Well, if you’ve been reading Gambling Review for a while then you have likely read countless articles on the Unlawful Internet Gambling Enforcement Act (UIGEA) and Barney Frank’s attempt to repeal it with his proposed bill, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act. Now there is a new attempt to legalize and regulate online gambling and it comes in the form of a bill that sets out to simplify the U.S. tax code.

Any American readers don’t need to be reminded of the ridiculous nature of the tax code, which is thicker than a phone book and more confusing than a T.S. Eliot poem. The code, of course, is deliberately that difficult for people to comprehend, because being that complex guarantees that mistakes will be made and if they are, those in power can use those mistakes as a weapon against those who oppose them. Ever wonder why people who accused President Clinton of misconduct found themselves getting audited by the IRS? Nixon did the same. By making the tax code complex, those in power can use it to punish their enemies and help their friends by giving them a break. That’s why tax cheats like Timothy Geithner are in President Obama’s cabinet rather than in jail.

Given how absurd the tax code is, rewriting it is a good idea. Ron Wyden, a Democratic Senator from Oregon, and Judd Gregg, a Republican Senator from New Hampshire, have proposed to do exactly that, by introducing the Tax Fairness and Simplification Act of 2010.

I haven’t read or even seen the bill yet, so I can’t tell you what’s in it. I can only tell you what those two Senators say the bill will do. According to them, it will eliminate many “specialized tax breaks” and “create policies that benefit everyone.” That wording scares me, but let’s continue. They also say the bill will include “fiscally-responsible middle-class tax cuts, business tax breaks to help American companies compete globally and create jobs, and a fairer and simpler tax system for all Americans.”

Okay, all of that sounds good except that I cringe when I hear a politician talk about taxes being fair. They normally do so when calling for a progressive tax system that unfairly places an extra burden on the upper class citizens who are the ones starting companies and creating jobs. Also, America already has a progressive tax system, with most of the tax burden being shouldered by the wealthy.

The one aspect of the bill that is of the most concern to online gamblers, though, is the fact that it calls for the regulation of online gambling, with all operators paying a 2% licensing fee to the government on all deposits. Many of the provisions in the gambling section of the bill are like those in Frank’s bill. The bill calls for “strict federal licensing and regulatory framework” to ensure that the games are safe and fair. A Joint Committee on Taxation analysis determined that the regulation of online gambling called for in the bill would generate almost $42 billion over the next 10 years.

Now that the bill has been proposed, its next step is to be debated in a Senate committee. Even though it would clearly legalize and regulate online gambling, I’m not sure if this bill is a good idea. It calls for some tax cuts but lets some of Bush’s tax cuts expire. It also changes the tax brackets and does other things that could be detrimental to the economy. It’s simply too early to tell, without having read the bill, whether it’s a good thing or bad. Rest assured, Gambling Review will follow this bill closely.

Well, President Obama in a speech five days before the election said that they were “five days away from fundamentally transforming the United States of America.” Well, he’s right, but not in the way that he intended. I believe that Obama wants to fundamentally transform America by doing away with the private sector, capitalism and basically democracy. He wants to shift a rather centrist nation far to the left. However, what he has done is transformed the nation by shifting it to the right.

As the government has tried to grab as much power as possible and grow as large as possible, there has been rebellion among the American people. Equally as important, though, is how it has affected the Republican Party. The Republican Party as it existed in 2008 was more liberal than the Democratic Party in the days of President John F. Kennedy. As a result of the current administration’s policies, though, Republican voters have learned that now we need conservativism more than ever and that big government, high taxes, and high spending policies can’t be accepted, whether it’s coming from a Democrat or a Progressive Republican, such as George W. Bush, John McCain and Charlie Crist. As a result, McCain and Crist are likely to lose in the primaries for their senate seats.

But what about president? At last weekend’s Conservative Political Action Conference, Ron Paul won the straw poll for presidential preference. Paul, who is a Republican with very Libertarian ideology, won 31% of the vote, with Mitt Romney (a centrist) coming in second with 22%. Romney had won the straw poll in each of the last 3 years. Sarah Palin received 7%.

No one knows if Paul will run for the Republican nomination. He did in 2008 and didn’t get nearly as many votes in the primary as Romney or McCain. Times have changed, though, and his anti-spending message resonates now more than ever.

