Barton’s iPoker Bill Released

June 24, 2011 - 6:24 AM EDT
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Representative Joe Barton has released the current full text of his proposed bill to license and regulate online poker in the United States. If passed, the bill, named the “Internet Gambling Prohibition, Poker Consumer Protection, and Strengthening UIGEA Act of 2011,” would allow for the licensing and regulation of online poker alone.

The bill as currently written would amend federal laws that relate to online gambling to explicitly allow licensed sites to spread online poker. It would provide federal and state governments with regimes to license and regulate such sites. It would also make some minor changes to federal law to more strictly enforce the prohibition of forms of internet gambling other than poker. The bill has not yet been introduced to committee, but Barton is expected to do so soon.

Below is Subject: Poker‘s early analysis of the bill:

 

Regulations

As is common in regulatory legislation, the bill is quite vague in many respects, leaving much of the detail of how licenses would be granted and what regulations would be in place to the various regulators. The actual licensing and regulating is largely handed off to state regulatory bodies, and the Secretary of Commerce is given the task of choosing these agencies and overseeing them through a new Office of Internet Poker Oversight. It provides only vague guidance as to how state regulatory bodies should be selected.

However, the bill is not silent on all regulatory matters. Here are the matters where it does weigh in:

  1. Cheating. The bill would require licensing agencies to approve sites’ practices for catching cheaters, and it would make violating the rules of the site to gain an advantage a federal crime, punishable by a fine and/or up to three years in prison. It would explicitly outlaw the use of bots and collusion, but it does not mention other forms of cheating. Contrary to popular belief, it would not outlaw the use of tracking software, HUDs, or similar software unless the rules of the site ban them explicitly.
  2. Eligibility for licensing. Though the regulatory agencies are largely responsible for deciding who would be eligible to get a license, the bill does require that anyone receiving a license in the first two years after the licensing begins have run an appropriately large licensed gambling facility in the US for five years prior to their licensing. A facility is appropriately large if it has at least 500 gaming devices (e.g. slot machines or video poker), is licensed to operate at least 250 poker tables, or processed at least $200 million in bets on horse racing during any three-year period. So, for the first two years after the bills passage, only very large and established gambling companies would be allowed to receive licenses. After two years, the Secretary of Commerce can amend these rules as he sees fit.1
  3. Age requirement. Only people over the age of 21 would be able to play poker online under the terms of this bill. Younger players would not be able to collect any winnings if they did play and were caught, but they would remain responsible for any losses.
  4. Self-exclusion. The bill would allow players to self-exclude themselves and it would create a master self-exclusion list so that a player who requests that he not be allowed to play on one site would not be allowed to play on any licensed site. As with underage players, self-excluded players who someone managed to play and were caught would not be able to collect any winnings but would still be responsible for any losses. Self-exclusion would be allowed permanently or for a limited time.
  5. No child support delinquents. People who owe money for child support would not be allowed to play online poker on licensed sites. As with underage players and self-excluded players, if they did manage to play, they would be responsible for any losses but would not be allowed to collect any winnings if caught.
  6. No credit cards. The bill would explicitly ban the acceptance of credit card payments by licensed online poker sites. It would further ban them from accepting deposits from a payment processor that accepts credit card payments.2

Timetable

If passed in its current form, the bill would set up a remarkably fast timetable. After passage, the Secretary of Commerce would have at most 180 days to prescribe final regulations. The Secretary of the Treasury would also have at most 180 days to amend various Treasury regulations to account for online poker, and the Director of the Financial Crimes Enforcement Network would have at most 120 days to establish a list of unlicensed gambling sites. After those three tasks finish, licensing of online poker sites could in theory begin, and this could conceivably happen even before the 180 day deadline. However, because the bill gives the Secretary of Commerce complete control over which state agencies would be allowed to license sites and when they would be given this ability, the Secretary ultimately would decide when licensing would begin.

State Opt-Outs

As is the case with all such federal legislation, the bill ultimately allows individual states to decide whether they would participate. Under the terms of this bill, each state would automatically be included unless its governor chose to opt out. If a governor does so, residents of his state would not be allowed to play on licensed sites. Since state governments are not guaranteed to act on all issues, this “opt-out” method is more favorable to gamblers than an “opt-in” method, which would require state governments to explicitly allow their residents to participate. However, other bills would require state legislatures to pass laws in order to opt out. That form of opt-out is generally considered to be more favorable to gamblers because it is much easier for a governor to act than a legislature.3

Difference from Previous Legislation and Chance of Success

The bill is distinct from the Campbell-Frank bill in that it explicitly legalizes, licenses, and regulates online poker only and contains provisions to increase enforcement on the prohibition of other internet gambling. This approach is widely believed to have a higher chance of success. Some congressmen, including staunch gambling opponent Senator John Kyl of Arizona, have expressed a willingness to compromise on poker in exchange for tougher laws on other forms of internet gambling.4

