Florida Considers Options For Regulating Online Betting

by Mike Godfrey, Tax-News.com, Washington

01 December 2009

A report prepared by the Office of Program Policy Analysis and Government Accountability (OPPAGA) will be presented to the Florida State Senate shortly, examining the enactment of laws to provide protections and remedies for existing and unregulated internet poker activities.

According to the Report, Florida law allows poker only at licensed facilities and federal law prohibits internet gambling of any type but United States residents, including Floridians, can gamble online easily.

Legislation to license and regulate internet gambling would reverse current US law, although a recent decision by the US Court of Appeals for the 3rd Circuit concerning the Unlawful Internet Gambling Enforcement Act appears to infer that intrastate Internet gambling already may be legal. As a result, Internet gambling proponents may move forward with state proposals.

The Report proposes three options:

• Maintaining the status quo and monitoring federal legislation that would establish a federal licensing system;
• Adopting laws that would prohibit Internet poker; or
• Adopting laws to authorize and regulate intrastate Internet poker.

The Report stated that it was unable to produce objective estimates of tax revenue that could be generated, and did not comment on the estimate of USD90m a year in tax income made by the 'Poker Voters of America' lobby group.

Proposals to expand authorized gambling in Florida to include Internet poker could face opposition from groups concerned about the negative societal effects of gambling; it could also affect the Seminole Tribe of Florida, especially if a gaming compact that provides the tribe exclusivity for card games is adopted, according to the Report.

If Florida wanted to authorize internet poker, the Report identified several steps that it would need to take, namely to:

• Amend state law, potentially the state’s pari-mutuel statutes, to provide for licensing and oversight of Internet poker;
• Determine whether it would allow for a single state contract or license all vendors that meet state criteria;
• Introduce licensing fees for Internet poker vendors which are sufficient to cover the costs of regulation;
• Establish a tax structure and system to account for Internet poker revenues.
• Ensure that licensed vendors take steps to protect player identification and credit information, prohibit under-age gambling, ensure the system prohibits play on a state licensed system by anyone not physically located in the state, and require vendors to provide assistance to problem gamblers;
• Establish payment-processing systems for intrastate internet poker that do not violate federal rules restricting payment system processors (e.g. banks, credit card companies, and money transmitters) from transferring money for gambling purposes. (These take effect as of December 1, 2009);
• Consider and address the role of law enforcement because internet gambling can be 'a potential venue for various criminal activities including cheating, theft, identity theft, and money laundering' - according to the Report; and
• Assess the impact on the Seminole Compact if internet gambling were authorized in Florida. The tribe would likely seek to provide similar gaming opportunities.

The Report and especially the issue of internet poker will be debated in the Florida Senate; early next year is the expected timeframe.

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