A new law in the U.S. state of North Carolina may outlaw and shut down the only significant form of gambling currently going on within their borders. A new law, House Bill 80, was passed by the state legislature last week and is awaiting the signature of Governor Beverly Perdue, who is expected to sign the bill into law within the next week.

This isn’t the first time that gambling fans in the Tar Heel state have been targeted by lawmakers. Dating as far back as 1791, most forms of gambling have been illegal. In 2006, the state passed laws that banned video poker. That same year, Congress passed the Unlawful Internet Gambling Enforcement Act, which allows the feds to go after financial institutions involved in transactions related to “unlawful” online gambling, whatever that means.

Last year, North Carolina’s legislature passed a law banning online gambling. The law targeted online slot games, or “server-based electronic game promotions,” as it is worded in the law. That shut down the online slot business at Internet cafes, but the gamblers found a way around the law.

As a way of complying with the letter of the law while still allowing customers to spend their money as they please, Internet sweepstakes cafes were established. These establishments and the games they provide are legal because they have predetermined sweepstakes systems for the awarding of prizes, rather than it being done in an online pool. In addition, the sweepstakes machines don’t pay out to the players, since that is banned by a different state law. Instead, players get their winnings from a teller in the café.

If House Bill 80 becomes state law, North Carolina residents will lose yet another form of gambling and the Internet sweepstakes cafes will have to shut down. The law would take effect on January 1, 2011, so the cafes would have to be closed by then.

Uh oh. All of this talk about online gambling has made the regulators in Nevada cranky. The Nevada Gaming Control Board is now telling licensed land-based casinos not to become involved in online gambling, at least for now.

Many land-based casino companies are believed to be talking with online casino businesses in an attempt to expand their reach in the gambling market. One such casino, Harrah’s Entertainment, has already opened its own online casino, though that casino does not currently accept American customers. If UIGEA is repealed or if the state of Nevada legalizes online gambling, that could change.

In the meantime, the NGCB is issuing a stern warning. Board member Randall Sayre called deals between licensed land-based casinos and unlicensed online casinos “inconsistent with the Nevada Gaming Control Act.” Well, he might be right. If there’s one thing that government regulators are knowledgeable on, it’s control.

He went on to say that such business relationships are not sound from “a state and federal perspective.” He says that even though there is no federal ban of online gambling. So much for that knowledgeable thing I was talking about. Sayre stated that the Nevada Gaming Control Board is currently investigating already established links between land-based casinos and online gambling companies.

Sayre and the rest of the folks at the NGCB seem to think that the industry can only be safe if it’s being regulated by the government. Certainly history has shown that the heavily regulated oil and banking industries have become much more secure since the government got involved. I mean, it’s not like we’ve had any recent crises with either of those sectors, right?

The truth is that there are already plenty of safe online casinos for USA players that are monitored, regulated and approved as safe by independent (non-government) online gambling authorities. Playing on those online casinos is also cheaper because they don’t pass on the cost of government licensing fees, taxes and the high employee wages and benefits required by the unions. If the NGCB really wants what’s best for the consumers, they should back off and let the casinos do their thing.

Today the Unlawful Internet Gambling Enforcement Act (UIGEA), which was passed in 2006 as part of the SAFE Port Act, officially takes effect. What does that mean for online gamblers in the United States?

Not much, to be honest. The law makes financial institutions responsible for blocking transactions related to “unlawful” online gambling, though it doesn’t outline what is unlawful. UIGEA does not constitute a federal ban on online gambling and no such ban exists, though some states do have a ban on the books. Players cannot be punished under UIGEA; only the financial institutions can.

A result of the law is that many online casinos, sportsbooks and poker rooms have stopped accepting American customers, afraid that they or the players won’t get paid by the banks. However, most of those online gambling sites had already made the move and left the American market. In a sense, though it was not yet in effect, players have felt the effect of UIGEA for the last 4 years. Another effect is that VISA and MasterCard block transactions to and from online gambling sites, but again, they made that move before today. In a sense, the UIGEA taking effect today only matters in a symbolic nature, because it has affected the American online gambling market since 2006.

