US Internet Gaming Policy

8/6/2019 US Internet Gaming Policy

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Hawaii SB 755

Sponsor:McKelvey, D-Olowalu-Kapalua

Florida - SB812Sponsor: Diazde la Portilla, R-Miami

Nevada AB258

Sponsor:Horne, D-LV

As introduced, would permit Nevada to be a hub for interstate online poker and provided thatapplicants for Nevada licenses will not be denied solely on the basis that they accepted US poker players after UIGEAs passage, if the applicants operated sites licensed in other jurisdictions. On Apr.26, the bill was amended. Numerous provisions were deleted. The amended legislative findingsprovide that because Nevada leads the nation in gaming regulation and enforcement, it is uniquelypositioned to develop an effective and comprehensive regulatory structure related to interactivegaming and, therefore, needs to provide for licensed and regulated interactive gaming and toprepare for possible federal regulation. The bill was altered to provide that no license to operateinteractive gaming will be effective until either a federal law is enacted that authorizes interactivegaming or the US DoJ notifies Nevada gaming authorities in writing that it is permissible under

federal law to operate interactive gaming and that an interactive gaming license may be issued to anapplicant that meets any qualifications established by federal law regulating the licensure of interactive gaming. The amended version was passed and enacted.

Introduced and referred to Committee on Judiciary Mar.10; amended and reported from Judiciary with proposedchange, read and proposed amendment adopted, andreferred to Ways and Means, all on Apr. 25; amended andreported from Ways and Means on May 18; passed byAssembly on May 19; referred to Senate Judiciary on May20, Amended and reported from Judiciary on May 29,Passed by Senate as amended; sent to the governor onJune 3; signed by the governor on June 10.

Section 1 of the bill refers to the need to reclassify poker from a game of chance to a game of skill inorder that peer-to-peer poker tournaments or championship series can be held in Hawaii and attractneeded tourists. Section 2 of the bill would create a peer-to-peer entertainment commission andauthorize it to determine what contests of skill may be conducted as peer-to-peer entertainment,establish a permit fee and other requirements for peer-to-peer entertainment events, and license thetwo qualified operators with the highest bids (minimum bid $100 million) to provide peer-to-peer entertainment on the Internet. The bill also provides for a 20% tax on wagers.

Introduced on Jan. 21; considered, amended, andreported out by two committees, and, on Mar. 8, passedby Senate and sent to House; referred to 3 committees;on Mar. 23 recommended for passage,with amendments, by the House Economic Revitalizationand Business Committee (7-1) and by the HouseJudiciary Committee (9-3); on Mar. 24 passed secondreading as amended and referred to the House FinanceCommittee, which voted (14-0) NOT to recommend. Thelegislative session ended May 5.

WashingtonDC Legislation# B18-1100(Law # L18-

370)

Part of the 2011 budget legislation (Subtitle G - Lottery Modernization Act of 2010); changes D.C.gaming law by adding a provision that a lottery or lottery game means both games of skill and gamesof chance that are operated by and for the benefit of the District of Columbia, IF, when offered over the Internet, it can be confirmed that those playing are located in the District and if no method, media,

or device for play of the games of skill and games of chance violates federal law.

Introduced Nov. 23, 2010; passed by Council Dec. 7;signed by Mayor Jan. 27, 2011; Congress 30-day periodto object to the proposal closed on Apr. 7; law effective onApr. 8.

Authorizes and provides for regulation of a state Internet poker network to be operated by no morethan three Internet poker hub operators through a contractual relationship with the state. Huboperators are to be chosen through a competitive procurement process. Card rooms licensed for atleast 10 tables are permitted to seek affiliate cardroom licenses permitting them to contract with a hub

operator to operate a website offering Internet poker to registered players and pay a $1000 annuallicense fee. Hub operators are to pay a $10 million hub contract fee that will be used, untilextinguished, to offset 10% tax on monthly gross receipts (amount paid by registered players toparticipate in authorized games), a $500,000 annual fee to fund regulation and oversight. Revenueremaining after the gross receipts tax is paid is to be split, with 70% for licensed cardroom affiliates,25% for hub operators to pay the costs of hub operation, 4% for hub operators to fund advertising andmarketing, and 1% to state to pay for services related to compulsive/additive gambling.