So what does this mean for online gambling? If Paul was elected president, it would be a good thing for the online gambling community in America as well as anyone who wants an expansion of brick and mortar casinos. Paul is co-sponsor of Barney Frank’s bill in the House that would overturn the Unlawful Internet Gambling Enforcement Act (UIGEA).

Like the issues of spending and regulation, there has been a public shift in sentiment regarding gambling as well. States like Alabama that have traditionally been against gambling, either online or in casinos, are starting to come around, according to recent polls. As the economy continues to struggle and many states are facing budget deficits, adding revenue from gambling makes sense now more than ever. It would also lead to an increase of jobs, something that is badly needed, since 9.7% of the country is still unemployed according to the White House (and a much larger number according to many economists).

Before anyone gets too excited, I should point out that Ron Paul has always been considered unelectable in a national election. Though times have changed, maybe they haven’t changed enough for a man like Paul to sit in the Oval Office. However, his surge in popularity shows a shift in attitude in America, which is just as important. With Americans demanding less regulation, more freedom for private business, and a balancing of the state and federal checkbooks, online gambling legislation could be a safer bet now than ever.

If you remember, and you probably don’t, a while back we reported on the Morongo Band in Mission Indians and their quest to provide online gambling within the state of California. Recently, the Morongo Band has opposed measures in Congress to repeal the Unlawful Internet Gambling Enforcement Act (UIGEA). While that may seem absurd, given their desire to provide online gambling, there seemed to be selfish reasons for it. A legalization of it nationwide would increase competition and the Morongos, according to some, wanted it all to themselves.

Now, however, the tribe seems to be getting more generous. They now are asking the state to allow them to allow them to provide online poker. The state should regulate the industry to ensure that it is safe and fair. In return, the tribe would cut the state in on some of the profit. The Morongo Band is reiterating that California need not wait for nationwide regulation. If they keep the online poker games inside the state and only allow players who reside in California to play, no federal regulation is necessary.

Facing major budget problems, California is looking for any ways to make extra money, so it’s possible that they’ll go along with the Morongo’s ideas. Only time will tell.

This weekend, Americans took the time to reflect on the things for which we are grateful. For some, it’s a loving family. For some, it’s a great job. For some, it’s turkey, stuffing, sweet potato casserole and pumpkin pie. For me, it’s all of those things in addition to a rare good decision made by Obama appointees.

Obama appointees make wise decisions that are in the best interest of the country about as often as I turn down sex with a beautiful woman, so it was surprising indeed when the Treasury Department and Federal Reserve granted the petition to delay the implementation of the Unlawful Internet Gambling Enforcement Act (UIGEA).

Most Gambling Review readers are aware of the UIGEA and its significance in the world of online gambling. Many, however, may not have known that it was not set to take effect until December 1, 2009. However, a bipartisan petition for a delay of the law was submitted to Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Barnanke.

There were two main reasons for seeking a delay. From some, such as Representative Barney Frank, who want the law repealed, they are simply trying to buy more time to take down the law. For others, it is a financial and economic reason. Right now, in the middle of a recession that we haven’t seen since either the Jimmy Carter years or the Great Depression (depending on who you ask), would be the worst possible time to place a new burden on the financial industry. It is interesting that Geithner and Bernanke granted the petition for that reason, though, since both have gone to considerable trouble trying to convince the country that the recession is over. Are they finally admitting that it’s a lie?

Implementation of UIGEA is now delayed until June 1, 2010. In the meantime, Frank and others will seek to repeal the law. Since it’s unlikely that our economy will be in much better shape by then, an interesting question is whether or not, if it isn’t repealed, there will be a second petition.

Something wicked this way comes… On December 1^st, the United States must come in full compliance with the regulations set forth in the Unlawful Internet Gambling Enforcement Act or UIGEA for short. Meanwhile, the Poker Players Alliance (PPA) is scrambling behind the scenes to slow the coming storm of vague laws aimed at bureaucratizing the illegality of online gambling.

The patron saint of online gambling (or is he?) Barney Frank introduced HR 2266 which would delay the effects of the UIGEA by one year. This would in theory give lawmakers enough time to consider a better way to tax and regulate online gambling. Unfortunately, despite garnering much support from 48 cosponsors to the bill, there are apparently “other issues” going on with the government and the economy that are somehow “more important” than the delay of the UIGEA. So it doesn’t look like help will arrive in time.