To some, it may seem surprising that the federal government would seek to control the financial industry in such a way and take liberties away from the people, but America has moved a long way from its roots and no longer resembles the collection of free states that the Founding Fathers created. It started in the early 20^th century under Woodrow Wilson, when the government expanded its power in a time of war. The Wilson administration controlled public opinion using a propaganda machine that would later be copied by Nazi Joseph Goebbels and imprisoned anyone who spoke out against the government. Many practices, such as the banning of books and prohibition of alcohol, were done in the name of protecting the people.

In the 1930s, FDR followed in his footsteps, imprisoning political dissenters, running internment camps for German and Asian citizens, and unleashing a New Deal economic policy that prolonged the Great Depression all in the name of an expansion of government power. Again, it was for the good of the people. Now we have the Obama administration taking over the healthcare industry and the financial sector. It is, of course, for the good of the people, to save us from another recession.

In between we had Harding, Coolidge, Reagan and a few others who attempted to take control away from the government and give it back to the people. The result in each instance was great economic prosperity. That is why there is now hope for a complete repeal of UIGEA and legalization of online gambling. Massive government takeovers always leads to a backlash and right now you can see it in the Tea Party movement. That is why I wrote earlier that the Tea Party movement is the best chance we have for a repeal of UIGEA. A Congress with many pro-gambling Democrats and pro-liberty Republicans would do the gambling community well.

Yesterday, I exposed the myth that Democrats are for online gambling and Republicans are against it. Even Barney Frank, who is leading the charge to legalize and regulate online gambling, didn’t vote against UIGEA. The truth is, the Democrats and Republicans stand together in opposition of online gambling.

This may come as a surprise, but in recent years there hasn’t been a whole lot of difference between the two parties. Both have favored big government, but for different reasons. Both have had out of control spending, but they spend money on different things. The Democrats were against online gambling because it’s something they can’t control and Republicans were against it for mostly moral reasons – seeing gambling as a potentially destructive habit.

Things are changing, though. You may have heard of the Tea Party movement sweeping the nation. It is a conservative movement that strays from the current Republican party and is focused on the principles of the Founding Fathers – the original conservative Republicans. The Tea Party embraces almost a Libertarian form of Constitutionalism and wants a small government that will stay out of people’s lives. As you might imagine, such a mindset is good for online gambling legislation because the Tea Partiers believe that the government has no right to tell you what you can and can’t do with your money.

Tea Partiers are putting pressure on the legislature, but just as importantly, they’re electing small-government candidates. Look at the recent Republican primaries and you will see the establishment Republican candidates losing (or trailing in the polls) to the Tea Party small-government guy. Rand Paul’s win and Marco Rubio’s annihilation of Charlie Crist that forced Crist to drop out of the primary and run as an Independent are the most recent examples.

If Tea Party Republicans continue to gain power, it brings the perfect storm together for the push to legalize online gambling at a federal level. That is because it allows the Republicans and Democrats to join together on the issue, this time in support of online gambling. The Republicans would be for the legislation because it takes power from the government and gives it back to the people and the Democrats would support it because it gives them another industry to regulate and tax. The Democrats rarely turn down an opportunity for tax revenue.

For that reason, fans of online gambling in America should support the likes of Paul, Rubio, JD Hayworth and even small-government Democrats like Mark Critz.

It seems that U.S. Representative Earl Blumenauer (D-OR) has changed his mind about online gambling. Four years ago, he joined the majority in voting for the Unlawful Internet Gambling Enforcement Act (UIGEA). Though the bill doesn’t actually ban online gambling (a fact reinforced by a recent Supreme Court decision), it does allow the federal government to go after financial institutions that are involved in transactions that are considered “unlawful” internet gambling transactions. Which transactions are unlawful is anybody’s guess – that’s one of the problems with the law – but many people believe it only applies to states that have banned online gambling.

