New Federal Online Poker Bill Expected to be Filed and Raise Constitutional Concerns

Casino Watch Focus reported many times on the failed attempts of the federal legislature to pass a bill to remove UIGEA and fully allow online gambling at the federal level.  Most attempts have been lead by Senator Harry Reid. A new bill is once again being introduced by Sen. Reid and Les Bernal of Stop Predatory gambling provides a summary of the bill: 

A draft of the online poker bill that Sen. Harry Reid (D-Nev.) and Sen. Jon Kyl (R-Ariz.) plan to introduce was released this week. The bill, known as the “Internet Gambling Prohibition, Poker Consumer Protection, and Strengthening UIGEA Act of 2012” would legalize online poker at the federal level, a step that became possible last December when the U.S. Department of Justice released an opinion stating that the Wire Act does not apply to online poker.

The bill provides an opt-in structure, in which states have to affirmatively choose to participate in the online poker program. A state would be considered to have opted in if it has passed a law legalizing online poker. Thus far, only Nevada and Delaware have passed such laws. An Indian tribe is considered to have opted in if a designated authority of the tribe submits written notice to the Secretary of Commerce saying so. Money could only be accepted from players located in those states or tribal lands at the time they are playing.

No game other than poker would be allowed under the bill, even if it is licensed by the state. A state could still legalize other games under their own laws, but this law would not allow them to operate those games interstate. The bill has a carve-out that allows interstate bets on horse racing to continue to operate legally, as well as an exception to allow lotteries to sell tickets online.

Other portions of the bill seek to establish a criteria to determine how licenses are issued and tax issues are handled.  The Las Vegas Review Journal explains how parts of the bill could violate due process:

A bill to legalize online poker that is being written in Congress and that Nevada senators are trying to pass by the end of the year could be challenged in court and found unconstitutional, according to a legal analysis by a former top government attorney.

The bill would set up a framework to license and regulate Internet poker companies, and to nourish a U.S.-based online poker industry. But former U.S. solicitor general Paul Clement said he found flaws in segments of the bill that seek to punish overseas providers that ran games in the United States and continued to take bets from U.S. players even after Congress passed online restrictions in 2006.

The so-called “penalty box” provisions would prohibit those companies from applying for an online poker license for five years, and from selling their trademarks or software to others seeking a license.

Clement said the bill being formed by Sens. Harry Reid, D-Nev., and Jon Kyl, R-Ariz., “raises serious due process concerns.”

He said it would deprive the providers of “significant property interest,” and could be considered an unconstitutional “bill of attainder” because it effectively singles out a group for punishment without adequate protections for their rights.

This bill could be its own worst enemy as it closes off several forms of online gambling in order to establish a legal framework for poker.  Those party to gambling online outside of just poker will certainly object.  The Las Vegas Review outlines both the National Governors Association and the National Conference of State Legislatures as groups who oppose due to restricting states opportunities to benefit financially. 

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