Internet Gambling Prohibition, Poker Consumer Protection, and Strengthening UIGEA Act of 2012


Reid-Kyl Draft iPoker and iGaming Prohibition Bill Leaked -- "Internet Gambling Prohibition, Poker Consumer Protection, and Strengthening UIGEA Act of 2012"

A copy of the Kyl-Reid draft bill on Internet poker enabling regulation leaked out late yesterday in the DC Beltway. While my extensive review and analysis of this draft legislation has not yet been completed, those following this internet gaming regulatory issue will be interested to note the following elements in the present draft bill:

As currently crafted, (and as foreshadowed in the leaked Bill Summary several weeks ago) it has provisions that would proscribe issuance of of iPoker gaming licenses to poker site operators or anyone else who was involved with accepting real money play in the United States after 2006 -- i.e., following the enactment of the UIGEA.

The draft language specifically would prohibit any such business from being licensed for five years after enactment, unless that party could persuade a regulator that such a business had not ever violated either U.S. federal or State gambling laws.

Additionally, the draft bill would authorize the U.S. Department of Commerce to recognize certain state or tribal gaming regulatory bodies as so-called "qualified bodies" (similar to provisions in the Reid/Kyl Bill circa 2010) who would be authorized by the U.S. government to issue licenses to internet poker operators.

Any iPoker site operator issued a license by any "qualified body" would be permitted to accept real money poker play via the internet from any State that has "opted-in" to participate in the U.S. federal system. However, the draft bill also would prohibit nearly all other internet gaming other than peer-to-peer iPoker within the States.

As written, the draft bill would create certain carve-outs. For example, the language currently would exempt sales of drawing tickets by State lotteries and would also exempt certain internet wagers on horse-racing. Virtually all other iGaming activity -- casino games, bingo, raffles, sweepstakes, and most everything else -- even if licensed by a State in the U.S., would also be prohibited by this draft bill.

The basic revenue piece of this draft legislation imposes what effectively amounts to a Sixteen Percent (16%) Gross Gaming Revenue tax on iPoker site operators.

Stay tuned for more analysis and for confirmation of those provisions in the draft bill leaked yesterday. The Bill has not been officially dropped so provisions may well be tweaked or removed as the lame duck session of Congress commences following the US Presidential election.


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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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