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Debate on Reid Online Poker Legislation Deepens

Posted on 12/7/10 by Lenny S.

"Black period" generating plenty of heat
With more information emerging on the legislative proposal to legalise US online poker attributed to Senator Harry Reid of Nevada, the debate has deepened this week.
Interested parties appear to be especially troubled by a clause which is being interpreted as meaning that for 15 months, there will be no legal online poker in the United States. A blogger on the ESPN site described it thus: "Once this bill is enacted, the first license will [only] be issued 15 months from that date."
The relevant clause in the Reid draft reads: "No qualified body may issue a license under this title before the date that is 15 months after the date of the enactment of this Act. Qualified bodies shall, to the extent practicable while meeting the requirements and standards of this title, issue multiple licenses on the date that is 15 months after the date of the enactment of this Act in order to ensure a robust and competitive market for consumers and to prevent the first licensees from gaining an unfair competitive advantage."
Other points in the draft highlighted by ESPN include a requirement that operators who currently provide online poker services to US players cease to do so within thirty days of the law coming into force if they wish to be considered for a licence.
Operators obeying this clause will have to tell their players how and when to withdraw their positive account balances; those who do not withdraw their money within two years will have their funds transferred into escrow which will be at the disposal of federal authorities.
The good news is that the so-called "blackout" period in which current online sites were rumoured to be excluded from achieving licensing status for an additional two years, appears to have been removed from the current draft.
Legalisation will also entail changes for the better in the UIGEA, which hampers online gambling financial transfers:  "A financial transaction provider shall not be held liable for engaging in a financial activity or transaction, including a payments processing activity, in connection with a bet or wager permitted by the Prohibition of Internet Gambling, Internet Poker Regulation, and Strengthening UIGEA Act of 2010 or the Interstate Horseracing Act of 1978 (15 U.S.C. 3001 et seq.) unless the financial transaction provider has knowledge or reason to know that the financial activity or transaction was conducted in violation of either such Act or any other applicable provision of Federal or State law."
Operators may also balk at the proposal that sites will have to pay 20 percent of the revenue generated as a licensing fee: "Each ....licensee shall be required to pay not later than 15 days after the end of each calendar month an Internet poker license fee equal to 20 percent of a licensee's Internet poker receipts for that calendar month."
Operators will also be required to:
Report every player's winnings and losses.
• Base hardware for the sites in the United States.
Each licence granted will be valid for five years, and unlicensed operators convicted of providing internet poker services to US players will face severe punitive consequences of up to $1 million a day, or "...civil penalty of not more than the greater of the amount of bets or wagers taken by the person from players in the United States during the period that a license was needed but not held by the person."
The Reid proposal, which at present is just that, and has yet to pass through the legislative process in Congress, also provides for responsible gambling elements and research studies into Internet gambling. It allows individual states to opt out of its implementation, thereby guaranteeing the continued intra-state autonomy of the states.

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