Reid Bill to License U.S. Online Poker (failed to pass in late 2010)
12-02-2010
, 06:36 PM
Summary by NoahSD. Thanks, Noah! IF YOU HAVE A QUESTION, PLEASE READ THE SUMMARY IN ITS ENTIRETY AND CONSIDER WHETHER YOUR QUESTION HAS BEEN EXPLICITLY ANSWERED BEFORE ASKING IT. However, still feel free to debate points or get clarification if you don't understand something. We will update it as necessary.
Sticky link with some info: Sticky Link
Quote:
Summary (not calling it cliffs cause it ain't so short):
The Congress is currently in a lame duck session. Basically a bunch of Dems got voted out, but there's a 1.5 month window where they're still in control. That window technically lasts until January third, but in practice they usually break for Christmas in mid December unless they're really fighting over stuff. For a number of reasons (very few of which have to do with idealogical differences), the general consensus is that the Dems are much more likely to help us out than the Reps, so most people view this as our best chance to get something done for the next 2 years.
Enter Senator Harry Reid of Nevada. Senator Reid (majority leader of the senate, so quite a powerful dude) is considering attaching a bill to license and regulate online poker (only poker) to other legislation that's almost definitely going to pass. The most likely target is a bill to extend tax cuts that the Dems and Reps have been negotiating over since the election. Nobody's really sure how likely this is to actually happen, as it's likely to be an unpopular move if the Reps decide to make a big deal out of it. However, there's been very little resistance so far. The Dems also seem to be caving pretty hard on the tax cut debate, so the final bill might be very much to the Reps liking and therefore much less likely to garner complaints.
An old draft of the bill has leaked, and we've gotten some inside information from people who work in the senate and PPA members who are negotiating right now. In no particular order, here's a list of things about the bill that are probably true true. (REMEMBER THAT THIS IS BASED ON LEAKS AND AN OLD DRAFT OF A BILL THAT IS STILL A WORK IN PROGRESS AND WON'T NECESSARILY PASS.:
Blackout
The big thing that everyone's upset about is a fifteen month "blackout" period. No site will be able to get licensed until fifteen months after the bill goes into effect. Sites that want to get licensed that are currently serving US players will have to stop during those fifteen months.
It seems that Reid wants this provision for two reasons. First of all, they want some time to set up regulation. Second, they don't want to give sites that have arguably been ignoring US law for years to get a leg up over US companies that have been willing to accept the DoJ's argument that online poker was illegal in the US.
There's a ton of evidence that Stars and FTP will go along with this. So if this passes, there will probably be a fifteenish month period when US players are not able to play on Stars.
Sites that offered sports betting are pretty likely not to bother with this. Sports betting is clearly covered by the wire act, so there's basically no way that anyone who ever offered it could argue that they weren't blatantly violating US law for years. In particular, Bodog is likely to just totally ignore this law if it passes and continue serving US residents throughout the blackout.
For other sites the picture is less clear. I think Cake still serves Washington residents, so that would presumably be an obstacle for them if they wanted to get licensed, and it also suggests that they might be willing to ignore this law. Cereus still serves Washington as well and also obviously has a really sketchy past, so it's unclear if they'll bother to get a license. Cereus also spreads table games, which were already in less of a grey area than poker and will be even more unambiguously illegal after this law is passed, so that's more reason for them to not bother with this. I know nothign about any of the other smaller sites that serve US residents.
The current information from the PPA is that there will be thirty days after the bill passes in which basically nothing happens, then a thirty day grace period in which the sites can still serve Americans (so we get to play for sixty days total), and then another thirty in which the sites have to cash out all Americans. So, there's no reason to worry about getting money out now.
The PPA has been arguing that even though this sucks, it's necessary. They say that the current status quo is getting less and less stable, this is our best chance to fix things, and there's no way we get anything through without a blackout period. Players are split on the issue.. some saying that a fifteen month break (with Bodog and maybe some other sites still around) is worth it for eventualy legality and much softer games and some saying it's not.
A few posters have offered their souls to the devil in exchange for a bill without a blackout. So far, the devil has not commented.
Tax
The tax is pretty damn small. It's 20% on the poker site's revenues (aka rake). This works out to be much less than the current cost of getting around the US government's attempts to prevent Americans from getting money on and off. So, there's no reason to expect rakes to go up as a result of this. There's some reason to expect rakes to go down, but I wouldn't hold your breath if I were you.
