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UIGEA | IGREA | Poker Players Alliance | WTO | Robert Wexler's Poker Exemption Bill | States Banning Online Gambling |

UIGEA

On Sept. 30, 2006, the U.S. Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA).

UIGEA prohibits U.S. financial institutions from processing U.S. citizens' deposits and withdrawals at gambling sites, including online casinos and poker rooms.

The law also makes it illegal for online gambling companies to accept monies from U.S. financial institutions. It doesn't, however, criminalize the act of online gambling.

As a result of the UIGEA being passed, a number of online gambling companies withdrew from the U.S. market.

IGREA

On Apr. 27, 2007, Rep. Barney Frank introduced the Internet Gambling Regulation and Enforcement Act of 2007 (IGREA) in the House of Representatives.

The object of IGREA is to reverse UIGEA, and establish a federal regulatory and enforcement framework to license Internet gambling companies in order for them to serve Americans. Licensing requirements would include protections against compulsive gambling, underage gambling, fraud and money laundering.

"The existing legislation is an inappropriate interference with the personal freedom of Americans and this interference should be undone," Frank said in a press release when his bill was introduced.

Frank's campaign to end the prohibition of online gambling has gained a lot of support. On Nov. 15, Rep. Earl Blumenauer (D-Ore.), signed on as IGREA co-sponsor number 41.

This is the complete list of IGREA co-sponsors (per Nov. 21):

  • Neil Abercrombie (D-Hawaii)
  • Gary Ackerman (D-N.Y.)
  • Joe Baca (D-Calif.)
  • Shelley Berkley (D-Nev.)
  • Howard Berman (D-Calif.)
  • Michael Capuano (D-Mass.)
  • Russ Carnahan (D-Mo.)
  • Julia Carson (D-Ind.)
  • William lacy Clay (D-Mo.)
  • Steve Cohen (D-Tenn.)
  • Joseph Crowley (D-N.Y.)
  • William Delahunt (D-Mass.)
  • Bob Filner (D-Calif.)
  • Vito Fossella (R-N.Y.)
  • Raul Grijalva (D-Ariz.)
  • Luis Gutierrez (D-Ill.)
  • Alcee Hastings (D-Fla.)
  • Michael Honda (D-Calif.)
  • Steve Israel (D-N.Y.)
  • Peter King (R-N.Y.)
  • Carolyn McCarthy (D-N.Y.)
  • Jim McDermott (D-Wash.)
  • James McGovern (D-Mass.)
  • Charlie Melancon (D-La.)
  • James Moran (D-Va.)
  • Ron Paul (R-Texas)
  • Ed Perlmutter (D-Colo.)
  • Ciro Rodriguez (D-Texas)
  • Steven Rothman (D-N.J.)
  • Linda Sanchez (D-Calif.)
  • Adam Schiff (D-Calif.)
  • Robert Scott (D-Va.)
  • Bennie Thompson (D-Miss.)
  • Edolphus Towns (D-N.Y.)
  • Melvin Watt (D-N.C.)
  • Anthony Weiner (D-N.Y.)
  • Robert Wexler (D-Fla.)
  • Lynn Woolsey (D-Calif.)
  • Albert Wynn (D-Md.)
  • Don Young (R-Alaska)

Poker Players Alliance

The Poker Players Alliance (PPA), a non-profit membership organization working to protect players' rights, also supports Barney Frank and the IGREA. The PPA has been very much involved in convincing congressmen to co-sponsor the bill.

"Congressman Frank's bill is a common sense approach to Internet gambling," said Alfonse D'Amato, PPA chairman of the board and former U.S. Senator, when the IGREA was introduced.

"Licensing and regulation will allow us to sort out the most responsible sites - those that are good corporate citizens - from those engaged in unscrupulous activities and practices," D'Amato added.

WTO

The World Trade Organization (WTO) has on several occasions ruled that the United States is violating international trade rules with UIGEA. The U.S. eventually admitted that it was in violation, but instead of changing its own legislation, the U.S. wants to change its WTO agreement, and exempt Internet gambling from it.

Robert Wexler's Poker Exemption Bill

Another initiative to undermine the UIGEA was taken by Florida congressman Robert Wexler in June 2007. Wexler introduced a bill to exempt poker and other skill games (bridge, chess and mahjong) from UIGEA.

