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US Gambling Law

April 7, 2009

The Bush Administration tied up the loose ends of the UIGEA before handing over charge by passing the revised regulations using the “Midnight Rules”. This obviously made things more difficult for the Obama administration, which was perceived as being favorable to online gambling. The problem for the Obama administration is that it has been forced to focus on two international issues that are of much greater importance than online gambling in the United States. One is the global financial crisis and the other is the rise of the Taliban in Afghanistan and Pakistan. Probably therefore the administration has not been able to initiate strong steps in the online gambling issue. However the first step was taken, more as a matter of course. The bill to overturn the legislation passed through the midnight rules has been introduced and will move ahead as per the established protocol.

While the government is seized with more important issues, background work on the bills proposed to be introduced is in progress. Congressman Barney Frank is to reintroduce his bill to legalize and regulate online gambling. The bill he had introduced last year lapsed when the administration changed. This year Frank has been working with proponents of online gambling so as to fine tune the bill and see that it faces less hurdles and moves faster. The Poker Players Alliance (PPA) is separately working on solutions that would address the problems raised in the revised UIGEA regulations. Senator Menendez and Congressman McDermott are other legislators who are considering reintroducing their bills. One of the problems that these bills will face is that as of now many of the sports leagues are against legalization of online gambling. Both the PPA and Frank are in talks with the sports leagues like the NFL trying to figure out a path acceptable to both.

A very big push for online gambling is coming from some of the states who are finding it difficult to balance their budgets. In New Hampshire and Illinois the state run lotteries are suffering because people are finding it difficult to pay for tickets online on account of the UIGEA. California too has indicated its intent to find a way to legalize and regulate online gambling so that they can create a new revenue stream. A report from PricewaterhouseCoopers stated that the United States could raise $52 billion by regulating and taxing online gambling. This model is already working very well in certain European countries. Some states like Texas and Florida, where land based gambling is not fully legal, are working to generate tax revenues by increasing the scope of land gambling. Meanwhile online poker has forged ahead of online casino gambling. Online poker has been able to create a distinction that it is not a gambling game but one of skill through some landmark court judgments.

All these disparate efforts need a clear signal from the Obama administration as to where it stands on online gambling. The American online gambling fraternity is not the only one waiting for this signal. Online gambling operators all over the world are waiting to get back to the American market. Antigua has already taken legal measures in the World Trade Organization. Europe too is on the verge of taking similar steps. A favorable signal from the Obama administration will warm many hearts.

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