John Pappas, executive director of the PPA spoke to Poker News Daily and had this to say, “The reality is that our country is facing a lot of challenges. From a poker player’s perspective, the UIGEA may be the top priority, but it’s not the top priority of Congress. Until Barney Frank can solve the issues facing his Committee, ours is not going to take precedence.”

The PPA is apparently pursuing all avenues in search of a delay to the harmful anti-online gambling legislation. One of the considered weapons in their arsenal is the Administrative Procedure Act “allows for individuals and organizations like the PPA to weigh in with the Department of the Treasury and ask for a delay of a proposed rule.”

Also working in favor of online gambling supporters is the amount of money the government stands to gain by taxing and regulating online gambling. However, this same issue may work against them. The Obama administration and Democratic Congress have so many issues on the table like health care reform and thinking of ways to distract the American people from understanding the financial implications of passing government controlled health care that passage of anything seems like a tall order at this time.

“We are working with Barney Frank and others for a non-legislative solution to clarifying or delaying the UIGEA regulations. Given everything on the Chairman’s plate, one thing off of it is a good thing. We’re hoping to see a delay.”

Thus far, Gambling Review has published roughly 7 million stories (or at least it seems that way) about the Unlawful Internet Gambling Enforcement Act (UIGEA) and Representative Barney Frank’s attempts to overturn it. Frank thus far has been less than successful. In 2008, Frank introduced a bill in the House that would have repealed UIGEA and was defeated, despite having a Democratic majority in the House. Once President Obama and the new Congress were sworn in back in January, Frank introduced a new bill to repeal UIGEA. The bill so far has 60 co-sponsors, though many are not confident that Frank will succeed his second time around. For various reasons, not the least of which is skyrocketing unemployment and an administration focused on passing healthcare reform, flooring of the bill has been delayed.

In the meantime, some representatives would like to stall. Though UIGEA was passed in 2006, regulations for the law weren’t passed until 2008 and the implementation of the law isn’t set until December 1, 2009. Who says Congress doesn’t get things done quickly? Now a group of representatives, led by Frank and Republican Peter King, have sent a letter to Federal Reserve Chairman Ben Bernake and Treasury Secretary Timothy Geithner asking for the implementation of UIGEA to be delayed. Their reason is that with the economy still in a deep recession, now is not a good time to place more burdens on the financial institutions.

It will be interesting to see if Bernake and Geithner listen to the request. After all, both have claimed time and again that the recession is over, despite all evidence to the contrary. Therefore, agreeing to delay the implementation of UIGEA on the basis that the recession, which they say is over, is putting too much of a burden on the financial industry would seem to be an admission that they are lying, or at least wrong, about the economy. For that reason, like the passage of Frank’s bill, I think this attempt will fail.

Loyal Gambling Review readers, if such a thing exists, have probably noticed that Ricky Bauer and I have a decidedly anti-UIGEA stance and while we’re not exactly fans of Barney Frank, we appreciate his efforts to repeal the law. Well, today I read an opposing viewpoint from an industry lawyer that I find interesting and provocative, so I thought I would share.

In a recent article, Martin Owens contends that Barney Frank’s gambling legislation is unnecessary, possibly even detrimental to the industry, and doesn’t stand a chance of passing anyway. Recently I have written that I am not optimistic of Frank’s chances, but what about the other two? Martin Owens is a California attorney who specializes in internet law and is the author of a book called Internet Gaming Law, so he’s infinitely more qualified to comment on the subject than me.

While the Unlawful Internet Gambling Enforcement Act (UIGEA) was passed in 2006, regulations for the law weren’t passed until 2008. According to Owens, while the law was written by Capitol Hill politicians, the regulations were written by professionals in the financial industry to protect themselves from UIGEA. Yes, that’s right. The regulations for UIGEA protect the financial industry from UIGEA. UIGEA basically gives the government the power to prosecute any financial institutions who transfer funds from “unlawful internet gambling.” The problem is that there is no definition in that or any federal law about what constitutes “unlawful internet gambling.” If you don’t know whether the gambling was legal or illegal, how are you supposed to know if the funds are from a restricted transaction? Currently, there are only 6 states in the Union that have laws prohibiting online gambling. According to Owens, the regulations in UIGEA provide safety for the financial service providers (FSPs) because “as long as they install proper procedures to identify and block these ‘restricted transactions,’ American FSPs will not be penalized, even if a wicked internet bet or two does slip through the cracks.” According to Owens, thanks to the new regulations, UIGEA has become “unintelligible, unenforceable and mostly unimportant. It is doubtful that any person or company could be prosecuted for anything under the UIGEA in its present state.”