Representative Barton is a Republican from Texas’s six district, and has been in Congress for over 26 years. He is the second most senior Republican in the House Energy and Commerce Committee, which is chaired by Representative Fred Upton, a Republican from Michigan. While the Campbell-Frank bill was introduced in the House Financial Services Committee, the Barton bill is expected to be introduced in Energy and Commerce. Financial Services is chaired by Representative Spencer Bachus, an opponent of online gambling, so many believe that Barton’s expected path will have a higher chance of succeeding. Barton has stated that Upton is willing to give his bill a hearing in committee, but it is not clear what Upton’s view of online poker is.5

In addition, many of the less popular aspects of the Reid bill are not present in Barton’s bill. For example, Reid’s legislation would have explicitly banned foreign players from playing on US licensed sites, but the Barton bill makes no mention of foreign players playing on licensed sites. So, presumably, the bill as passed would allow for this, although both the Secretary of Commerce and state regulatory agencies could presumably ban foreign players from participating. The bill would explicitly make running unlicensed sites illegal (see next section), so it does contain a “blackout period” similar to that of the Reid bill. However, this would only take effect thirty days after the bill is passed, and as explained above, the timetable for this bill is much faster than Reid’s proposed fifteen months. So, such a blackout period would presumably be much shorter under Barton’s legislation.

The bill does not provide for additional taxes on licensed online poker sites. Other proposed legislation, such as the Campbell-Frank bill, came with a companion tax bill and the Reid bill included tax provisions. Subject: Poker is working to learn if additional tax provisions will be included in this bill or in a companion bill.

Tougher Laws on Other Internet Gambling

In addition to its wide-ranging effects on online poker, the bill would strengthen other federal gambling law. While many argue that the current online gambling law is vague, this bill would make running an online gambling site without a license explicitly illegal. It would require the Director of the Financial Crimes Enforcement Network to identify illegal unlicensed online gambling sites, and it outlines an extensive procedure for doing so. It would then fine unlicensed gambling sites $1 million for each day during which they allow US players to play or the gross amount of wagers for US players accepted, whichever is larger. It also would establish an up-to-five-year prison sentence for operators of unlicensed gambling sites.


This article is about the first publicly released draft of Representative Barton’s proposed online poker legislation. The bill is not law, and indeed, it has not even been introduced to committee. If it does pass, it will likely be modified quite heavily beforehand.

Even without direct changes to the bill, it is likely that Subject: Poker will learn more as time passes. In particular, this article was written only hours after we received a copy. We encourage our readers to read the full text of the draft themselves.

Subject: Poker will continue to monitor the bill and keep our readers informed of any progress, updates, changes, or new insight.


Edited on 6/24/2011 11:03 AM EST: We accidentally reported that Barton has been in Congress for over sixteen years instead of twenty-six.
Edited on 6/24/2011 11:47 AM EST: We incorrectly reported that a qualified card room needed to have 250 poker tables. They need only be licensed to operate 250 poker tables.

Footnotes

  1. It is unclear at this point whether foreign sites who accepted US players in the past would be eligible to be involved at all, or if they could be eligible to be licensed after two years. The bill suggests that the Secretary of Commerce consider such history of applicants, but it does not explicitly say that it should lead to automatic disqualification. However, it does explicitly say that persons who committed crimes punishable by more than one year in jail are not permitted to participate. It is unclear at this time how that would apply to sites that have accepted US players without a license.
  2. This is a relatively common part of gambling legislation.
  3. This provision is actually a bit unclear. It seems to imply in parts that states may opt out of only certain types of games but not others, but it then quite clearly says that any such opt-out (which it calls “limiting”) would force the licensed sites to not accept any gambling. It’s possible that this part will be clarified later and that states will have the ability to only partially opt out.
  4. Senator Kyl is often cited as the primary impediment to online gambling legislation in the Senate.
  5. Our interview with John Pappas of the Poker Player’s Alliance discusses this topic more.

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18 Responses to Barton’s iPoker Bill Released

  1. MattCWaldron
    June 24, 2011 at 11:47 AM EDT

    Thanks for getting this out and broken down so fast guys. Great work on your site.

  2. Ryan
    June 24, 2011 at 12:59 PM EDT

    Well written breakdown of the bill. Good work.

  3. Justin
    June 24, 2011 at 1:08 PM EDT

    What’s the time table for passing a bill? Isn’t that pretty variable? And no real time limit?

    • Noah Stephens-Davidowitz
      June 24, 2011 at 2:14 PM EDT

      There’s no real time limit, though the bill would have to be reintroduced if enough time passes. But, certainly the supporters of the bill are trying to get it passed quickly. I suggest reading our interview with John Pappas for an optimist’s timeline. (A pessimist’s timeline doesn’t have the bill passing at all, of course.)

      (Made slight change to this comment on 6/24 at 2:18 PM EST.)

