Rep Joe Barton (R – TX) introduced the latest attempt to regulate online gambling at the federal level today with the Internet Poker Freedom Act (IPFA).
Much of what we see in this bill echoes past legislative efforts. But the bill is completely distinct from Rep. King’s recent bill to regulate online gambling.
What follows is more of a highlights than a cliffs, although I did make an effort to at least touch on all essential sections of the bill.
If you’re wondering about my opinion of the bill, these tweets sum it up pretty well:
— Chris Krafcik (@CKrafcik) July 11, 2013
@OPReport Meet the New Bill, same as the Old Bill. But at least this keeps the conversation going and the lobbyists from starving on K St.
— Ian J. Imrich, Esq. (@ijiLaw) July 12, 2013
Just as it sounds.
Not much of note here, basically provides context and general justification for the bill.
The section references the UIGEA, DiCristina, the legal ambiguity surrounding online poker and the unique peer-to-peer nature of poker.
The section then lays out the fundamental components of a regulatory scheme for online poker and the economic benefits of regulation.
A few things worth noting here:
This section makes it illegal to operate a US-facing online poker room without a license as required by IPFA.
This section establishes The Office of Internet Poker Oversight (The Office) under the Dept of Commerce.
The Office has a number of powers, including:
The Office is required to “conduct meaningful consultation with federally recognized Indian tribes regarding all aspects of this title which affect federally recognized Indian tribes.”
This section covers a variety of issues, including who must be licensed, the issue of state participation and more. A few key points:
A few key requirements regarding applications
Requirements for operation
If you’ve been convicted of a felony involving accepting bets over the Internet, you’re shut out for 5 years. And if you purchase the assets of a bad actor, you’re shut out for the same 5 year period.
Companies and individuals who don’t meet the threshold of “significant vendor” may still be required to go through suitability checks. In any case, operators are required to notify regulators of any “other vendor,” a term that covers quite a bit of ground.
Most important for affiliates, it includes those who: “direct, provide, or solicit customers to or for the licensee’s Internet poker facility, or materially assist in any of those 9 tasks, in return for a commission or other fee;”
Having an “other vendor” that doesn’t meet suitability can put an operator’s license in jeopardy.
IPFA basically seeks to limit operator licenses to existing casinos, card rooms and tribal gambling facilities. But the section appears to be written in a broad enough way to make the limitation somewhat moot. And in any case, the section can be done away with after two years.
The law of the regulatory body that issued a license is the controlling law when licensees run afoul of the IPFA.
When licensees are appealing an action, they can continue to operate if they can convince the court hearing their appeal to allow them to do so.
If an operator loses their license, they have 30 days to return all funds. Funds that can’t be returned must be placed in escrow overseen by The Secretary.
Violations of the IPFA by licensed operators carry an (effective) minimum civil penalty of $250k for individuals and $750k for corporations – for each violation.
Violations by unlicensed operators – i.e., unregulated US-facing sites – face a minimum fine of $1mm per each day the site takes bets without a license, up to the total amount wagered by U.S. players.
This section covers the minimum requirements regarding problem gambling controls, responsible gambling promotion and self-exclusion.
IPFA contains some common-sense and potentially effective requirements, but then gives state and tribal regulators such broad latitude as to render this section basically meaningless.
The Secretary will keep a master self-exclusion list consisting of all individual self-exclusion lists.
Individuals on the self-exclusion list get very little in the way of protection from IPFA. But the operator certainly does – they don’t have to pay self-excluded players their winnings should the player come back on site during the self-exclusion period.
Anyone delinquent on child support payments is automatically placed on the self-exclusion list.
This section requires The Office to accumulate and “make public” a wide array of aggregated data regarding online poker activity, including “gender, age and region of residence, player behavior including frequency of play, length of play, speed of play, denomination of play, amounts wagered and, if applicable, number of lines or hands played and characteristics of games played.”
What can’t you do under IFPA?
You can’t be hit for violation of another law if you’re following everything under IPFA.
Exempts activity permitted by IFPA from UIGEA regulations.
Cheating is generally prohibited. But what constitues an “unfair advantage” is left up to the licensee. That’s an area that a lot of poker assistance software could potentially fall under.
But bots are specifically identified as cheating devices under the IFPA. And use of them carries a potential criminal penalty
Generally, this section makes clear the the IFPA won’t impact existing law – with one key exception (bold mine):
Except as otherwise expressly provided in this title and excluding any prohibitions described in section 104(a)(3), the provisions of this title shall supersede any provisions of the law of any State or federally recognized Indian tribe expressly relating to the permitting, prohibiting, licensing, or regulating of Internet poker facilities, including Internet poker facilities, and the law of any State or federally recognized Indian tribe expressly relating to the permitting, prohibiting, licensing, or regulation of gambling, except to the extent such State or tribal laws are not inconsistent with this title.
The IFPA also won’t have any impact on tribal compacts, status or or the IGRA.
The Secretary has 180 days after the passage of IPFA to propose regulations.
Requires a variety of annual reporting.
The law comes into force 30 days after passage, but licenses can’t be issued until regulations exist.
This title edits the UIGEA for two purposes: First, to make it comport with the IFPA.
Second, to identify and investiage a list of violators, who will then be added to the Specially Designated Nationals and Blocked Persons list.
There’s a lot of detail in this section, but that’s the gist.
The remainder of the bill involves some clerical housekeeping.