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Old 11-08-2009, 12:16 PM   #1
PokerXanadu
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The UIGEA and Federal Licensing Bills FAQ

What is the UIGEA?

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.

Here is all the info about compliance with the UIGEA from the American Banking Association. Most of the documents are restricted to members only, but these few can be viewed by anyone (pdf files):
•Compliance Overview (5/28/09)
•Four Keys to UIGEA Compliance
•Compliance Overview (5/28/09)

More about ACH transactions:
http://www.nacha.org/ACH_Rules/ACH%2...12,%202009.pdf

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.

More info on ABA numbers:
http://en.wikipedia.org/wiki/Routing_transit_number

Simple practical advice:

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.?

Send the PPA letters to your lawmakers:
http://capwiz.com/pokerplayersalliance/home/

Become a member of the PPA:
https://theppa.org/join/

Donate to the PokerPAC:
http://theppa.org/about/pokerpac/donations/

Last edited by PokerXanadu; 06-08-2013 at 09:54 PM.
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Old 11-27-2009, 07:20 PM   #2
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The UIGEA and Federal Licensing Bills FAQ

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.

======================

Spoiler:

Last edited by PokerXanadu; 11-26-2011 at 09:24 AM. Reason: at request of PX
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Old 08-23-2010, 03:42 PM   #3
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Re: The UIGEA and Federal Licensing Bills FAQ

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:

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Old 07-17-2011, 10:04 AM   #4
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Re: The UIGEA and Federal Licensing Bills FAQ

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?

H.R. 1174: The Internet Gambling Regulation, Consumer Protection and Enforcement Act (Campbell bill) [CB]
Main discussion thread:
John Campbell/Barney Frank sponsored Internet gambling bill introduced

H.R. 2230: Internet Gambling Regulation and Tax Enforcement Act of 2011 (McDermott Bill) [MB]
Main discussion thread:
HR 2230 introduced - McDermott, Campbell, Frank bill

H.R. 2366: Internet Gambling Prohibition, Poker Consumer Protection, and Strengthening UIGEA Act of 2011 (Barton bill) [BB]
Main discussion threads:
Cliffs: HR 2366, the Online Poker Act of 2011
HR 2366, the Online Poker Act of 2011, introduced

What is the difference between these bills?

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).

For information on the procedures to pass a bill:

Please watch:
http://www.youtube.com/watch?v=tyeJ55o3El0

And read:
http://www.votesmart.org/resource_govt101_02.php

And study:
http://www.lexisnexis.com/help/CU/Th...ecomes_Law.htm

What can I do to help get the legislation passed?

Participate in the daily Fight for Poker Rights actions.

Send the PPA letters to your lawmakers.

Become a member of the PPA.

Donate to the PokerPAC.

Volunteer to help the PPA in your state.

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).

Send the PPA letters to your lawmakers:
http://capwiz.com/pokerplayersalliance/home/

Thanks so much!

Best,

[your name]

P.S. Please forward this message to your friends and family, too.

Last edited by PokerXanadu; 10-10-2012 at 05:09 AM.
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Old 07-17-2011, 10:12 AM   #5
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Re: The UIGEA and Federal Licensing Bills FAQ

Cliffs of H.R. 2366, the Barton bill.

The Internet Gambling Prohibition, Poker Consumer Protection, and Strengthening UIGEA Act of 2011
Also referred to as The Online Poker Act.

Here is the PDF of the Barton Bill
Here is html text of the Barton Bill (click on "Printer Friendly" link to see entire bill)

Here are links to the three places where the bill can be tracked:

Library of Congress: Thomas
Govtrack
OpenCongress

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!)

Rep Barton, Joe [TX-6]
https://www.facebook.com/RepJoeBarton
https://twitter.com/#!/RepJoeBarton

The bill co-sponsors so far are:

Rep Amodei, Mark E. [NV-2] - 4/19/2012
http://www.facebook.com/MarkAmodei
http://www.amodei4nevada.com/

Rep Andrews, Robert E. [NJ-1] - 7/8/2011
https://www.facebook.com/robertandrews

Rep Berkley, Shelley [NV-1] - 6/24/2011
https://www.facebook.com/shelleyberkley
https://twitter.com/#!/RepBerkley

Rep Berman, Howard L. [CA-28] - 8/12/2011
https://www.facebook.com/RepHowardBerman
https://twitter.com/#!/RepHowardBerman

Rep Campbell, John [CA-48] - 6/24/2011
https://www.facebook.com/JohnCampbell
https://twitter.com/#!/repjohncampbell

