New Federal Online Gambling Bill With Poker Carveout Making the Rounds in Washington

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A new online gambling bill that includes a carveout for online poker is said to be in play at the federal level.

That’s per Nevada journalist John Ralston, who posted a copy of the bill draft on his site here.

Ralston did not offer much additional context for the bill, saying only that it is “floating around DC,” and adding “I smell a Nevada company.”

The bill draft is titled the “Internet Gambling Prohibition and Control Act of 2014a variation on the original title of the Sheldon Adelson-backed “Restoration of America’s Wire Act” (RAWA) bill recently introduced by Sen. Lindsey Graham and Rep. Jason Chaffetz.

Very little is known about IGPCA or the forces supporting it. But the draft bears similarities to a bill foreshadowed by Nevada Sen. Dean Heller back in February.

Review the draft here.

Bill would represent potential path to compromise between Adelson and foes

Much like RAWA, IGPCA seeks to update the Wire Act in a manner that would apparently outlaw many forms of online gambling.

IGPCA accomplishes this by inserting language that asserts the Wire Act’s applicability to Internet wagers and expanding the critical definition of “sporting event or contest”:

(2) the term “any sporting event or contest” includes games in material part or predominantly subject to chance which are played for a prize, including games in which players compete against each other, and not against any person, entity, or fellow player hosting the game, the outcome of which, over any significant interval, is predominantly determined by the skill of the players. 

That’s similar to, but less definitive than, RAWA, which strikes the term “sporting event or contest” and replaces it with “any bet or wager.”

IGPCA then articulates a number of exceptions to that blanket ban, noting that “bets or wagers” do not include:

  1. Most activities exempted under UIGEA (see below).
  2. Activities covered by the Interstate Horseracing Act of 1978.
  3. “bets or wagers on poker, but only in, between or among States and Indian tribes that have expressly authorized that activity, or among States and Indian tribes that have expressly authorized that activity, including pursuant to Tribal-State or State-State compacts or agreements;”
  4. “qualifying intrastate lottery transactions.”
  5. ” licensed facility activities.”

RAWA contains exemption 2 and modified versions of exemptions 2 and 4.

As Dan Cypra of pointed out to me, IGPCA’s UIGEA exemption is narrower than RAWA’s and does not appear to include fantasy sports.

Both bills would effectively ban companies from offering many (although not all) traditional casino games online.

Rumors of such a compromise emerged earlier this month. Whether the similarities would be enough to shake Adelson from his current position is unclear.

Interesting timing in light of AGA pullback on issue

The leak of the bill draft comes only days after the American Gaming Association, the leading trade group for the U.S. commercial casino industry, announced their withdrawal from the debate over regulated online gambling.

That timing strongly suggests that IGPCA lacks consensus support from the membership of the AGA.

Prior to the shift, the AGA supported an approach where Congress would “enact strong minimum regulatory standards that would provide a uniform set of protections for consumers while respecting states’ rights to choose what is in their best interests.”

What chances would a compromise bill have?

While a compromise bill certainly has a better chance in absolute terms than an outright ban or widespread legalization, any federal action on online gambling remains highly unlikely.

The bulk of the upside for politicians in the issue continues to reside in the writing of op-eds and the sponsorship of bills that will inevitably die in committee.

Bringing a bill to the floor for a vote when the specific issue at hand is trivial to the majority of Americans would be a sucker’s bet. Doubly so in an election year, and doubly yet again given the states’ rights and moral subtexts in play.

- Chris is the publisher of Grove also serves as a consultant to various stakeholders in the regulated market for online gambling in the United States.
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