Though he voted for a government restriction of online gambling in 2006, Blumenauer now says that he was wrong to do so. Yesterday he released a statement saying that the United States is missing out on gambling revenue that could help states and the federal government with their budget problems. In addition, he believes that allowing online casinos to operate in the U.S. would create jobs.

Blumenauer also suddenly realized that restricting online gambling is hypocritical, since fantasy sports, horse racing and state lotteries are exempt from UIGEA’s rules. So Blumenauer has finally seen the light. Good for him. I wonder who pointed it out to him (maybe he’s been talking to Ron Paul).

There is a popular misconception that Democrats are for legal online gambling and Republicans are against it. They say that UIGEA was pushed through Congress because the Bush administration wanted it done and Democrats have been fighting it ever since.

Like much of the popular opinion regarding politics, that is inaccurate. UIGEA was passed in 2006, during Bush’s second term. That much is true. However, the bill, which was part of the SAFE Port Act, had overwhelming bipartisan support. In fact, it had a type of bipartisan support that is rare in such a polarized era. The bill passed the House of Representatives by a vote of 421-2, with 9 representatives not voting (why members of Congress can abstain from voting so often when that is their only job is another story). It then passed the Senate by a 98-0 vote, with 2 senators not voting. After differences in the House and Senate versions were resolved, the conference report was then passed by the House 409-2, with 21 representatives not voting.

Two, folks. Two people voted against the bill. Of those two who voted against the bill, one was a Republican (Jeff Blake of Arizona) and one was a Democrat (Edward Markey of Massachusetts). Barney Frank, the current “patron saint” of online gambling, did not vote.

This is the legislation that he now deems to important to overturn, yet he didn’t even vote on it. Not an aye, not a nay. Nothing. Keep in mind that UIGEA was part of the much larger SAFE Port Act, which was concerned mostly with port security, but to say that it was a Republican bill that Democrats opposed isn’t exactly accurate, considering that only 1 Democrat voted against it and just as many Republicans did as well. Now, I don’t support either party, because they both suck (though I think Republicans suck less), but it’s time for some people to get their stories straight.

Some members of the U.S. House of Representatives are trying to get a federal legalization of online gambling so they can regulate and tax the industry. Such initiatives would overturn the Unlawful Internet Gambling Enforcement Act of 2006, which – though it didn’t outlaw online gambling – does allow the feds to go after financial institutions used in “unlawful” online gambling transactions. There is currently no federal law that bans online gambling, though it is banned in a few states.

The push to overturn UIGEA and regulate online gambling in America has been led by Democrat Barney Frank (D-MA) and Republican Ron Paul (R-TX). My personal opinion is that Paul wants online gambling legalized because the government has no business telling people what they can and can’t do with their money and Frank wants it regulated because he loves the government controlling and taxing businesses.

Since the Frank-Paul bill was introduced – but not yet brought to the floor –Jim McDermott (D-WA) introduced a companion bill called the Internet Gambling Regulation and Tax Enforcement Act. It has been co-sponsored by Earl Blumenauer (D-OR), Frank and John Larson (D-CT).

Last week McDermott’s bill was brought before the House Ways and Means Committee, which is the chief tax-writing committee in the House. Strangely enough, several members of this tax-writing committee – such as Charlie Rangel (D-NY) – have used ignorance of the tax code as defense for tax fraud.

Anyway, last week the committee looked at McDermott’s bill and they seemed unimpressed. McDermott stated that America was simply driving gambling revenue offshore, giving money to foreign countries that America desperately needs. He also said that his bill would generate $72 billion in revenue over 10 years from creating new taxes. Among the new taxes are plans to tax the players on their deposits up front, taxes on the casinos on the wagers themselves, taxing the players’ winnings and more. Of course, there would also be many different types of licensing fees for the casinos, just like for current brick and mortar casinos.

Two representatives from Nevada weren’t too big on the bill, which isn’t surprising, since they have to look out for the interests of Las Vegas. Republican Dean Heller said he would keep an open mind, but he is concerned about online gambling’s impact on the Vegas strip. He is also against the “deposit tax” that would take money away from players up front, whether they win or lose at the casino. The other Nevada representative on the committee, Democrat Shelley Barkley, said she supports the legalization of online gambling, but not the taxing of it – at least not right away.