Rep Capuano, Michael E. [MA-8] - 7/19/2011
https://www.facebook.com/mecapuano

Rep Cohen, Steve [TN-9] - 6/24/2011
https://www.facebook.com/CongressmanSteveCohen
https://twitter.com/#!/RepCohen

Rep Conyers, John, Jr. [MI-14] - 6/24/2011
https://www.facebook.com/CongressmanConyers
https://twitter.com/#!/repjohnconyers

Rep Engel, Eliot L. [NY-17] - 7/19/2011
https://www.facebook.com/pages/Eliot...984852?sk=wall
https://twitter.com/#!/RepEliotEngel

Rep Filner, Bob [CA-51] - 7/19/2011
https://www.facebook.com/bobfilner
https://twitter.com/#!/CongBobFilner

Rep Frank, Barney [MA-4] - 6/24/2011
https://www.facebook.com/barneyfrank

Rep Gerlach, Jim [PA-6] - 8/12/2011
https://www.facebook.com/JimGerlach
https://twitter.com/#!/jimgerlach

Rep Grimm, Michael G. [NY-13] - 6/24/2011
https://www.facebook.com/repmichaelgrimm

Rep Heck, Joseph J. [NV-3] - 7/19/2011
https://www.facebook.com/RepJoeHeck
https://twitter.com/#!/Heck4Nevada

Rep Himes, James A. [CT-4] - 8/12/2011
https://www.facebook.com/CongressmanJimHimes
https://twitter.com/#!/jahimes

Rep Honda, Michael M. [CA-15] - 6/24/2011
https://www.facebook.com/RepMikeHonda
https://twitter.com/#!/RepMikeHonda

Rep Israel, Steve [NY-2] - 7/19/2011
https://www.facebook.com/RepSteveIsrael
https://twitter.com/#!/repSteveIsrael

Rep King, Peter T. [NY-3] - 6/24/2011
https://www.facebook.com/reppeteking
https://twitter.com/#!/RepPeteKing

Rep Lance, Leonard [NJ-7] - 12/14/2011
http://www.facebook.com/CongressmanLance
https://twitter.com/#!/RepLeonardLance

Rep Larson, John B. [CT-1] - 8/12/2011
https://www.facebook.com/RepJohnLarson
https://twitter.com/#!/RepJohnLarson

Rep LoBiondo, Frank A. [NJ-2] - 4/19/2012
http://www.facebook.com/LoBiondoForCongress
http://lobiondoforcongress.com/

Rep Moran, James P. [VA-8] - 7/8/2011
https://www.facebook.com/RepJimMoran
https://twitter.com/#!/Jim_Moran

Rep Murphy, Tim [PA-18] - 1/31/2012
https://www.facebook.com/reptimmurphy
https://twitter.com/#!/RepTimMurphy

Rep Paul, Ron [TX-14] - 6/24/2011
https://www.facebook.com/ronpaul
https://www.facebook.com/pages/Congr...870421?sk=wall
https://twitter.com/#!/RepRonPaul

***I can't tell which Facebook link is legit. The 2nd one has the same profile pic as the Twitter. Just hit both, can't hurt!

Rep Perlmutter, Ed [CO-7] - 6/24/2011
https://www.facebook.com/pages/Congr...496459?sk=wall
https://twitter.com/#!/RepPerlmutter

Rep Polis, Jared [CO-2] - 7/8/2011
https://www.facebook.com/jaredpolis
https://twitter.com/#!/jaredpolis

Rep Sanchez, Linda T. [CA-39] - 6/24/2011
https://www.facebook.com/CongresswomanLindaSanchez
https://twitter.com/#!/RepLindaSanchez

Rep Smith, Adam [WA-9] - 4/19/2012
http://www.facebook.com/adamsmithforcongress
http://www.electadamsmith.com/

Rep Welch, Peter [VT] - 8/12/2011
https://www.facebook.com/PeterWelch

Rep Woolsey, Lynn C. [CA-6] - 7/19/2011
https://www.facebook.com/RepLynnWoolsey
https://www.facebook.com/LynnWoolsey
https://twitter.com/#!/RepLynnWoolsey

***The 1st Facebook link has the same profile pic as verified Twitter account

The House committees the bill was referred to are:

House Energy and Commerce
. Subcommittee on Commerce, Manufacturing, and Trade
House Financial Services
. Subcommittee on Financial Institutions and Consumer Credit
House Judiciary
. Subcommittee on Crime, Terrorism, and Homeland Security

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.

This bill takes effect 30 days after enacted.

