Taxable Talk

The poker world is abuzz with word that Senate Majority Leader Harry Reid (D-NV) is circulating legislation that would legalize online poker in the United States. Poker newsgroups, such as 2+2, have long threads on the proposed legislation. Here’s what’s known at this point:

1. The proposed legislation is circulating in various drafts in Washington.  Like the UIGEA that, in theory, made financing online gambling illegal, this legislation would be attached to some “must-pass” legislation.  The two most obvious targets are the AMT patch and the compromise bill that would extend the Bush Tax Cuts and unemployment benefits.
2. The bill would implement a United States-based licensing scheme, with licensing run through state licensing boards.  Given that Harry Reid is from Nevada, the Nevada Gaming Commission would likely be preeminent in such matters.
3. In one draft of the legislation, states that have legalized poker (except Washington) would be considered to have “opted in” to the legislation; states without legalized poker would be considered to have “opted out.”  States would be able to switch, probably by a vote of the state legislature and such legislation being signed by the state’s governor.  If you’re a resident of Utah, it’s likely you will be out of luck.
4. Eventually, current providers of online poker would be allowed to apply for licenses.  It’s likely it will be some time before they’ll actually be able to obtain the licenses.
5. The bill makes other types of online gambling (e.g. online blackjack) a clear violation of the Wire Act.
6. There will likely be other impacts depending on the exact wording of the legislation.

For the online gambling community, you need to remember that this is draft legislation being circulated behind the scenes. There is a good chance this legislation is not attached to anything, and does not make it into law. And as always, the devil is in the details, and this Congress has been quite good about voting on legislation first and then reading it second (e.g. Obamacare).

In one way this is deja vu. Back in 2006, then Senator Bill Frist pushed through the UIGEA by attaching it to the Safe Ports Act. It will be interesting to see if the effective end of the UIGEA for online poker comes about by legislation attached to some other must-pass bill.

This entry was posted on Monday, December 6th, 2010 at 3:37 am and is filed under Gambling, Legislation. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.