list, an FSP doesn't have safe harbor, but does have it for any other transaction for Internet gambling. Better than the original wording of this provision, which would have laid the responsibility for determining if transactions were compliant with this law on the FSP instead.
Prohibits the use of credit cards for Internet gambling. Prepaid cards, gift cards and e-wallets (PayPal, Moneybookers, Neteller, etc.) are not prohibited, as long as there is no charge to a credit card involved.
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Second Degree Amendment by Mr. Frank to Bachmann Amendment, no. 13a, was AGREED TO, as amended, by voice vote.
If a federal or state court, or an appropriate state agency notifies the Treasury that someone is delinquent in child support payments, the person is automatically added to the self-exclusion list (and sites can't accept wagers from them) until the Treasury is notified that they are no longer delinquent.
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Amendment by Mrs. Bachmann, no. 13, was AGREED TO, as amended, by voice vote.
Sites have to verify for each of their players that they are not delinquent on child support payments. This one would have been a mine field except the amendment above clarified how to implement it.
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Amendment by Mr. Peters and Mr. Hodes, no. 14, was AGREED TO, by voice vote.
State and tribal lotteries don't have to get a license under this law to operate Internet gambling that is legal under the UIGEA (i.e., any intrastate or intratribal gambling other than sports betting) and makes such expressly legal. And it clarifies the Federal Wire Act to specify that it doesn't apply to such Internet gambling run by state or tribal lotteries. Bottom line - state lotteries will be able to offer any intrastate internet gambling they want, legally and without federal licensing and regulation.
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Amendment by Mr. Bachus and Mrs. Bachmann, no. 15, was AGREED TO, by voice vote.
This one disqualifies sites from getting a license if they offered or facilitated illegal Internet gambling after passage of the UIGEA. This amendment declares anyone unsuitable for licensing who:
1. Knowingly participated in any illegal Internet gambling activity since passage of the UIGEA including:
the taking of an illegal Internet wager.
the payment of winnings on an illegal Internet wager.
advertising of any illegal Internet website or service.
collection of payments to any illegal Internet gambling website.
2. Knowingly been owned, operated, managed or employed by any person participating in any of the above four points.
3. Received financial or other assistance from anyone who has knowingly accepted bets or wagers from a person located in the US in violation of Federal or State law.
4. Provided financial or other assistance to anyone who has knowingly accepted bets or wagers from a person located in the US in violation of federal or state law.
5. Has purchased or obtained from any other entity who has accepted bets or wagers in violation of US law:
the entity itself.
the customer mailing list of the entity.
some of the equipment or services of the entity.
I don't see anything here that excludes sites like PokerStars or Full Tilt Poker. We already know the many valid legal arguments about these sites not violating any US federal laws, which covers #1, #2 and #5.
The only points where State laws come into play are in regards to receiving or giving assistance to persons accepting bets that violated state or federal gambling laws, #3 and #4. These provisions do not address accepting wagers, facilitating wagers or such. They only address giving assistance, financial or otherwise, to someone who illegally took such bets. That's a whole other matter, and not applicable to the poker sites. These two provisions covering state laws are anti-money laundering provisions, not anti-Internet gambling site provisions.
Sites that participated in sports betting won't be eligible for licensing under this amendment. Poker-only sites are not affected, imo.
---
Amendment by Mr. Sherman, no. 16, was AGREED TO, by voice vote.
Requires sites to locate their operations for US players in the US, including:
Establish a US corporation or other US business entity, with majority US officers and majority US board members.
The facilities for US operations located in the US and open to regulatory inspection.
The majority of employees, and employees of affiliated business entities, are US residents or citizens.
So, if a site wants to run a US licensed site, they have to set up a US branch, incorporated in the US, located in the US, with majority US persons of officers, board members and employees, for this licensed US entity only. Their non-US operations aren't subject to any of these requirements. I expect sites like FTP and PS to transfer their US players to a new US skin, with a combined international player pool with the non-US skin(s).
---
Amendment by Ms. Kilroy, no. 17, was AGREED TO, by voice vote.
The sites have to make anonymized player data available to the Treasury, and the Treasury has to publish it on their web site, including gaming frequency, gaming duration, the amount wagered, the number of bets placed, and net losses.
---
Last edited by PokerXanadu; 01-05-2012 at 10:59 AM.