Steps to Passage of This Bill

Please watch:
http://www.youtube.com/watch?v=tyeJ55o3El0

And read:
http://www.votesmart.org/resource_govt101_02.php

And study:
http://www.lexisnexis.com/help/CU/Th...ecomes_Law.htm

Last edited by PokerXanadu; 04-25-2012 at 01:39 PM.
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Old 10-13-2011, 02:10 PM   #6
PokerXanadu
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Re: The UIGEA and Federal Licensing Bills FAQ

Here are lists and links to use to contact your politicians about poker legislation:

A recent facebook list:
https://forumserver.twoplustwo.com/sh...&postcount=807

The Republican & Democrats Who Discriminate
https://forumserver.twoplustwo.com/57...-list-1045443/

Complete Senate FB list
https://forumserver.twoplustwo.com/57...sting-1032620/

Phone Numbers List
https://forumserver.twoplustwo.com/57...hread-1031075/

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 05:57 PM.
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Old 10-10-2012, 05:00 AM   #7
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Re: The UIGEA and Federal Licensing Bills FAQ

In mid-September 2012, a summary of the Reid/Kyl compromise bill (purportedly written and ready to introduce to Congress) to federally regulate the state and tribal licensing and regulation of online poker, was leaked. It is anticipated that this bill may be introduced and put to a vote in Congress, either as a stand-alone bill or as an attachment to some other legislation, during the 2012 lame-duck session of Congress.

Current political rhetoric by key Congressional members and/or their staffers paints the possibility that a federal bill strictly to make illegal Internet gambling of all sorts, including Internet poker, may be introduced in the House as a first step. Once passed, this bill would be sent to the Senate, where by plan it would be amended to include the language of the Reid/Kyl-compromise carveout for Internet poker before vote and passage.

Here is the text of the summary of the Reid/Kyl compromise bill, courtesy of QuadJacks:

Quote:
The Internet Gambling Prohibition, Poker Consumer Protection, and Strengthening UIGEA Act of 2012

1. The bill undoes the impact of the recent Justice Department Office of Legal Counsel (OLC) opinion that the Wire Act only covers sports betting and it further clarifies the prohibitions on Internet gambling in the Wire Act, the Illegal Gambling Business Act, and the Unlawful Internet Gambling Enforcement Act (UIGEA). In particular, the bill updates the 1961 Wire Act and the 1970 Illegal Gambling Business Act so that they clearly apply to modem technologies and to all forms of unlicensed Internet gambling. The bill also makes those two laws consistent with a modified UIGEA that is enhanced with stronger enforcement tools (described below).

2. Under the bill, all Internet gambling, whether interstate or intrastate, would be prohibited, except offtrack horse-race wagering under the Interstate Horseracing Act of 1978 and licensed poker. State and tribal lotteries could sell lottery tickets online but could not create online games that mimic a slot machine or other casino games. Offering unlicensed Internet gambling would constitute an express crime under the bill- subjecting the offender to up to 10 years’ imprisonment and accompanying fines – and under the Wire Act, the Illegal Gambling Business Act, and UIGEA.

3. The overall effect of the bill is to strengthen federal prohibitions on Internet gambling by expanding those prohibitions to include the vast majority of the expansive Internet gambling that the OLC legal opinion effectively permits and wholly intrastate “closed-loop” or other remote gambling. The bill also increases the capacity of law enforcement agencies to prevent illegal gambling activity.

Additional Law Enforcement Tools

4. The bill adds important tools to aid law enforcement in preventing illegal Internet gambling. Among these tools is a list of licensed online poker enterprises. Financial transactions providers may only process U.S. transactions for online poker enterprises that are on that list.

5. To deter U.S. players from patronizing illegal sites, the bill makes explicit that any property involved in or traceable to a gambling transaction in violation of the new act (including winnings) is subject to forfeiture. That same provision also clarifies existing forfeiture laws by providing that all operator proceeds from such unlawful Internet gambling activity similarly are subject to forfeiture.

6. The bill prohibits the establishment of Internet poker cafes or other locations created principally for the purpose of accessing Internet gambling, thereby ensuring that substantial gambling in public places remains confined to traditional, licensed facilities.

Limited Exception for Online Poker Only for Those States That Choose to Participate

7. The bill permits online poker, but only for persons physically located in states or on tribal lands that choose to opt in to the bill’s regime. The bill provides a voluntary election procedure by which states and tribes may choose to participate. A state or tribe may opt out simply by doing nothing. To opt in, a state must elect to participate by a simple majority vote of each chamber of the state’s legislature. A tribe may opt in if its principal chief or other chief executive officer or designated authority provides written notice to the Secretary of the Commerce Department of this election. However, a tribe may not elect to opt in if its tribal lands are within the territory of a state that has not opted in. Offering bets or wagers to or accepting bets or wagers from persons located in any state or tribal land that does not opt in is prohibited. Similarly, no licensee or other U.S. person may accept bets or wagers from persons located in other countries.