"It allows Americans to play poker online as they should have every right to do," a spokesman for Wexler said.

States Banning Online Gambling

A few individual states in the U.S. have decided to ban online gambling. They are:

 

  • Illinois (Ill)
  • Indiana (Ind)
  • Louisiana (La)
  • Michigan (Mich)
  • Nevada (Nev)
  • New Jersey (N.J.)
  • New York (N.Y.)
  • Oregon (Ore)
  • South Dakota (S.D.)
  • Washington (Wash)
  • Wisconsin (Wis)

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European Firms Suggest $100 Billion from U.S.

There's no question - in any of the disputing parties minds - the Unlawful Internet Gambling Enforcement Act (UIGEA) passed by the United States last year, shutting European gaming operators off from the American market, has had an effect on the online casino industry"s booming bottom line.Just how much of an effect? Depends what side of the divide you're on.

Lawyers for major European online gaming companies, according to a report from Reuters news service this week, estimate compensation demands from their clients should be as high as $100 billion given the size of their industry.

The U.S., of course, is likely to see it differently. Especially considering its recent offer to the tiny Caribbean island of Antigua and Barbuda, the nation which filed - and won - the original complaint regarding the UIGEA's violation of WTO trade regulations.

Antigua suggested $3.4 billion was a reasonable number for the revenue lost by the 32 online casinos under their jurisdiction. The U.S. countered with $500,000. Needless to say, Antigua was none too impressed and rejected the offer outright.

The 27-nation EU also is unlikely to be pushed too far off their estimated demands.

Lawyers for European online gaming firms said the EU should definitely press for the $100-billion, suggesting the market value of listed gaming firms including heavyweights such as PartyGaming and Sportingbet dropped $7 billion alone when Washington shut off the world's biggest market in October.

The U.S. [compensation] offer to date is insufficient and we continue to negotiate in order to improve it," said Peter Power, a spokesman for EU Trade Commissioner Peter Mandelson, told Reuters.

"The level of damage is impossible to quantify in a dollar sense," Power added. "It is clear the EU industry was damaged... and adequate compensation is now the subject of negotiations."

The new deadline for the United States to agree on compensation is October 22, however lawyers on both sides said they had modest hopes for a quick resolution, suggesting the dispute could drag on for years.

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" Online gaming already has it tough in the US. Now, with the recent Kentucky ruling, it may get even harder for cyberspace players and gaming enthusiasts to find good websites to satisfy their gaming needs.

Yes, the ruling of one state court could have implications for the entire online moneymaking community. It's a little bit confusing, so when thinking about how the Kentucky ruling is going to affect the online gaming world, keep the following ideas in mind.

 

Establishes State Law Outside the State

One of the more controversial aspects of the Kentucky ruling is that it represents a state trying to apply its laws onto an entity that may or may not be based in the state itself. So, when it comes to doing business on the Internet, and when it comes to gaming on the Internet, if a site operates in multiple states, whose laws is it subject to? It is ultimately a question of jurisdiction, and if the appellate court doesn't strike down the Kentucky ruling, it may scare a number of gaming site operators into shutting down or limiting services.

 

States' Laws at Odds

As stated above, if the Kentucky ruling stands as is, then a gaming website based in New York might actually be subject to Oklahoma law. Even if the site isn't geared towards Oklahomans, if they use its gaming services, the website might be held responsible. That would create a huge contradiction in states' rights, a part of the US Constitution that is hotly debated and often considered sacrosanct. It is a question and ruling that most likely should be taken up at the Supreme Court level to ensure all legal interests are served.

 

International Questions

The more pressing issue regarding conflicting laws is that many online gaming websites are based outside of the United States, therefore making it virtually impossible to try and apply Kentucky law to a nation like, say, Antigua. That country and others in the World Trade Organization are likely to hotly object to the Kentucky ruling having any effect on sites based in their territories in other offshore locations.

 

Effects for Average Gamers

As for the Kentucky ruling's effect on your average, everyday online gamer, they could see a noticeable difference. If online gaming sites are actually considered to be subject to each states' particular laws, then many will consider it too much of a liability and will likely shut their virtual games down completely. Others may simply limit the game and services they offer to try and avoid any new legal liability presented by the precedent of the Kentucky ruling.

More thoughts on online gambling in the US

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