Introduced Mar. 8 and referred to Regulated Industriesand Criminal Justice Committees; received favorable vote(10-2) in RI on Mar. 16; received unfavorable vote (2-2) inCJ on Mar. 21; reconsideration is pending in CJ. Almost

identical House bill (HB 77) referred to multiple committeereassignments, with no voting. Florida's legislativesession ended May 7.

POLICY SUMMARY HISTORY/STATUS


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New JerseyA2676 / S2652Sponsor:Quijano, D-20

US HR 1174

Sponsor:Campbell, R-Calif.

US HR 2230

Sponsor:McDermott, D-Wash.

US HR 2366

Sponsor:Barton, R-Texas

Would add a subchapter to 31 USC providing a regulatory framework for Internet poker as well asstrengthen the language in the Unlawful Internet Gambling Enforcement Act of 2006; establishes theOffice of Internet Poker Oversight (under the Secretary of Commerce), which authorizes qualifiedstate agencies to regulate the industry; and provides exemptions for state lotteries and racingoperators compliant with the Interstate Horseracing Act of 1978. To be eligible for licensure, an entitymust operate at least one land-based card room (with 250 or more tables) or state/tribal-licensed racetracks with at least 500 gaming devices and that processed at least $200 million in gross wagering onhorse racing during any three of the five years preceding enactment of the Act; beginning two yearsafter the date of first issuance, the Secretary may authorize licenses (beyond original criteria) toqualified vendors if doing so does not increase the risk that standards of the Act won't be satisfied bynew licensees.

Introduced on June 24 by Rep. Barton and referred to theCommittees on Energy and Commerce, FinancialServices and Judiciary; currently has 11 cosponsors.

Would amend P.L.1983, c.80, and supplement P.L.1970, c.13 (C.5:9-1 et seq.) by directing the StateLottery Commission to permit purchase of lottery tickets by electronic means; would allow residents of New Jersey to purchase lottery tickets directly from the Division of the State Lottery using the Internet,electronic mail, text messaging or any other electronic means deemed appropriate by thecommission.

Introduced on May 13, 2010 and referred to the AssemblyRegulatory Oversight and Gaming Committee; Reportedout of committee with amendments on Dec. 9, 2010 andreferred to the Assembly Appropriations Committee;inroduced to the Senate on January 25, 2011 and referredto Senate State Government, Wagering, Tourism &Historic Preservation Committee.

Identical to HR 2267 (introduced by Rep. Frank in prior session of Congress) as amended andreported by House Financial Services Committee on July 28, 2010. It would, among other things: adda new subchapter to 31 USC that provides a regulatory and licensing framework for Internetgambling, except for sports wagering; exclude an operator that "knowingly participated in, or shouldhave known [it was] participating in, any illegal Internet gambling activity, such as taking of an illegalInternet wager or has through its entire history, (i) not committed an intentional felony violation of

Federal or State gambling laws; and (ii) used diligence to prevent any United States person fromplacing a bet on an Internet site in violation of Federal or State gambling laws;" and allow individualstates and tribes to opt out (and opt back in). The bill does not prescribe a schedule for taxes and feesfor licensees.

Introduced on Mar. 17 by Rep. Campbell and referred toHouse Committees on Financial Services, Judiciary, andEnergy and Commerce; each committee hassubsequently referred the bill to a subcommittee;currently has 28 cosponsors.

Seeks to amend the Internal Revenue Code of 1986 to regulate and tax Internet gambling; acompanion bill to HR 1174. Taxes would be applied to deposits made at online gambling sites: 2% tofederal govt., 6% to states/tribes where bettors are located.

Introduced on June 16 by Rep. McDermott and referred tothe Committee on Ways and Means as well as theCommittee on Education and the Workforce; currently has3 cosponsors.

POLICY SUMMARY HISTORY/STATUS


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Pursuant to the federal Interstate Horseracing Act, as amended in 2000, several states allow pari-mutuel wagering on horse races using the Internet. The entities providing advancedeposit wagering services on horseraces via the Internet note different numbers of states from which they will accept wagers. For example, Twinspires.com notes it will NOT acceptwagers from 16 states, leaving 34 states from which it accepts wagers, while TVG.com notes it accepts wagers from 17 states, leaving 33 from which it will NOT accept wagers.

Lotteries

Pari-mutuel

In 2009 and 2010, Illinois enacted legislation allowing the state Department of Treasury to enter a management agreement with a third party to operate the Illinois Lottery. Thelegislation also created a pilot program for Internet sales. The US DoJ was informed but has not expressed disapproval. Additionally, lotteries in at least five statesMinnesota, NewHampshire, New York, North Dakota, and Virginiaoffer, or have offered, subscription services through which individuals in those states can purchase blocks of tickets over theInternet.