8. Online poker will be subject to stringent licensing requirements and to oversight by a new Office of Online Poker Oversight (OOPO), established within the Department of Commerce, that will have oversight of state and tribal regulatory bodies and may issue licenses directly to state-controlled entities or tribes that themselves want to operate online poker. (Those state or tribal entities also may seek licensure from a state or tribal regulatory body, provided that such body is not owned or controlled by the entity it regulates or any other online poker licensee.)

9. The bill’s principal regulatory structure is state-focused. The bill directs the Commerce Department to designate qualified bodies, which will act, along with the OOPO, as regulators of licensed online poker operators. The qualified bodies may be state agencies or tribal regulatory bodies, must possess substantial experience in regulating land-based gaming, and must meet rigorous standards set out in the bill that are designed to ensure accurate identification of customers, age and location verification, data security, and protections against collusion, fraud and compulsive gambling. The safeguards expressly mandate the use of self-exclusion lists and of biometric and GPS or materially equivalent technologies to address gambling by minors or by persons in excluded jurisdictions as well as to ensure that online poker operators use appropriate technologies. Violations of these or other requirements entail substantial civil penalties (up to $750,000 per violation) and loss of license.

10. The bill directs the Commerce Department to designate at least three “benchmark” qualified bodies that meet the requisite criteria to serve as initial regulators along with the OOPO. The benchmark qualified bodies designated by the Commerce Department must have reputations as regulatory and enforcement leaders in the gaming industry, must adhere to a strict regulatory regime, and must have sufficient staff, experience, and resources to regulate this new activity.

11. The bill requires strict scrutiny for suitability of operators and significant vendors (those who provide certain types of goods or services – such as software or intellectual property – to operators). For the first two years, in order to ensure a baseline level of expertise and experience, licensees must already be regulated operators (or affiliates of operators) of licensed land~based gambling facilities of a certain size and type (including commercial gaming operators, tracks and tribal operators) or manufacturers of certain types of regulated gaming devices.

12. In addition, licensing of persons (or use of their assets) that were involved in offering Internet gambling to United States residents after 2006 (following enactment of UIGEA) is prohibited for five years after enactment of the bill, subject to a rebuttable presumption that state or federal laws were violated by their post-UIGEA gambling activities in the United States. A person covered by this prohibition may seek relief from this sanction, but unless that person can establish to a court by a preponderance of the evidence that no state or federal laws were violated, the prohibition will stand. After the expiration of that five-year period, any such person can participate in licensed activities only jf they pass muster under the stringent suitability review that may be conducted only by the OOPO or by a benchmark qualified body.

13. The bill prescribes time frames for issuance of the regulations necessary to implement its provisions and specifies that no licensee may begin operations until at least 15 months after the date of the bill’s enactment. The bill envisions establishment of the OOPO within 6 months of enactment and the appointment of benchmark qualified bodies and issuance of regulations three months thereafter. Failure by the Commerce Department to issue regulations by that date will result in automatic adoption of the first benchmark qualified body’s regulations until the Department has prescribed its own regulations. Taken together, these time frames ensure a level playing field and prevent any one licensee from acquiring a “first mover’s advantage.”

14. The authorization for online poker is strictly limited and the bill contains a mechanism to create barriers to future expansion into other forms of Internet gambling.

Substantially All Revenue Is Dedicated To States

15. The bill establishes a 16% online poker activity fee payable by licensees on a monthly basis – 14% payable to the states or tribes and 2% to the federal government with an adjustment mechanism to redirect any unused portion of the federal fee to the states or to establish additional funds – up to a maximum of 3.5% – if necessary to fund the permitted federal uses. The federal share of the online poker activity fee will be dedicated to OOPO, law enforcement, Native American, and responsible gaming efforts. The activity fee is calculated as a percentage of eligible online poker receipts. The fee will be administered through a Treasury Department trust fund, with state and tribal receipts distributed to the respective states or tribes that have opted-in.

16. The state and tribal shares of the online poker activity fee will be apportioned based on two factors. 70% of the state and tribal portion of the online poker activity fee will be allocated based on the location of the customers from whom the licensee’s online poker receipts are generated. The remaining 30% will be paid to the state or tribe in which the licensee’s qualified body is located. (For licensees regulated directly by the OOPO, that portion will become part of the federal share.)

17. The bill requires licensees to report and to withhold online poker winnings consistent with existing federal tax law, to ensure that players’ income attributable to poker winnings are reported and applicable taxes paid.