(A lot of people are confused by the wording of the bill and think that this is a tax on deposits. It is not a tax on deposits. It's just worded a little funny because lawyers need work just like online poker players need work. It's a tax on revenues and it's quite low.)
The bill also has some provisions to make sure that poker players pay taxes on their winnings. You should pay your taxes anyway, so nobody here will have any sympathy for you if you have a problem with that.
No Penalty for Sites Currently Facing US Players
Stars and FTP come out smelling like roses. An old version of the bill (actually the one that leaked) said that they'd be penalized for facing the US market when it was arguably illegal. People who are in the know say that that has been removed.
No Euros for a While
Non-US players won't be allowed to play on US-licensed sites. So that would be something like the equivalent of Stars.fr and FTP.fr. The version of the bill that I have says that three years after the blackout (so over four years from now), they might be allowed in if some bureaucrats decide to let them in.
State-by-State Crap
There is no way that the federal government will force states to make online gambling legal. That's arguably unconstitutional, and it's just not something any senator would do. So, states have to have some way to make a choice about whether or not they want to participate. How exactly they are allowed to make that choice is pretty crucial.
The old draft of the bill that I have says that only states that already allow commercial poker in some form ("at least" California, Colorado, Delaware, Florida, Iowa, Kansas, Michigan, Mississippi, Missouri, Nevada, New Jersey, New Mexico, Ohio, Pennsylvania, and West Virginia) would be involved automatically. The others would have to send a letter from their governor before the end of 2011 to be included. That would not be good as a lot of governors would choose not to send such a letter, preferring to just stay out of the issue.
Fortunately, the PPA has been saying that this has been improved. The best-case scenario is one in which all states are automatically involved and they can only get out if the state legislatures (which in most states have a lot of trouble getting anything done) vote to opt them out. The PPA has been saying that something like this is likely to be in the final bill, so that's pretty good for us.
21+
The bill is 21+. This probably isn't gonna change. Of course, with the fifteen month blackout, this will only really affect people who are younger than like 19.5ish.
The Congress is currently in a lame duck session. Basically a bunch of Dems got voted out, but there's a 1.5 month window where they're still in control. That window technically lasts until January third, but in practice they usually break for Christmas in mid December unless they're really fighting over stuff. For a number of reasons (very few of which have to do with idealogical differences), the general consensus is that the Dems are much more likely to help us out than the Reps, so most people view this as our best chance to get something done for the next 2 years.
Enter Senator Harry Reid of Nevada. Senator Reid (majority leader of the senate, so quite a powerful dude) is considering attaching a bill to license and regulate online poker (only poker) to other legislation that's almost definitely going to pass. The most likely target is a bill to extend tax cuts that the Dems and Reps have been negotiating over since the election. Nobody's really sure how likely this is to actually happen, as it's likely to be an unpopular move if the Reps decide to make a big deal out of it. However, there's been very little resistance so far. The Dems also seem to be caving pretty hard on the tax cut debate, so the final bill might be very much to the Reps liking and therefore much less likely to garner complaints.
An old draft of the bill has leaked, and we've gotten some inside information from people who work in the senate and PPA members who are negotiating right now. In no particular order, here's a list of things about the bill that are probably true true. (REMEMBER THAT THIS IS BASED ON LEAKS AND AN OLD DRAFT OF A BILL THAT IS STILL A WORK IN PROGRESS AND WON'T NECESSARILY PASS.:
Blackout
The big thing that everyone's upset about is a fifteen month "blackout" period. No site will be able to get licensed until fifteen months after the bill goes into effect. Sites that want to get licensed that are currently serving US players will have to stop during those fifteen months.
It seems that Reid wants this provision for two reasons. First of all, they want some time to set up regulation. Second, they don't want to give sites that have arguably been ignoring US law for years to get a leg up over US companies that have been willing to accept the DoJ's argument that online poker was illegal in the US.
There's a ton of evidence that Stars and FTP will go along with this. So if this passes, there will probably be a fifteenish month period when US players are not able to play on Stars.
