Intrastate Gaming News

After a few months of inactivity regarding United States legislation that would legalize and regulate online poker, a flurry of action continued today when another Congressional committee session on the subject was scheduled for Tuesday.

On Tuesday morning, the House Committee on Financial Services will mark up H.R. 2267, the Internet Gambling Regulation, Consumer Protection and Enforcement Act, a bill introduced by the commitee’s chairman, Rep. Barney Frank (D-MA)

A “mark up” is where a Congressional committee considers and makes changes to a bill before it is voted on by the committee and eventually sent on to the full House of Representatives, should it pass that committee vote. A mark up session in Congressional committees is often followed by a committee vote, although is unclear if a vote will take place right away, or if it could take place at a date in the near future.

The committee meeting will take place Tuesday at 10 a.m. in Room 2128 of the Rayburn House Office Building.

Michael Waxman, spokesperson for the Safe and Secure Internet Gambling Initiative, had this to day after the announcement of the mark up:

This mark up demonstrates that Congress is serious about moving Chairman Frank’s bill forward and establishing a strict regulatory framework for Internet gambling activity/ The passage of this legislation would be a win-win as it will protect consumers, create an estimated 32,000 new jobs over five years and provide federal and state governments with as much as $72 billion in new revenues over ten years.

H.R. 2267 would unequivocally make online poker fully legal in the United States, if it becomes a law. It would set up a regulatory framework for licensing of online poker and gambling operators that want to do business in the United States. The bill would also allow states to “opt out” if they don’t want their constituents to be able to play online poker.

The status of online poker in the U.S. has long been a gray area, with the Wire Act and the Unlawful Internet Gambling Enforcement Act throwing doubt on the matter in the U.S. However, millions of Americans play online poker, and there are many online poker sites that serve American customers.

There is currently a companion piece of legislation (H.R. 4976, the Internet Gambling Regulation and Tax Enforcement Act of 2010) that would be considered should the Frank bill become law. That bill would make provisions for taxing online poker in the U.S.

The bill faces a long road to become law. If the marked up bill is passed by the House committee, it would need to be approved by the full House in a majority vote, then it would also need to pass a vote in the Senate by a majority before being signed into law by the President.

Intrastate Gaming is almost legal in New Jersey.

The topic of intrastate online gaming is a somewhat controversial one, especially in states where Indian gaming claims it interferes with pacts but also as a topic that tends to divide progressive and conservative politicians. But the revenue that could be gained from such an endeavor has spurred the movement by several states to push the envelope, and New Jersey might be leading the way on it.

The process began when State Senator Raymond Lesniak introduced S.B. 490 in January, a piece of legislation that proposed state-level poker and casino games offered online and operated through land-based Atlantic City casinos. The new industry would piggy-back on the already strong gaming industry in the state with regulation by the New Jersey Division of Gaming Enforcement. The purpose would be to capture the money currently spent by residents on offshore websites like PokerStars and Full Tilt, though also including blackjack, baccarat, and other casino games, and bring that revenue into the state of New Jersey through the new intrastate online gaming industry.

During the first week of June, the State Senate’s Wagering and Tourism Committee considered the bill – the Intra-State Internet Gambling bill – and given a positive 3-to-1 vote to push it out of committee. The next step lies in the hands of the Senate President, who is now to decide whether or not to bring the bill to the floor of the legislature for a vote.

Assistance with committee arguments for the bill came from Interactive Media Entertainment and Gaming Association (iMEGA), which commissioned a study from Econsult to show the economic benefits of intrastate gaming. The Philadelphia-based firm concluded its study by showing that New Jersey could find as many as 1,900 jobs in intrastate gaming, as well as $250 million in annual gross gaming revenue and as much as $55 million in tax revenue. But, if the industry goes and New Jersey becomes a hub for the online gaming industry, those numbers could rise to 57,000 jobs, $7 billion in gaming revenue, and $472 million in tax revenue.

Joe Brennan, Jr., iMEGA chairman, noted, “Though we’re not across the finish line yet, the committee vote is significant progress. We’ve gotten to this point by making this debate about more than taxes from gaming revenue, which is a big one-note. Instead, we’ve made a significant case for job creation, capital investment, and the opportunity for New Jersey to become the national and global hub for this industry. And those numbers make this a compelling option for New Jersey legislators to consider.”

William Pascrell III, a lobbyist for the online entertainment industry, added, “Establishing intrastate internet gaming for state residents will enable New Jersey to funnel new and existing online players into sites licensed through Atlantic City’s casinos, capturing previously lost tax revenue and offering New Jersey casinos a new channel for driving traffic to the resorts.

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