18. The bill also allows qualified bodies and the OOPO (when acting as a qualified body) to assess user fees from applicants for licenses or significant vendor certifications in order to cover the costs of administration of the application process.

Lotteries

19. The bill imposes strict limitations on online lotteries, while respecting the right of states and tribes to sell lottery tickets online and otherwise to retain regulatory authority over their lottery activities. As noted, states and tribes will only be able to sell “tangible” tickets online, in games where winners are determined not more frequently than daily. The games themselves cannot be played online and cannot mimic online games.

Tribes and States

20. The bill treats Indian tribes fairly. Tribal regulatory bodies can become qualified bodies subject to the same criteria as state regulatory agencies. Like states, tribes can opt in to the bill’s regime, and tribes receive shares of the online poker activity fee on the same basis that applies to the states. Tribes with gaming facilities may participate as online poker operators subject to the suitability and other criteria identified above. However, tribes may not regulate themselves. Any tribe that serves as a qualified body may not also be an online poker operator for its own operation. A tribe that is precluded from opting in because the state in which it is located has not done so nevertheless may apply for designated as a qualified body.

21. The bill further provides that no decision or action taken by a tribe or state in connection with online poker activities or their participation in the regulation or operation of an online poker facility shall have any effect on non-Internet gaming activities under the Indian Gaming Regulatory Act or on any related tribal-state compact and shall not require a tribe or state to negotiate any new compact.

22. Existing gaming that is authorized, licensed, and regulated by states or tribes as of May 1,2012 is preserved.

WTO Issue

23. Finally, the bill directs the United States Trade Representative to conclude the long-stalled process of withdrawal of U.S. remote gambling commitments under the General Agreement on Trade in Services (WTO) within 180 days of enactment or, if unable to meet that deadline, to initiate WTO arbitration.
Skallagrim, (Patrick Fleming, a PPA board member and the PPA Litigation Support Director), posted this clarification of point #5:

Quote:
Originally Posted by Skallagrim
The PPA has finally got some answers regarding interpretation of the summary. While we have still not seen the actual bill (top top secret ....) Senate staffers in charge of the bill were asked directly about player penalties and they swore that the bill contains NO PLAYER CRIMINAL PENALTIES WHATSOEVER. The provision in question does what was expected, it makes it clear that no player has a right to get back any money that the government seizes from an unlicensed site (or its processor) - so your online bankroll is clearly at risk. But the provision does not make playing a crime nor make a player's personal assets the target of forfeiture.

I personally suspect the leaked summary was written by staffers in either Kyl or Heller's office and was designed to make the proposal look more like a traditional anti-gambling bill than a "legalizing online poker" bill. I also suspect that is why this provision in the summary was worded in a way that could be interpreted as more harmful to players than the bill actually is - appears many (but not all) politicians with an "R" after their name go for that "get tough on 'em" attitude. Regardless, this will not be the first federal gambling bill to allow the FBI to arrest players.
Discussion of this bill is ongoing in this thread.

Last edited by PokerXanadu; 10-10-2012 at 05:31 AM.
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Old 11-09-2012, 08:13 AM   #8
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Re: The UIGEA and Federal Licensing Bills FAQ

The 2012 Reid/Kyl draft bill became public at the end of October. It is thought that Reid may attempt to attach this bill, either as written or amended, to must-pass legislation during the 2012 Congressional lame duck session which runs from November 7, 2012 to January 3, 2013.

The ongoing discussion of this draft bill can be found in these threads:
Draft of Reid/Kyl Online Poker Bill Obtained by PPA
The what are our chances in the lame duck thread

Here are my cliffs of the draft bill provisions:

If all you want to know is the general intent of the bill, then this summary of the Sense of Congress from the bill sums it up:

Quote:
(b) Sense of Congress.—It is the sense of Congress that—

(1) Internet gambling involving house-banked games or sports betting should be strictly
prohibited;

(2) an online poker market should be limited to only those States and Indian tribes that
affirmatively choose to opt-in and the market should be regulated by State and tribal entities
that have an established track record of providing a well-regulated gaming market to United
States consumers, subject to a robust licensing and regulatory framework—
(A) to prevent underage wagering and otherwise to protect vulnerable individuals;
(B) to ensure the games are fair and are conducted honestly;
(C) to address the concerns of law enforcement; and
(D) to ensure that States and Indian tribes that wish to prohibit online poker may do
so;

(3) licensed online poker operators should be limited, at least initially, to service
providers that have an established track record of complying with a strict regulatory
environment, have an established track record of providing fair games to consumers, and
have significant goodwill and assets at stake, in addition to their online poker assets, to
ensure they would comply with the strict regulatory framework and that they only conduct
business in those States that have elected to opt-in; and