A major problem with Frank’s bill is that it takes rights away from the states and gives them to the federal government. As you may be aware, Gambling Review is a big proponent of states’ rights. In Frank’s bill, the power to license online casinos lies solely in the hands of the Treasury Department. States and tribes don’t voluntarily join the federal internet licensing program. They are automatically enrolled, though they do have the option to opt out within 90 days of the passage of the bill. And if Frank’s bill is passed, guess who profits from taxing the online casinos and players? It’s the federal government, not the states.

A major issue with Frank’s bill, though, is tribal casinos. There are already legal conflicts between tribal casinos and the states in which they operate, due to loopholes and general confusion from tribal gambling laws. In Frank’s bill, a tribe’s internet gambling decisions are completely independent from the state in which the tribe is located. Owens put forth a hypothetical question, if a tribe said yes to internet gambling but the state opts out, “what about the internet connection in and out of the reservation?” He also asks “since the Indian Gaming Regulatory Act only allows Indian gambling to take place on Indian land, will the gaming tribes be able to meaningfully participate online in the first place?” It is an interesting question. Currently, it is legal for American citizens to gamble in Indian casinos because they are on sovereign tribal land, not United States soil. However, there is question about whether it would be legal to log onto a tribal online casino from US land in a state that opts out. Equally important, though, is this question: Why would anyone bother using a tribal online casino if there are plenty of non-tribal alternatives? It’s not more convenient, since all of the casinos are available on your home computer.  It seems that Frank’s bill would provide more competition for the tribal casinos without letting them get in on the new action.

All of this begs the question, if Barney Frank’s bill would not protect financial service providers more than they already are, will cut into the profits of tribal casinos, and will potentially take tax money away from individual states that are hurting in this recession, is it a good thing after all? This is just another example of whenever the federal government does something, it’s never simple and things are never as they seem.

Not long ago I warned our readers to not be too confident in the overturning of the Unlawful Internet Gambling Enforcement Act in the United States. There are simply too many reasons the legislation in Congress could fail, as it did last time Barney Frank tried to get it done. I’m not the only one who thinks so.

Tony Cabot, founding member and former president of the International Masters of Gaming Law Association, agrees with me. Considered an expert on gambling legislation, Cabot believes that no law will be passed on a federal level that legalizes and regulates online gambling. Barney Frank has already pushed his House bill back and it likely will not be heard on the floor this year. Expect the same from Menendez’s similar Senate bill. In both cases, online gambling is simply not a priority, with the no end in sight to the recession and no prospect for the creation of new jobs in the near future. In addition, with the administration focusing on healthcare reform, there simply isn’t the time or energy to devote to a bill that would have a minor impact on the economy.

If the bill isn’t passed this year, though, it could be dead, according to Cabot. Next year is an election year and no politician is going to want to give their opponents ammunition by backing a controversial subject like gambling. I agree. Not only that, but the reason Barney Frank is so confident that he will succeed this time where he failed in the past is because he has strong support from Congress that has a strong Democratic majority. However, if the politicians hold off on the legislation until after the 2010 elections, the Democrats could lose that majority and therefore, online gambling would lose its support. Midterm elections are always unfavorable to the party in the White House, and with the approval rating of Obama and Congress plummeting, many experts predict a huge shakeup on Capitol Hill.

Another reason Cabot provided for a lack of optimism is that some online casinos are against the legislation. Yes, you read that correctly. According to Cabot, some of the online casinos that are already dealing with American customers are against repealing UIGEA because it would give them more competition in the market. Some fear that they will even be denied licenses to operate in the United States. Likewise, land-based casinos in the country, especially in Las Vegas, are divided on the issue. Some want online gambling legalized because they want to expand into the online realm. Other casinos are against online gambling because they see it as competition. Senator Harry Reid of Nevada, who is basically a puppet of the Vegas casino lobby, has refused to pick a side on the issue.

