President Bush's Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006 is regarded as increasingly unenforceable and has led to costly WTO disputes with the EU and Antigua because of its protectionist nature. With the arrival of President Obama, a Democrat Congress and advancing technology to enable internet gambling to be taxed and regulated more efficiently, many are asking if the time is right to repeal the Act? Will the prospect of USD50bn tax revenue over the next 10 years be more powerful as an incentive than the combined opposition of the Christian Coalition of America and the National Football League?
Barney Frank (D-Mass.), chairman of the US House of Representatives Financial Services Committee, has introduced another bill to sweep away the ban on internet gambling. A previous effort by Frank failed to get out of committee, but the prospect of an easy source of tax dollars in this time of need and some strong grass-roots and corporate support, together with the strength of the Democrats in Congress has upped the ante. Frank said he supported the legislation as a matter of personal freedom.
A bill to repeal the UIGEA with no restrictions, as Frank first suggested, would have been much more straightforward, but Frank has decided to give way to the sports leagues' lobbies and continue the ban on online sports betting. Many Americans bet on sports by sailing away in ships to international waters off the coast of Florida. It seems anomolous that it should be legal to bet offshore on a boat from the US, but not 'offshore' from a computer. The UIGEA has not stopped online sports betting and the new bill will not change that. Congress banned US banks, credit card and financial companies from processing online gambling transactions in 2006, but regulations governing enforcement of this law are only due to take effect this December. It has been difficult but not impossible for Americans to get money to offshore sportsbooks and receive winnings from them, but new payment systems that fall within the regulations of the UIGEA are rumoured to be ready for introduction before December.
A recent Price Waterhouse study has suggested that a complete removal of the ban on online betting could generate more than USD50bn in tax revenue over the next 10 years, but a continued ban on sports betting would lessen the impact considerably and further revisions are thought also to water down the effect of the bill. One possible outcome would be to allow individual states and Indian tribes to implement their own licensing policy for online betting - those states that do not want their citizens to have internet gambling will just desist from issuing licenses.
Another important justification for the bill has been concern over the US violations of WTO obligations which led to Antigua receiving USD21m annually in compensation, whilst the EU may receive upwards of USD1bn. The Remote Gambling Association's complaint of selective prosecution of EU based operators has hinged largely on sports betting instances, so it is not easy to see that the bill is a ready solution to this problem.
Eventually, after lobbyists' revisions, maybe the watered-down bill will not end up featuring highly on Obama's list of priorities.
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