(4) Congress should ensure that any intrastate lottery transactions completed through the
use of the Internet are limited to sales of tickets and related activities so that they do not
allow for the circumvention of Congressional limits on Internet gambling on house-banked
and other casino games, without unduly limiting the power of the states to offer intrastate
lottery purchases.
Here are specifics of the provisions:

Prohibition

Every form of online wagering site that fits the definition of Class III gambling under the Indian Gaming Regulatory Act other than licensed horse race wagering, State or Tribal lottery ticket sales (has to be traditional lottery tickets, not scratch-offs, VLT games or such), intrastate remote gaming (limited), legal skill games and licensed online poker will be illegal in the US and punishable by fines, up to 10 years in prison or both.

Office of Online Poker Oversight [OOPO]

Not later than 180 days (6 months) after enactment, the Secretary of Commerce has to create the Office of Online Poker Oversight to:

1. Enact and oversee licensed and regulated online poker in the US.
2. Be a licensing and regulatory body for online poker.

Not later than 270 days (9 months) after enactment, the Secretary (or OOPO) has to publish regulations and standard for the licensing of online poker licensing and regulations for problem gaming (and these have to be equivalent to those adopted by the initial Qualified Bodies).

If the Secretary doesn't meet that 270-day deadline, then these regulations and standards become the same as those adopted by the first Qualified Body until such time as the Secretary is able to issue federal regulations.

Qualified Bodies

Not later than 150 days (5 months) after enactment, the Secretary has to publish in the Federal Register all the information necessary to submit an application to become a Qualified Body (State or Tribal agency authorized to license and regulate online poker).

State or Tribal agencies wishing to become a Benchmark Qualified Body must submit their application not later than 180 days (6 months) after enactment.

Not later than 270 days (9 months) after enactment, the Secretary (or OOPO) has to designate at least three Benchmark Qualified Bodies from those that applied by the 180-day deadline.

If the Secretary fails to designate three by the deadline, then by 300 days after enactment (10 months), the Secretary has to designate all qualified applicants who submitted an application not later than 270 days (9 months) after enactment as Benchmark Qualified Bodies.

Qualifications to become a Qualified Body must include reputation, experience, staffing, enforcement resources and “capabilities relevant to the online poker environment”; and includes consideration of years of regulatory experience, size of regulatory market, demonstrated capabilities, influence in the industry and experience working with Federal law enforcement and FinCen.

One year after appointment of the Benchmark Qualified Bodes, other State or Tribal agencies can apply to become a Qualified Body. They have to live up to the standards of the Benchmark Qualified Bodies to be accepted.

State or Tribal agencies cannot be accepted as a Benchmark Qualified Body or as a Qualified Body unless they:

1. Regulate at least 0.3 of total US gaming revenue (based on 2010 figures) for 3 out of the last 5 years.
2. Their State or Tribe has opted in.
3. None of the agency members has ties to owners of sites that haven’t yet been licensed or significant vendors that haven’t yet been found suitable, or to illegal gambling sites.

Site Licensing

Sites need one license from one Qualified Body to offer online poker to anyone located within any opt-in state or tribal lands.

Licensees can have separate operations outside the US for online poker and/or online gambling as long as there is no commingling of players, funds or records.

License applicants must agree to be subject to US courts as well as the courts of the State or Indian tribe where their Qualified Body is located.

The bill covers significant details of how a Qualified Body determines the suitability of the license applicant and their significant vendors.

A license application will be denied if any of these are true:

1. The applicant has been convicted of an offense subject to one year or more imprisonment.
2. Is delinquent in any Federal or State tax.
3. Took bets or wagers on sporting events in violation of State or Federal law (or affiliated with anyone who has done so).

The bill covers significant details of how a Qualified Body determines the suitably of significant vendors (service providers) of a license applicant, to receive a certificate of suitability as a vendor.

For the first two years after enactment, licenses can only be issued to someone who owns or controls (and has done so for the 180-day period prior to enactment), or is owned by or controlled by someone that who owns or controls (and has done so for the 180-day period prior to enactment):

1. Casinos, riverboats or race tracks that are licensed for 500 or more gambling machines (not including pari-mutuel horse wagering) in one facility.
2. Poker rooms licensed for 250 or more tables.
3. Race tracks that have conduct live thoroughbred horse races which involved at least $225M of wagers during at least 3 of the past 5 years before enactment.
4. Licensed manufacturers who supplied facilities in #1 above throughout the 180-day period prior to enactment.

After two years, the Secretary (or OOPO) may expand licensing to other entities in any manner that is consistent with preventing public risk, subject to public notice and comment.