Sites that offered sports betting are pretty likely not to bother with this. Sports betting is clearly covered by the wire act, so there's basically no way that anyone who ever offered it could argue that they weren't blatantly violating US law for years. In particular, Bodog is likely to just totally ignore this law if it passes and continue serving US residents throughout the blackout.
For other sites the picture is less clear. I think Cake still serves Washington residents, so that would presumably be an obstacle for them if they wanted to get licensed, and it also suggests that they might be willing to ignore this law. Cereus still serves Washington as well and also obviously has a really sketchy past, so it's unclear if they'll bother to get a license. Cereus also spreads table games, which were already in less of a grey area than poker and will be even more unambiguously illegal after this law is passed, so that's more reason for them to not bother with this. I know nothign about any of the other smaller sites that serve US residents.
The current information from the PPA is that there will be thirty days after the bill passes in which basically nothing happens, then a thirty day grace period in which the sites can still serve Americans (so we get to play for sixty days total), and then another thirty in which the sites have to cash out all Americans. So, there's no reason to worry about getting money out now.
The PPA has been arguing that even though this sucks, it's necessary. They say that the current status quo is getting less and less stable, this is our best chance to fix things, and there's no way we get anything through without a blackout period. Players are split on the issue.. some saying that a fifteen month break (with Bodog and maybe some other sites still around) is worth it for eventualy legality and much softer games and some saying it's not.
A few posters have offered their souls to the devil in exchange for a bill without a blackout. So far, the devil has not commented.
Tax
The tax is pretty damn small. It's 20% on the poker site's revenues (aka rake). This works out to be much less than the current cost of getting around the US government's attempts to prevent Americans from getting money on and off. So, there's no reason to expect rakes to go up as a result of this. There's some reason to expect rakes to go down, but I wouldn't hold your breath if I were you.
(A lot of people are confused by the wording of the bill and think that this is a tax on deposits. It is not a tax on deposits. It's just worded a little funny because lawyers need work just like online poker players need work. It's a tax on revenues and it's quite low.)
The bill also has some provisions to make sure that poker players pay taxes on their winnings. You should pay your taxes anyway, so nobody here will have any sympathy for you if you have a problem with that.
No Penalty for Sites Currently Facing US Players
Stars and FTP come out smelling like roses. An old version of the bill (actually the one that leaked) said that they'd be penalized for facing the US market when it was arguably illegal. People who are in the know say that that has been removed.
No Euros for a While
Non-US players won't be allowed to play on US-licensed sites. So that would be something like the equivalent of Stars.fr and FTP.fr. The version of the bill that I have says that three years after the blackout (so over four years from now), they might be allowed in if some bureaucrats decide to let them in.
State-by-State Crap
There is no way that the federal government will force states to make online gambling legal. That's arguably unconstitutional, and it's just not something any senator would do. So, states have to have some way to make a choice about whether or not they want to participate. How exactly they are allowed to make that choice is pretty crucial.
The old draft of the bill that I have says that only states that already allow commercial poker in some form ("at least" California, Colorado, Delaware, Florida, Iowa, Kansas, Michigan, Mississippi, Missouri, Nevada, New Jersey, New Mexico, Ohio, Pennsylvania, and West Virginia) would be involved automatically. The others would have to send a letter from their governor before the end of 2011 to be included. That would not be good as a lot of governors would choose not to send such a letter, preferring to just stay out of the issue.
Fortunately, the PPA has been saying that this has been improved. The best-case scenario is one in which all states are automatically involved and they can only get out if the state legislatures (which in most states have a lot of trouble getting anything done) vote to opt them out. The PPA has been saying that something like this is likely to be in the final bill, so that's pretty good for us.
21+
The bill is 21+. This probably isn't gonna change. Of course, with the fifteen month blackout, this will only really affect people who are younger than like 19.5ish.
A Bloomberg writeup....
http://www.bloomberg.com/news/2010-1...-gambling.html
Quote:
Three U.S. House Republicans are objecting to what they call a “secretive, closed-door, undemocratic” effort in the Senate to pass legislation that would legalize and tax some Internet gambling before Congress adjourns this year.
Representatives Spencer Bachus, Dave Camp and Lamar Smith, all in line to be committee chairmen with oversight of online gambling when Republicans take control of the House in January, said they have learned that the Senate may attach a measure to “must-pass” legislation during the current lame-duck session.