I know what you’re thinking? What? A Democrat is wary about adding a new tax? How can that be? Also surprising for a Democrat, she made a good argument. She wants to legalize and regulate the new online casino industry and let it develop first before taxing it. “Because the industry is not even established yet, I can’t imagine how we can know with any degree of certainty how the special tax would affect operators or customers,” she said. Instead, she says that it should be legalized and regulated, but should not be looked at as a source for revenue. Wow, now she’s sounding like a conservative.

No decision was made on whether to move forward with the bill. This is Washington; things move slowly.

You can only keep Americans in the dark for so long. Sure, you can fool us with propaganda and lies for a while, but Americans are resourceful people with access to a wealth of information from the internet, newspapers, online blogs (*ahem*), talk radio, Youtube, and more.

For that reason, only 6% of Americans still believe that President Obama’s “stimulus” bill has helped the economy. Only 19% of Americans believe that Bigfoot exists and only 6% of Americans believe that the moon landing was faked. People are resourceful and they eventually figure things out.

What about online gambling? Despite campaigning by the Department of Justice and other groups to convince people otherwise, there is no federal ban on online gambling. Neither the Wire Act nor the Unlawful Internet Gambling Enforcement Act (UIGEA) bans online gambling, with the exception of sports betting.

Until recently, however, the common belief among Americans was that online gambling in any form was illegal. The number people who feel that way, though, is dropping. In 2007, it was as low as 41% and earlier this year it was only 37%, according to a survey by Canadian group Ipsos Reid.

So what does this mean? It means that people are waking up and learning about their rights. They are learning what they are allowed to do and what they are not allowed to do. Americans don’t like the government or anyone else telling them what to do and by educating themselves, they are empowering themselves.

The same survey shows that 55% of Americans would like a federal regulation of online casinos to ensure their safety while 45% would prefer the regulation be done by each individual state.

Generally speaking, governments tend to work very slowly. This is mostly because they are very inefficient machines that have more impediments toward getting things done than stuff put in place to help getting things done. Bureaucratic red tape clogs the works and keeps things moving at a snail’s pace. For just two examples in the United States, look at the Unlawful Internet Gambling Enforcement Act (UIGEA), which was passed in 2006 yet won’t take effect until June of this year at the earliest, and Obama’s healthcare reform act, which is now passed yet the supposed “benefits” won’t kick in until at least 2014.

It’s not just the U.S. government that represents the model of inefficiency, though. Pretty much every government is like that. Right now that inefficiency and inability to get things done in a timely manner is really hurting the government of South Africa.

In 2008, the country legalized online gambling and passed legislation that would regulate and tax the industry. The new law allows for up to ten online casino operators to set up in South Africa and begin serving their citizens. Those casinos must be approved for a license by the Minister of Trade and Industry, Rob Davies. So far, for reasons unknown to me, he has yet to give the okay to a single online casino.

As a result of the political foot-dragging, ineptitude, or whatever is going on, black market online casinos have sprung up and become major players in the industry. The people of South Africa are now getting their online gambling, but the government isn’t getting the tax money. Not only that, but there is no government agency assuring the fairness of those casinos.

Last week, government officials met for the national Gambling Review Commission (no, we’re not a sponsor; they just used our name). In that meeting, advisors, some of whom pushed for the Interactive Gambling Act in 2008, described the illegal gambling activity going on in the country and its affect on the nation.

This is yet another example showing that the government can’t ever effectively deprive the people of something they want. If they want to gamble, they will find a way to do so. That is why the South African government passed the Interactive Gambling Act two years ago. However, because they have yet to license any online casinos, the black market has jumped in and supplied the goods demanded by the people. Now the government has two problems, because they still need to get around to approving and adequately taxing and regulating the online gambling in the country, but now they also have competition from illegal sites.

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.