Frank Bill Finally Introduced

May 06, 2009 | News Category: Gaming Law

0 Comments The much awaited proposal by Barney Frank is finally here. The new bill took longer to be completed than was expected and has been met with much interest and excitement from those in the online gambling world.

The bill presents Congress with a structure for regulating and licensing online gambling sites. The bill establishes terms for poker rooms and online casinos to qualify for licensing and also lays out the conditions which would need to be met to maintain a license once it has been granted.

Somewhat unexpected was the inclusion of a provision which allows states and tribal authorities to opt out of the federal legalization of online gaming. States that have no legal gambling, such as Utah and Hawaii will be pleases with the section that reads "each State and Indian Tribe having the ability to limit Internet gambling operators from offering Internet gambling to persons located within its territory by opting out of the provisions of this Act."

Operators that will be licensed, according to the bill, would have to make sure that each state only receives the online gambling they they choose to make legal in their own borders, which means that specific states may exclude specific online casino games or types of gambling, while allowing other gambling games.

According to the bill, the Department of the Treasury would be given regulatory authority, which would include checking criminal and credit checks, reviewing applicants and checking their business structures, as well as establishing the experience of the operator in running online gambling games.

Operators would need to provide measures that will adequately check the on the identity of players and good age verification measures, as well as the legality of the location from which the player is playing. They would also need to provide programs for responsible gaming, self-exclusion options and problem gambling prevention.

Another unexpected requirement for those accepted as licensees is with regard to tax collection. Online casinos would be required to calculate taxes that are owed on gambling winnings before they pay any money out to winners. Under the heading "COLLECTION OF CUSTOMER TAXES," the bill states "Appropriate mechanisms to ensure that all taxes relating to Internet gambling from persons engaged in Internet gambling are collected at the time of any payment of any proceeds of Internet gambling."

The tax collection section came as a surprise to many, however, one should expect that when the chairman of the House Financial Services Committee, Barney Frank, is drafting a bill, that he would want to ensure that the appropriate taxes are collected with ease.

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