Licenses are for 5-year terms.

The Secretary (or OOPO) will maintain a list of all currently licensed sites, available publicly on the Internet.

Safeguards Required

No one under the age of 21, to a “reasonable degree of certainty”, “including by the use of biometric or other technologies of materially equivalent reliability at the time of registration and all logons.”

Must be physically located in an opt-in jurisdiction, to a “reasonable degree of certainty”, “including by the use of Global Positioning System or other location technologies of materially equivalent reliability in combination with screening of Internet Protocol addresses or similar techniques at the time of registration and all log ons.”

And others for: collection of site taxes; reporting of licensee fees; against financial crimes; privacy of player information; fair and honest games (including no cheating, collusion or bots); segregation of player funds and “are otherwise protected from corporate insolvency, financial risk, or criminal or civil actions against the licensee.”

Site gaming equipment must be located inside the US. Qualified Bodies can require their licensees to locate the equipment within their State or Tribal Land.

If a license is revoked, the licensee must return player funds within 30 days.

Site Penalties

For each violation of the provisions by a licensee, the Secretary (or OOPO) or a Qualified Body can assess a penalty up to the greater of:

1. The amount involved in the violation.
2. $250K for an individual; $750K for a corporation.
3. Whatever is applicable under State or Tribal law.

For operating without a license, the Secretary (or OOPO can assess a penalty up to the greater of:

1. The total bets or wagers of the players during the period of operation while unlicensed.
2. $1m per day that players place bets or wagers.

Compulsive Gaming

The usual, but quite extensive, safeguarding regulations are required:

Sites make available materials on compulsive gaming at every login and by request.
Self-limiting options available to players.
Self-excluded players blocked on all licensed sites.
Self-exclusion list is kept private, except to significant vendors as required for blocking.
Prohibited persons (per court order, law, the Secretary or a Qualified Body) are blocked.

State Opt-Ins

States must opt-in to participate, by vote of their state legislature. The vote must be by “a majority of a quorum of each chamber of the legislature”. This is not the same as a majority vote of each chamber, as it would take only a majority of those congresscritters attending the voting session to pass it. Also note that the opt-in provision does not require that the state bill or resolution is also signed by the state governor to take effect.

Once a state is opted in, it would take a similar state vote to change to opt out status.

A state cannot pass its own law that changes any of these terms of opting in or out.

Tribal Opt-Ins

Any Indian tribe can opt in as long as their state has already opted in. A tribal opt in is by written notice to the Secretary by the tribe’s “principal chief or other chief executive officer or designated authority”.

Once a tribe is opted in, it can later opt out by the same method.

Tribes that are located in states which are not opted in can still be designated as a Qualified Body for licensing and regulating sites.

Unlicensed Intrastate/Intratribal-land Remote Wagering

Any intrastate or intratribal-land remote wagering (other than licensed online poker under this bill) cannot be authorized or operated by any state or tribe unless:

1. It doesn’t involve any facility or service provider located outside the state or tribal land;
2. It doesn’t involve any financial institution for deposits or withdrawals; and
3. The wagering activity, including routing over the communications facility, takes place wholly within the state or tribal land.

Legal exceptions are:

1. Remote wagering by players located on the casino gambling facility premises.
2. Remote wagering authorized by state or tribal law prior to May 1, 2012.

Sports Wagering

Sports wagering, including online, continues to be illegal with the exception of the grandfathered-in wagering under PASPA. Fantasy sports wagering continues to be legal as before under applicable State and Federal law.

Internet Poker Parlors

It will be illegal to operate an Internet poker parlor (where computers are available mainly for online play), including private clubs. The criminal penalty for operating one will be fines and/or up to 5 years imprisonment.

Cheating and Fraud

It is illegal to violate a site’s terms of play “for the purpose of obtaining prohibited or unfair advantage in any game”, or to use a device similarly.

It is illegal to use a cheating device (including a bot) to cheat or defraud a site or any player.

Criminal penalties are fines and/or up to 3 years imprisonment. Persons convicted can be banned from online poker.

Other Skill Games

Online wagering on other skill games is not considered online gambling under this bill, and continues to be lawful where not prohibited by law.

Superseding Law

The provisions of this bill supersede any existing state or tribal law.

Other Federal Gambling Law Amendments

This bill changes the Federal Wire Act and IGBA extensively to make all transmissions related to interstate or foreign Internet gambling, with the exception of legal horse race wagering, legal intrastate lottery ticket sales and licensed online poker, expressly criminally illegal. It also requires ISPs to close the accounts of any site where a Federal, State, tribal or local law enforcement agency with jurisdiction has given written notice to the ISP that the site is in violation.