Below is the Federal Bills Licensing FAQ for the 112th Session of Congress, which lasts until January 3, 2013. I have left the old FAQ posts in this thread as they still apply to what was HR 2267 by Barney Frank in the 111th Congress and is now HR 1174 in the 112th Congress.
======================
What federal bills will license and regulate Internet poker?
The main difference between the Campbell Bill (CB) and the Barton Bill (BB) is that the CB would license and regulate both Internet casino gaming and Internet poker while the BB would license and regulate only Internet poker and expressly outlaw all Internet casino gaming sites. The McDermott Bill (MB) is a companion bill to the CB for taxing licensed sites and would eventually be incorporated into (or passed in tandem with) the CB. The BB will no doubt eventually have a similar or the same companion bill for taxing licensed sites.
Quite often new federal legislation goes through a multi-year process of bills being introduced multiple times in the House and the Senate in various forms until a final wording is achieved that makes it through committees and to the full chambers for a vote and passage. This process flushes out the legislation with more thorough and complex wording that makes the new law comprehensive and unambiguous. The BB is the most recently introduced bill on this issue and contains the most developed provisions. The BB is currently considered the most likely bill to progress to a final vote in Congress.
For purposes of this FAQ, the BB and MB will be considered as one combined bill. The questions of this FAQ are answered for this combined bill.
What does “license and regulate” mean?
After the legislation is passed and signed into law, there will be a process where federal regulations are developed by the Department of Commerce to implement the provisions of the new law. Once the regulations are completed, real-money Internet poker sites will be required to apply to a State gambling regulatory agency authorized by the Dept of Commerce to issue a U.S. federal license for operating Internet poker in the U.S. The licensed sites must be located in the US, will be liable to U.S. jurisdiction and must follow all of the regulations.
The regulations will include protections against consumer fraud, cheating, underage participation and problem gaming. The licensed sites will be required to submit yearly individual taxpayer reports for the IRS. Fees for licensing and fees on player deposits will be paid by the sites. Consumers (players) will be able to use the government regulatory agency and the U.S. court system to redress any wrongs committed by any licensed site. There will also be extensive background checks of all the site owners and principals before a license is granted. Major service providers to a licensed site will be required to obtain a Certificate of Suitability from the State regulatory agency, subject to similar background checks and regulations.
How will Internet poker be taxed?
The MB proposes an 8% fee on all player deposits. This tax will be paid by the sites and cannot be deducted from player deposits. 2% will go to the federal government and 6% will go to the state where the player is located. These site taxes will probably not affect the rake charged by a licensed site as this licensing program will keep other site costs low (such as payment processing fees and legal fees) and create open market competition. The program will also increase the number of active players, bringing in strong revenues for the sites.
There is currently no cap in the bill on this player deposit fee, so sites will probably have to put a cap on player deposit amounts (~10K), which could put a damper on online high stakes play. However, this may be corrected with a fee cap added to the wording of the final legislation or to the Commerce regulations.
Can the site taxes be increased by the government later?
The site taxes on player deposits will be fixed. It will take another act of Congress (passing a new bill to amend the licensing program) to increase the fees.
Will I have to pay taxes on my Internet poker winnings?
This legislation does not change the answer to this question. Poker winnings and losses are currently reportable to the IRS as gambling winnings and losses (see here for more details). Licensed sites will be required to make appropriate individual taxpayer reports each year for the IRS. The sites will also be required to do income tax withholding on tournament winnings of $5K or more, but only if the US player fails to provide a valid Taxpayer Identification Number (e.g. Social Security Number). Non-US players may be subject to tax withholding on all their winnings, depending on their country's tax treaty with the US.
Will the current offshore sites be allowed to get a U.S. license?
Initially, only major US casinos, racetracks, cardrooms and slot manufacturers will be eligible for a license. Two and half years after enactment of this bill, the Secretary of Commerce can expand licensing to others, at its discretion.
The current wording of the bill would allow current offshore sites to be eligible for an initial license if they purchase a qualified US casino by 10 days before enactment of the bill. Alternatively, they could become approved software providers for US-licensed sites.
State licensing agencies are required to consider the scope of any unlicensed Internet poker and unlicensed Internet gambling by license applicants prior to enactment of this bill. But this is not an automatic disqualification for a license.
Is there a blackout period for sites after enactment of this bill?