Key Existing Federal LawThe Unlawful Internet Gambling Enforcement Act (2006) UIEGA attempts to prohibit the use of certain payment instruments, credit cards, and wire transfers for unlawful Internetgambling. It defines unlawful Internet gambling as to place, receive, or otherwise knowingly transmit a bet or wager by any means which involves the use, at least in part, of theInternet where such bet or wager is unlawful under any Federal or State law in the State or Tribal lands in which the bet or wager is initiated, received, or otherwise made, leaving it tothose impacted by UIGEA to scrutinize the Federal, State, and Tribal law to determine whether a particular type of Internet gambling activity is unlawful. The definition providesunlawful Internet gambling does not include authorized intrastate and intratribal transactions if the wager starts and ends within the state. It does not state that it provides an exceptionto the Wire Act.

The Interstate Horseracing Act of 1978 (amended in 2000) This law authorizes the facilitation of wagering on horseracing across state borders, provided the activity is authorizedin the state where the bet is taken as well as the state where the bettor resides. It specifically includes wagers placed using telephone and other electronic media."

The Wire Act Provides that [w]hoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication whichentitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisonednot more than two years, or both. The US DoJ has taken the position that the Wire Act prohibits all Internet gambling, including that involving wagers initiated and received in thesame state.

Illinois - A law passed in '99 prohibits a person from establishing, maintaining or operating an Internet site that permits a person to play a game of chance or skill for money or other thing of value by means of the Internet."

Louisiana - A law passed in '97 prohibits offering unauthorized gambling services over the Internet as well as partaking in such services as a consumer.

State Prohibitions

Indiana - A law passed in '05 makes it a felony for an operator of an Internet site to use the Internet to engage in gambling activities.

Nevada - A law passed in '97 prohibits I-gaming using language pertaining to "messenger betting" and use of other electronic devices.

Washington - A law passed in '06 broadens an existing ban on transmission of betting info via wire transfer facility to include the Internet.Wisconsin - A section of the penal code prohibits the use of a wire transfer facility for conducting a gambling business.

North Carolina - A law enacted in '10 bans Internet gambling cafes.

Oregon - A law passed in '01 prohibits Internet gambling, but exempts race betting.

South Dakota - A law passed in '00 prohibits running an online gambling establishment in which a transaction "originates or terminates, or both." It exempts the state lottery.


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About Us

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Exchange Legislation

Two states, CA in 2010 and NJ in 2011, enacted legislation that defines exchange wagering as a form of pari-mutuel wagering in which two or more persons place identicallyopposing wagers in a given market. In an exchange wagering system, individuals wager against each other, permitting them to place a wager that a horse will lose (a lay bet), aswell as one that a horse will win (a back bet), a particular race. In California, SB 1072 was introduced in Feb. 2010, finally approved by both chambers of the legislature on Aug. 31,approved by the governor on Sept. 23, and chaptered by the secretary of state on Sept. 24 as Chapter 283, Statutes of 2010. The legislation, among other things, added Article 9.1 toChapter 4, Division 8, of Californias Business and Professions Code, which authorizes and provides for the regulation of exchange wagering by the California Horse Racing Board.Exchange wagering may be offered by Board-licensed entities if the licensee has entered into an exchange wagering agreement between [it], the applicable racing association or fair conducting live racing, and the horsemens organization responsible for negotiated purse agreements. No exchange wagers, however, may be taken before May 1, 2012. In NewJersey, A2926 was introduced in June 2010, finally approved by the legislature on Dec. 13, and approved by the governor on Jan. 28, 2011 as P.L. 2011, Chapter 15. The legislationsupplements chapter 5 of Title 5 of New Jerseys Revised Statutes. It authorizes exchange wagering and provides for its regulation by the New Jersey Racing Commission. Exchangewagering may only be offered by a Commission-licensed entity that has a Commission-approved contract/agreement with the New Jersey Sports and Exposition Authority and if it isconducted pursuant to and in compliance with the provisions of the [IHA of 1978], the provisions of the legislation, and the rules and regulations of the Commission. While thelegislation became effective on Jan. 28, 2011, no regulations have yet been issued.

Documents

US Internet Gaming Policy