Blackout Period

The first licenses will go into effect 450 days (15 months) after enactment. Existing sites must cease US operations within 30 days after enactment and return funds to US players. Criminal penalties for violation are fines up to 3x player balances and/or up to 2 years imprisonment.

UIGEA

Persons who accepted online wagers in violation of Federal or State law after December 31, 2006 will not be eligible for licensing for 5 years. Licensees cannot use assets (database, software, etc.) of such persons (including business entities) for 5 years.

Amendments to the UIGEA incorporate changes to what is legalized under this bill, and include the site whitelist for use by transaction providers.

Asset Forfeiture

This provision in the bill specifically addresses “Bettor Forfeiture”. It states that any property, real or personal, that is involved in a transaction or attempted transaction that violates this Act is subject to forfeiture. As well, any property traceable to such property is similarly subject to forfeiture.

Here is the provision, word for word:

Quote:
SEC. 204. BETTOR FORFEITURE.

Section 981(a)(1) of title 18, United States Code, is amended by adding at the end the
following:

“(I) Any property, real or personal, involved in a transaction or attempted transaction in violation of section 103 of the Internet Gambling Prohibition, Poker Consumer Protection, and Strengthening UIGEA Act of 2012, or any property traceable to such property.”.
Here is a link to the referenced section of the US Code.

According to Skallagrim, this does not mean that the government can seize all your property just because you play on an unlicensed site or from an opt out state. Specifically, the terms "involved in" and "traceable to" would legally limit the applicability of the provision to site player account balances and funds in transit to or from the sites (deposits and withdrawals).

However, in the case of a professional player who earns their living from online poker, it is possible that additional personal property could be subject to forfeiture as "traceable to" transactions on the illegal sites, should the government wish to apply the provision in that manner.

Site Fees and Taxes

License applicants, significant vendors and licensed sites are assessed fees to cover the costs of operations of the Qualified Bodies and the OOPO.

Sites pay a site tax of 16% of their gross revenues (rake & fees) on a monthly basis. Of that, 14% goes to the States and Tribes and the remaining 2% to the Federal govt. The States and Tribes share gets split, 70% to the location of the players, 30% to the location of the corresponding Qualified Bodies of the sites. The 2% share can be upped to a 3 1/2% share if the 2% isn't enough to cover expenses.

Bonuses and promotional credits are excluded from revenue taxes, but I’m not sure from the wording if it means that any rake generated off them are excluded from the gross revenue figure, or that it means the total amounts of bonuses and credits are deducted from gross revenue, or something else.

$3M per year from the Federal share of the site taxes is paid out for Native American Programs. $2M per year for five years from the Federal share of the site taxes is paid out for Responsible Gaming programs. Expenses by Commerce for enforcement of this Act and the expenses by Treasury for enforcement of this Act and the UIGEA are paid from the federal share. Anything left at the end of the year in the federal share is paid out to the States and Tribes, in the same 70%/30% split.

Unlicensed and illegal sites owe a site tax of 50% of their gross revenues (in addition to any criminal penalties). Significant vendors for such sites are equally liable for this tax.

States and Tribes cannot impose additional site or wager taxes, with the exception of income taxes on sites located within their jurisdiction. States and Tribes must spend at least the lesser of ½ percent of their receipts from the site taxes or $1M per year on problem gaming programs.

Player Taxes

The bill does not change how players are assessed federal or state income tax on their winnings. There are provisions to conform reporting and withholding for online play to existing Federal tax code. Withholding will apply to net wins when withdrawing if you do not provide your Taxpayer ID (e.g., social security number) to the site or if you are not a US resident and owe US taxes on your winnings (or don’t provide proper US tax documents). Sites will report each player’s gross wins, gross wagers, gross losses, net wins, account balances and other information after the end of each year to the Federal govt (probably a 1099 form), with a copy to the player.

Expansion to Other Gaming

It will take a vote of 3/5 of the Members of the US Senate to change the Congressional procedural rules in regards to any future bill on Internet gambling, as established in this bill, before such a bill could be introduced in Congress. This bill provision acknowledges that there may be other constitutional legal methods of changing the procedural rules in the House and/or Senate. But bottom line, any bill to create any other online gambling carve out would first require passage of a change to the Congressional procedural rules before such a bill could even be introduced to Congress.

WTO

The US Trade Representative must complete withdrawal of US commitments for regarding Internet or remote gambling under GATS within 180 days (6 months). If unable to do so, the Trade Representative must proceed with arbitration per the terms of GATS to complete the withdrawal.

Last edited by PokerXanadu; 12-07-2012 at 09:31 PM.
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