Cabot gave 20 to 1 odds for the success of Barney Frank’s bill, but thinks legislation at the state level is much more likely. Sorry to be a buzz kill, fellow gamblers. I’ll try to have better news tomorrow.

One minute it’s there and the next it’s all gone. Isn’t that just like gambling? Yesterday we talked about Senator Ron Wyden’s proposed bill to legalize and regulate online gambling for the purposes of subsidizing health care costs. That bill has been pulled and the senator has moved on to greener pastures, looking for other ways to pay other people’s bills with other people’s money.

The reason seems to be that healthcare reform is controversial enough as it is and bringing online gambling to the table too is apparently tantamount to proposing abortion or euthanasia to help fund healthcare. And because current healthcare reform seems more about getting something passed than getting something passed that works, the last thing anybody wants to do is raise eyebrows.

“The last thing Senator Wyden wants to do is make it more difficult to expand subsidies for working families by introducing a new contentious issue to the debate,” said Jennifer Hoelzer, Wyden’s communications director. “So when he offers the amendment, he will do it with other funding mechanisms.”

“Changing the laws regarding online gaming is a significant detour from healthcare, a detour that Senator Reid agrees is not appropriate at this time,” said Regan LaChapelle, spokesman for Harry Reid.

Though Senator Wyden’s feet were cold enough to pull the bill, that didn’t stop others from voicing their support.

“Money’s money. If that’s the price we pay, that’s the price,” said Rep. Jim McDermott (D-Wash.). “I would consider adding it.”

Barney Frank, who has been the poster child for legalized online gambling for quite some time now also agrees that the bill was a good idea. “It’s a great idea,” Frank said. “Why should we leave all that money untaxed?”

While I continue to hope that someday online gambling will be legalized in the US, I find it disturbing that the only reason the government will legalize it is for financial gain. Playing a game and doing as they wish with their own money (as long as it doesn’t harm anyone else) is or should be every American’s right. It’s a shame that those rights are now considered on their financial merits and not on the wishes and hopes of the country’s citizens. Just my two cents.

A major online gambling lobby has launched an aggressive advertising campaign pushing for the legalization and regulation of online gambling in the United States. The campaign is in support of bills introduced by Representative Barney Frank and Senator Robert Menendez that would repeal the Unlawful Internet Gambling Enforcement Act, which has been called unconstitutional yet has been upheld in the courts. Of course, the courts have a history of upholding unconstitutional laws (such as eminent domain).

The series of ads has been released by online gambling advocacy group the Safe and Secure Internet Gambling Initiative, as reported by CasinoGamblingWeb.com. The ads will propose two major reasons for legalizing online gambling. The first, according to spokesman Jeffrey Sandman, is that the government needs to “start collecting taxes on the billions in revenue currently lost to unlicensed, offshore gambling operators.” He says that the extra tax money can be used to pay for healthcare reform and “other worthy programs.” The second reason given is that, according to the lobby, gambling online in an unregulated industry is much more dangerous than if the government was in charge.

I don’t know which advertising firm worked with the Safe and Secure Internet Gambling Initiative on this, but if they think they can persuade the American people to legalize online gambling with those two arguments, then they spend too much time reading The Huffington Post.

First of all, using the funds from online gambling to pay for Obamacare is kind of like me opening a lemonade stand to pay my mortgage. Even if it was able to make a significant dent, “the government needs more tax money” isn’t exactly a winning argument right now. Haven’t they been paying attention to the tea parties and healthcare protests? If not those, surely they’ve seen Obama’s approval rating plummet the more he talks about spending and expanding government programs. As for the other argument, does anyone actually think that there is an industry out there that is run better by having the government involved? The idea that government regulation of online gambling will end corruption is laughable. Creating another bureaucracy isn’t exactly high on the wish list of the average American citizen.

Instead, a smart campaign for online gambling would focus on the fact that the government has no right to tell the people how they can and can’t spend their money online, unless of course they spend it on child pornography. As it is, I think the ad campaign could do more harm than good. If UIGEA is repealed, it won’t be because the American people are eager to feed more money to the government beast.