Yes. The provisions of this bill take effect 30 days after enactment. The federal regulations for implementation will be issued within 180 days. This leaves a period of 150 days where unlicensed sites will be illegal. There will no doubt be some offshore sites that don't intend to become licensed who will skirt the law and continue to accept US players, just as there are now. It will not be illegal for US players to play on such illegal sites.
Will any states be excluded from the federal licensing program?
No state will be automatically excluded. The bill does include a provision that gives each state the opportunity to opt out of the program, which is a necessary provision for states rights. It is unlikely that a bill would be passed without such a provision. Licensed sites are forbidden to allow bets from anyone who resides in an opt-out state.
Who will decide if my state will opt out?
The state opt out provision allows the state Governor to opt out by written notice to the federal Secretary of Commerce. However, this does not automatically imbue the Governor with the authority to make the decision for his state. Each state Governor has their powers of office defined by the constitution and laws of his state. In some states the Governor may have the authority, but it is more likely that the state legislature will have to weigh in on the issue. There will no doubt be political battles in many states on the opt-out issue.
What if it is currently illegal in my state to play poker online?
The BB contains a provision that this bill supersedes all state laws on Internet gambling and Internet poker. Under this provision, if a state does not opt out, the federal licensing bill will make Internet poker at licensed sites legal in the state, superseding any current state law.
What happens if my state opts out?
In states that opt out, both licensed and unlicensed sites will be illegal. Under the BB, an opt-out state cannot adopt its own intrastate licensing program. If a state implements intrastate Ipoker before enactment of the BB, any site already licensed for intrastate Ipoker will be legal whether the state is opted-in or opted-out of the federal program.
There will probably still be some unlicensed sites that stay open to players in the opt-out states. The penalty in the MB for unlicensed sites operating in the opt-out states (or in any state) is a 50% fee on player deposits. Since these sites will not be located in the U.S., it is unlikely that the government will be able to collect this fee from the sites. However, they will be operating illegally under U.S. law, and will be subject to seizure of funds, blocking of financial transactions, indictments, etc.
It will not be illegal under the BB for players to play on unlicensed or illegal sites. However, the penalty provision in the MB makes both the site and the player liable for the 50% penalty fee. It is unprecedented in federal law to make the consumer liable for the illegal commerce of a business enterprise, so this language may not survive to the final version of the bill.
Does the bill overturn the UIGEA?
No, it does not overturn the UIGEA (Unlawful Internet Gambling Enforcement Act). The UIGEA makes it illegal for sites to accept money for "unlawful Internet gambling". If a federal licensing bill is passed that says online poker is lawful on licensed sites, the UIGEA would no longer apply to those financial transactions. The UIGEA would still apply to unlicensed and illegal sites.
The BB does strengthen the UIGEA as well. It expressly makes all unlicensed online poker sites illegal, and expressly makes all Internet casino gambling sites illegal. It also sets up a system for enforcement of the UIGEA whereby the federal government issues a list of illegal gambling sites for use by financial service providers (banks, etc.) to block transactions to any site on the list.
Will U.S. players be able to play with non-U.S. players?
The BB does have a provision requiring licensed sites to check the location of players to ensure that they are in a jurisdiction where online poker is legal at the time of play. This provision does not specify that the player must be located only in the U.S.
The BB provisions leave the door open for foreign players and combined international player pools. This may be implemented over time through compacts between State licensing agencies and foreign licensing authorities. Commerce will probably weigh in with regulatory oversight as well.
Can the government dictate games and limits allowed?
Except in regards to self-exclusion options for players who suffer from compulsive gaming, there are no provisions in the bill for the federal government to specify game selection, buy-in limits, stake limits, betting limits, etc.
The bill does allow each state to set such limits as part of the state opt out provision. However, the bill also requires sites to block all play from any state that sets such limits. So the bill is contradictory on this point and needs clarification.
What will be the age limit for players?
The age limit is 21. The bill would unlikely pass in Congress if it had a lower age limit, so it is not a provision open to debate or negotiation. This age limit might have a chance to be changed down the road, but for now it is pretty well set in stone.
When will the bill come before Congress for a vote?
The current bills remain active through the end of the 112th Congressional Session on January 3, 2013. If not acted upon by then, new bills will have to be introduced in the 113th Congressional Session and the process starts all over.
The process for passing a Congressional bill is complicated and lengthy. Barton has stated that he expects it to take about a year to pass his bill (summer 2012).