“Creating a federal right to gamble that has never existed in our country’s history and imposing an unprecedented new tax regime on such activity require careful deliberation, not back- room deals,” the lawmakers said in a Dec. 1 letter to Senate Majority Leader Harry Reid and his Republican counterpart, Mitch McConnell of Kentucky.
Internet gambling has provoked heated debate in Congress over the past few years. Proponents say regulating online poker and other games would bring billions into federal coffers, while opponents contend that it would encourage Americans to make poor financial choices and could open the market to children.
A House committee in July approved legislation that would legalize some Internet gambling, allowing U.S. residents to place online wagers with companies the Treasury Department has licensed. It has not been taken up by the full House or in the Senate.
Processing Payments
The House measure, sponsored by Massachusetts Democrat Barney Frank, chairman of the House Financial Services Committee, would override a law designed to block such betting. That law, which was enacted in 2006 and took effect in June, bars banks from processing payments to offshore gambling websites.
The Senate legislation is similar to Frank’s bill. The House proposal requires licensed gambling companies to have safeguards to protect against underage and compulsive gambling and to prevent people from placing bets online in states that prohibit it.
Reid, of Nevada, has large gambling interests in his state. A spokesman for Reid, Jim Manley, said in an e-mail that he had no comment.
The three House opponents -- Bachus of Alabama, Camp of Michigan and Smith of Texas -- are in line to be chairmen of the Financial Services Committee, the Ways and Means Committee and the Judiciary Committee, respectively. Each panel would have some jurisdiction over the measure.
“We also are concerned that this new rush to embrace Internet casino gambling might be partially motivated by one of the gravest sins that afflicts this Congress: desperation for more tax dollars to pay for ever-increasing federal spending,” the lawmakers said in the letter. “Congress should not take advantage of the young, the weak and the vulnerable in the name of new revenues.”
Approving such controversial legislation by attaching it to another bill would be “a secretive, closed-door, undemocratic process,” they said.
Representatives Spencer Bachus, Dave Camp and Lamar Smith, all in line to be committee chairmen with oversight of online gambling when Republicans take control of the House in January, said they have learned that the Senate may attach a measure to “must-pass” legislation during the current lame-duck session.
“Creating a federal right to gamble that has never existed in our country’s history and imposing an unprecedented new tax regime on such activity require careful deliberation, not back- room deals,” the lawmakers said in a Dec. 1 letter to Senate Majority Leader Harry Reid and his Republican counterpart, Mitch McConnell of Kentucky.
Internet gambling has provoked heated debate in Congress over the past few years. Proponents say regulating online poker and other games would bring billions into federal coffers, while opponents contend that it would encourage Americans to make poor financial choices and could open the market to children.
A House committee in July approved legislation that would legalize some Internet gambling, allowing U.S. residents to place online wagers with companies the Treasury Department has licensed. It has not been taken up by the full House or in the Senate.
Processing Payments
The House measure, sponsored by Massachusetts Democrat Barney Frank, chairman of the House Financial Services Committee, would override a law designed to block such betting. That law, which was enacted in 2006 and took effect in June, bars banks from processing payments to offshore gambling websites.
The Senate legislation is similar to Frank’s bill. The House proposal requires licensed gambling companies to have safeguards to protect against underage and compulsive gambling and to prevent people from placing bets online in states that prohibit it.
Reid, of Nevada, has large gambling interests in his state. A spokesman for Reid, Jim Manley, said in an e-mail that he had no comment.
The three House opponents -- Bachus of Alabama, Camp of Michigan and Smith of Texas -- are in line to be chairmen of the Financial Services Committee, the Ways and Means Committee and the Judiciary Committee, respectively. Each panel would have some jurisdiction over the measure.
“We also are concerned that this new rush to embrace Internet casino gambling might be partially motivated by one of the gravest sins that afflicts this Congress: desperation for more tax dollars to pay for ever-increasing federal spending,” the lawmakers said in the letter. “Congress should not take advantage of the young, the weak and the vulnerable in the name of new revenues.”
Approving such controversial legislation by attaching it to another bill would be “a secretive, closed-door, undemocratic process,” they said.
Last edited by Berge20; 12-07-2010 at 12:22 PM.
12-02-2010
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12-02-2010
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