  4. Jason Senti
    June 24, 2011 at 2:16 PM EDT

    Thanks for the breakdown guys! I am trying to remain cautiously optimistic.

  5. Barry
    June 24, 2011 at 7:20 PM EDT

    I’m cautiously optimistic too…except for the opt-out part which reads “That form of opt-out is generally considered to be more favorable to gamblers because it is much easier for a governor to act than a legislature.3″. The governor of Texas (Rick Perry) is a total asshat, so I’m worried he may try to stup us from playing, even though the Congressman (Barton) is from Texas also!

  6. Joe Blow
    June 25, 2011 at 6:51 AM EDT

    Sure go ahead and follow what the GOOBERMENT tells you you go play on there sites and there goes up to 30 percent of what ever you win!!! I’ll stick with stars!!

  7. milton patton
    June 25, 2011 at 6:57 AM EDT

    how would you make deposits then

    • Jerry C
      June 25, 2011 at 7:59 AM EDT

      There are other ways to deposit other than credit card right now…..EChecks, bank wire transfers, Western Union. All of these methods are much more secure than a charge card transaction. I’m assuming this is also part of the added security that this bill promotes.

      • Steppin Razor
        June 25, 2011 at 11:37 AM EDT

        In the bill, they talk about significant vendors, which includes payment processors, but I believe could also include e-wallets. Maybe we’ll get some of those back.

        • Beerhider
          June 29, 2011 at 11:14 PM EDT

          A) Moneypak? Nothing like carrying cash to the CVS.

          B) Why not just add an option to the ATM, lol. Have a PLUS system casino DEBIT card.

          C) DEBIT/CHECK Card – Remember, they don’t want people going into DEBT, but using a DEBIT card doesn’t apply.

          Same rules apply in PA – you can buy lottery tickets with a DEBIT card (PIN purchase) but not a CREDIT card*. * = Many stores aren’t advanced enough to know one type from another.

    • Noah Stephens-Davidowitz
      June 25, 2011 at 4:04 PM EDT

      Keep in mind that there’s a difference between a debit card and a credit card. The card that you typically get from your bank when you open a checking account is not technically a credit card.. It’s a debit card.

  8. Andrew Ferguson
    June 25, 2011 at 7:03 AM EDT

    Have you got any information on whether sites will allow international players?

    • Noah Stephens-Davidowitz
      June 25, 2011 at 4:03 PM EDT

      The bill doesn’t say that they can’t allow international players. That would likely be left up to regulators if it passed.

  9. Steppin Razor
    June 25, 2011 at 10:23 AM EDT

    Thanks for linking the text of the bill. I’m almost done :) .
    Sweating the timetable is going to be excruciating.

    International players are not excluded in the bill, but sites could do whatever they want. I don’t see why they’d want to exclude more players though.

  10. Rob C
    June 25, 2011 at 3:15 PM EDT

    Thanks for the quick synopsis.
    While I doubt the bill will make it unchanged through Congress it is a much better law than last year’s Reid Bill.

  11. David Hasselhoff
    June 28, 2011 at 5:33 AM EDT

    Couple of questions:

    Does this bill have to get through both the House and Senate? Are there any indications of how much support their is in Congress for this bill? Which entities would be the presumed front runners to take over the US iPoker market? I assume Harrah’s/Caesar’s/The Rio?

    • Noah Stephens-Davidowitz
      June 28, 2011 at 10:51 PM EDT

      Hi Mr. Hasselhoff,
      All bills must go through the house and the Senate to become law. However, just to clarify, this bill probably won’t go through on its own. It will likely be attached to another bill.

      The bill has eleven cosponsors right now, is bipartisan, and counts some fairly powerful congressman amongst its cosponsors. In particular, Senate Majority Leader Harry Reid will presumably support the bill, though he’s obviously quite busy with other things and hasn’t commented yet. Some important people who are historical enemies of ours are Senator Jon Kyl and Congressman Bachus (chairman of Financial Services), but both of them have recently expressed a willingness to consider poker-only legislation. Lots of important people’s positions on this are simply unknown, such as Congressman Fred Upton (chairman of Energy and Commerce, the bill’s primary committee), House Majority Leader Boehner, House Minority Leader Pelosi, and Senate Minority Leader McConnel.

      I think maybe we’ll write up a feature article talking about the various people involved in this and what has to happen for this to pass. FWIW, I don’t think anyone really thinks it’s a favorite to pass.

      The Harrah’s/Caesars/WSOP company-of-many-names is quite likely to be involved. Steve Wynn (i.e. the Wynn Casino) formed a bit of a partnership with Stars before Black Friday, but since has canceled. I would assume that he’s still interested in online poker should such legislation pass. All the major casinos are a possibility, as are some of the larger racetracks. The California card rooms might come into the market as well, depending on what happens with the pending intrastate legislation in California.

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