Send this letter to your friends, family and co-workers:
Quote:
Dear _________,
Please take a few moments to help me and fellow American poker players fight for our right to play Internet poker. Although it is currently still legal in most of the U.S. for anyone to play poker online, the current policy of our federal government is to interfere with our access to the sites and to attempt to block all related financial transactions.
Please help us lobby our federal and state government leaders and representatives to pass legislation to license and regulate Internet poker so all U.S. citizens will have unhindered access to licensed sites, as well as needed consumer protections. By using the link below, you can send pre-formatted e-mail letters through the Poker Players Alliance. It should take you only two or three minutes to send all the letters, and only requires that you enter your name, address, e-mail and phone (enter 999-999-9999 if you don't want to use your real one).
The first one is the official federal govt site.
The last one includes an upvote and comment system. Please upvote.
The bill can also be upvoted at PopVox.
The bill sponsor is: (Thanks to sluggger5x and Thew92 for all the facebook & twitter links!)
The Constitutional Authority cited for HR 2366 is the Commerce Clause of the US Constitution.
Who Licenses and Regulates
Most of this bill is about the relationship between the new Office of Internet Poker Oversight in the federal Commerce Department, the state agencies authorized by the Commerce Department to license and regulate poker sites and the licensed sites. The bill defines the general requirements, but leaves much of the licensing and regulatory details up to the state agencies.
Prohibited Internet Gambling
All Internet Gambling will be prohibited except:
Sites licensed under this bill for Internet poker.
Sites operating outside the US that don't take wagers from the US.
Horseracing sites legal under the Horseracing Act
Intrastate Lotteries
Skill Game sites that are legal under existing laws.
Intratribal I-gaming
Intrastate I-gaming that was licensed by a state before enactment of this bill.
The penalty on site operators for prohibited I-gambling is fines and up to 3 years imprisonment. This bill does not make it illegal for players to play on prohibited sites.
Unlicensed Internet Poker
The civil penalty for operating any site that is required to get a US license but doesn't have one is up to the total amounts wagered, or $1M/day of operation, whichever is greater. Criminal prosecution under other laws can apply as well.
There are no player penalties for unlicensed play.
State Agencies
Any state that wishes to license I-poker sites can request authorization from Commerce for their designated agency to become an authorized State Agency for licensing and regulation. Commerce will examine the qualifications of the agency for approval, including such things as experience, size and qualifications of staff, enforcement and regulatory authority of the agency and conflicts of interest.
Site Licensing
Sites will apply to the State Agency for a license in the state where their gaming servers are located.
Sites must locate all their remote gaming equipment (gaming, customer interface, financial, etc.) within the US. The licensing State Agency can require all such equipment to be located within their state for purposes of regulation.
Initially, the only entities eligible for a license are applicants that own or are owned by one of these on the date that is 10 days before enactment of the bill or for five years before applying for the license:
Casino Gaming Facility: Operating 500 or more gaming devices (slots, vlts, etc., but not parimutuel wagering machines) in one location.
Qualified Card Room: licensed for at least 250 tables.
Qualified Race Track: licensed for 500 or more gaming devices in one location, or $200M or more bets on horse racing during 3 of the last 5 years before enactment.
In addition, slot machine or mobile gaming (those used at b&m casinos) manufacturers that have been supplying Casino Gaming Facilities for at least 5 years are eligible.
Two years after issuance of the first license, Commerce can expand this (any way that want) at their discretion, with public notice and comment.
All suppliers for the sites must apply for a Certificate of Suitability from the State Agency.
Licenses last 5 years, and can be renewed.
Licensed sites must agree to US jurisdiction.
Licensing Qualifications
This is pretty much up to the State Agencies. The bill just requires normal licensing standards like honesty of the persons, criminal background, experience, financially qualified, etc.
The State Agencies are required to consider the scope of any unlicensed I-gaming operated by the applicant prior to enactment of this bill (e.g., offshore sites), but no prohibition against them is specified.
Licensee Requirements
Licensees must comply with all State Agency regulations.
Licensees must have systems in place for:
Age verification (21+).
Location verification.
Taxes collected or reported on payment of proceeds (details below).
Payment of site taxes.
Prevention of fraud, money laundering and terrorist financing.
Player privacy and security protection.
Honesty and fairness of games.
Prevention of cheating. collusion, use of cheating devices, use of bots.
Licensing Fees
State Agencies can assess user fees on license applicants to cover the costs of investigations.
