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Politics and Poker: States' Revenue Needs May Gut UIGEA

Politics and Poker: States' Revenue Needs May Gut UIGEA 0001

To online poker enthusiasts: Help is coming. States are desperate for revenue.

Last month's 651,000 jobs lost means 8.1% unemployment (14.6% if you factor in part-time, under-employed or those who are fed up and have stopped looking). 4.4 million jobs have been lost since the start of the recession. 12.5 million Americans are out of work.

How bad is it? 700 people in Michigan applied for a single school janitor job, paying $15-$16 per hour with benefits. Maine is likely to pass a $19 annual inland waterway canoe/kayak licence, with $100-$500 fines for non-complying canoeists. Ever more pressure is felt within state budgets that pay unemployment benefits, food stamps and shoulder the healthcare burden of those without work or insurance. In theory, the state governments collected taxes from businesses for this, but revenues are down as the consumption side of the global economy has ground to a halt.

So when House Banking and Finance Committee Chairman Rep. Barney Frank (D-MA) talked Friday about the $52 billion dollars in tax revenue online gaming would represent and said a bill to overturn the Unlawful Internet Gaming Enforcement Act (UIGEA) "would be ready by the end of March," it got our attention. How bad is it? Even arch-conservative lawmakers in Utah(!), a state where gambling (and drinking) is mostly prohibited, said they would welcome the online bill Barney Frank is proposing. And if the US Congress moves as glacially as it is known to, it may be too late and new issues will have surfaced, such as the proposed World Trade Organization (WTO) action over alleged US protectionist trade practices regarding online gambling.

California and New Jersey are rapidly moving forward with their own online gaming bills. New Hampshire and North Dakota are close behind. In California, action is expected soon on a bill allowing in-state online gaming. That move, by a state legislature, would make the UIGEA unenforceable by the Justice Department inside that state. It would indirectly create an even bigger headache with the proposed WTO action as it would strengthen the case against US protectionism because of a federal statute being overruled by state law.

Frank Catania, New Jersey Assistant Attorney General in charge of Gambling Enforcement, (and a leading gambling lobbyist), is coordinating an even bolder threat to UIGEA by linking state lottery systems together to create a complete online gambling solution. New Hampshire and North Dakota like the wildly successful multi-state Powerball and MegaMillions, and would provide online interstate gambling using an existing and successful platform. At that point it's "Katie bar the door," because a dozen high-profile Fed cases would become moot and the industry would also give a well-deserved snicker to PartyGaming's former chairman Anurag Dikshit's $300 million mega-settlement.

Ultra-conservative Congressional Republicans thought they were clever by sneaking in 11th-hour get-away language to the Safe Ports Act bill, in the form of the UIGEA. Instead of directly attacking gaming, which had been a losing strategy earlier, they instead focused on making the payment system illegal. If one cannot collect winnings, then one will not play. When the final federal rules went into effect last month, states were hurt when US banks refused to process online lottery payments domestic or international. Why? Because Congress is seldom clear and here placed the burden on companies to self-police. Banks, which are risk averse to begin with, shut down any Internet payment coded as gambling because this was the easiest route to UIGEA compliance.

While everyone, including online gamers, are caught between a rock and a hard place, Congress pats itself on the back for a job well done. Congress has been deaf to the consequences while continuing to bloviate about earmarks, while the rest of us try to figure out what it is they have wrought.

Sounds like business as usual.

Editor's note: Contributing columnist Denis Campbell brings an independent and experienced eye to poker's political scene. Campbell has worked closely in the past with former Cabinet Secretaries in the Carter and Clinton administrations, Ambassadors and members of Congress. He offers commentary on US and UK politics for the BBC and Huffington Post, and is currently the editor-in-chief of UK Progressive Magazine. Here, Denis offers his insights on matters affecting poker. Denis' views do not necessarily reflect those of PokerNews.

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