State Agencies can assess user fees on licensees to cover the costs of licensing and regulation, plus an amount for the feds to cover their costs.
All state fees collected are held by the US Treasury, accessible to the state for payment of costs.
These fees are just to cover costs.
State Opt-Outs
States are opted-in unless they opt out. Opt outs are by notice of the state governor or chief executive. No details are specified as to whether any action is required by a state legislature to authorize the governor to opt out. This would probably fall to state law whether the governor or the legislature has this authority under their state constitution.
Sites cannot accept play from anyone who resides in an opt-out state.
*Warning Bells*: The state opt out provision is written in a way that indicates that a state can limit the games offered, not just a straight opt-in/opt-out. However, the provision wording also specifies that licensed sites are not allowed to accept bets from anyone residing in a state that limits the games. It doesn't specify that a site has to limit play accordingly to those residents. The site can't take any play from those residents. This provision is contradictory.
Player Issues
The State Agency determines what game is acceptable as "Internet Poker" for a licensee. Another state agency or licensee can file a challenge with Commerce. Commerce decides within 30 days. Licensee or state agency can challenge decision in United States District Court for the District of Columbia
If a license is revoked, site must return player funds within 30 days to all players. Funds not returned must be placed in escrow under control of the Commerce.
Sites must have in place protections for compulsive gaming, including self-exclusion option. If a player self-excludes from one site, they will be excluded from all licensed sites.
If a court or related state agency makes notice of a child support delinquent, they will be put on the exclusion list. Only the same court or agency can remove them.
No use of credit cards allowed.
No Internet poker parlors allowed (i.e., live venues offering public play on Internet poker).
Cheating
The following forms of cheating are prohibited:
Violating site rules of play for the purpose of obtaining prohibited or unfair advantage.
Use of software or other device violating site rules to obtain advantage.
Use of cheating device to cheat or defraud any licensee or player.
Bots forbidden.
Penalties possible upon conviction:
Permanent ban from play.
Fines.
Up to 3 years imprisonment.
Site Taxes
This bill does not specify any taxes on licensed sites. I assume this will come in the form of a companion bill, such as the McDermott bill, or by later amendment to this bill.
Player Income Taxes
This bill does not make any changes to income taxes for players. It only specifies that sites must do tax collecting or reporting at the time of "any payment of proceeds". Players will continue to be liable for US income tax on all their poker winnings just as they are now (see this thread).
The only federal income tax collecting and reporting currently required of gaming establishments for poker is:
As with live play, US players are not subject to withholding if they provide their Taxpayer ID Number (likely a W-9 Form to the site indicating that you are not subject to income tax withholding). Otherwise, poker players will be subject to 31% backup withholding on tournament winnings of 5K or more. This is withholding of taxes, not necessarily equal to the amount of taxes owed on winnings when filing - overpayments can be refunded.
Foreign players will be subject to 30% withholding on all poker winnings unless they provide the proper documentation that they are from a country with a tax treaty on gambling winnings, just as with live play.
UIGEA-Strengthening
Requires the Treasury to publish a list of unlawful Internet gambling sites. This list will be used by payment processors (banks, etc.) to block transactions to the sites.
Non-US Players
It is possible under the provisions of this bill that players located outside the US will be allowed on the US licensed sites. The bill provisions specifically authorize licensed sites to accept bets from US players. The sites must also ensure that players are located in a jurisdiction where it is legal (e.g., no players from opt-out states). The bill does not have a provision that specifically forbids or outlaws licensed sites from taking bets from non-US players who are located in a jurisdiction where it is legal.
This does not necessarily mean that non-US players will be allowed. The regulations developed for implementation of this bill might forbid it. But the door is left open by the wording of this bill to allow it.
Other Legal Matters
Specifies that this act supersedes all state and tribal laws with regards to Internet Gambling and Internet Poker.
Specifies Wire Act does not apply to this act and horseracing act.
Specifies UIGEA does not apply to licensed play.
Commerce has 6 months to issue regulations to implement this bill.
Google Spreadsheet of all Congresscritters (including contact info, current stance, facebook pages, etc.)
[Thanks to TruFloridaGator for making this available and keeping it updated.] https://docs.google.com/spreadsheet/...3OUpkSXc#gid=0
Last edited by PokerXanadu; 12-25-2011 at 04:57 PM.
Two Plus Two
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