Although Frank’s bill would now prohibit some of those operators from securing licensure because they have taken wagers – allegedly illegally – the news was parried by PokerStars, a number of whose US payment processors have been the target of federal probes.
The company said the amended bill would not adversely affect its candidacy for licensure, adding that according to legal opinions it has received, “its activities in the US are and at all times have been legal.”
A lobbyist with clients based offshore, who requested anonymity because he was not authorized by his firm to comment publicly, said the amendment which excludes those sites which have knowingly infringed US state or federal gambling laws was not viewed as “much of a negative.”
“They don’t believe what they’re doing is illegal, and they’re willing to make that argument before courts and licensing commissions,” the lobbyist told GamblingCompliance. “We weren’t cheering for the amendment, of course, but we won’t oppose the bill because it includes it, either.”
From the US racing industry, meanwhile, the response was warm, particularly to an amendment that would exclude it from a prohibition on accepting bets via credit card.
Under the amendment, pushed by Representative Chris Lee, a Democrat, only horserace betting operators and other entities currently authorized to conduct gambling on an intrastate basis – not, say, a federally licensed online poker operator – would be able to accept credit from customers.
Laurie Itkin, head of government affairs for Betfair US-TVG, told GamblingCompliance the credit card carveout was particularly welcome given escalating tensions with Visa, card-issuing banks for which have been aggressively blocking transactions, she said.
“It’s a crisis situation,” Itkin said. “If you go to the four major advance deposit wagering sites – TVG, TwinSpires, YouBet and XPressBet – all have messages to consumers about Visa heavily blocking transactions.”
When asked whether the carveout would provide leverage in negotiations with Visa – which guides US member banks to identify racing transactions with a variant of the same merchant code used to identify unlawful sports betting transactions – she offered: “I hope so.”
At Lee’s urging, lobbyists said, the rest of the newly licensed internet gambling field would be limited to accepting card debit or other forms of payment.
While the amendment embodies the middle road, politically – particularly against the backdrop of rising credit card delinquency rates nationwide – its affect on the regulated US internet gambling industry, economically, is far from certain.
A representative of UC Group, a London-based payment processor and one of HR 2267’s chief lobbying backers, declined to discuss whether its view of the bill had changed significantly.
According to the informational site CreditCards.com, in the US, there were approximately 473 million Visa- and MasterCard-branded credit cards in circulation at year-end 2009, compared to 507 million Visa- and MasterCard-branded debit cards.
Although the number of credit cards issued by both firms fell 16.5 percent, on average, between 2008 and 2009, the number of debit cards issued increased by 9.5 percent.
“Lee’s amendment is based on the idea that if you’re going to play poker on the internet, then you should do it with the money you already earn,” one lobbyist said.
Among the country’s vast Indian gaming industry, meantime, opinions varied.
Alison Harvey, head of governmental affairs for the United Auburn Indian Community in California, praised Frank for making the bill “quite a bit better.”
“The bill now acknowledges that tribes can be licensed operators,” she told GamblingCompliance.
“It also put the whole operation of internet gambling by a tribe outside of the Indian Gaming Regulatory Act (IGRA), so a tribe would not be required to negotiate a new compact or any other new agreements with the states if they were to engage in the activity.”
Under the previous incarnation of Frank’s bill, to conform with IGRA, participating tribal operators would have been allowed to accept bets only from customers present on other tribal lands.
Harvey also praised the new restrictions targeting some offshore internet operators (which she labeled “flagrant violators of US tax and anti-money-laundering laws”).
Chris Lindstrom, executive director of the California Tribal Business Alliance, told GamblingCompliance that several suggestions it brought to Frank’s attention – including the desire for tribes to operate internet gambling independent of IGRA – were heeded.
Other tentative online gambling supporters from Indian country include the Mississippi Band of Choctaw Indians, the Mohegan Tribe of Connecticut and the Barona Band of Mission Indians from California, Lindstrom said.
Lobbyists said the Morongo Band of Mission Indians from California – which has argued that a nationwide internet gaming scheme would undermine hard-won tribal sovereignty, but fought for exclusive control of California’s online poker market – remains vigorously opposed to HR 2267.
Patrick Dorinson, a spokesman for the tribe, did not return an e-mail seeking comment Thursday.
The US lottery industry, which has yet to forcefully enter the internet gambling debate in Washington, was nonetheless the subject of an amendment proposed by Representative Gary Peters, a Democrat and former director of the Michigan Lottery.
Peters’ amendment would clarify that state lotteries operating internet games in accordance with UIGEA’s intrastate provisions would not be required to apply for a second federal license.
It would also clarify that state lottery internet programs, if operated in accordance with UIGEA, do not violate the Wire Act (a concession the federal Department of Justice, to some lotteries’ consternation, has yet to put in writing).
The commercial casino industry, for its part, offered little in the way of public comments.
Harrah’s – each quarter, one of the biggest-spending supporters of internet gaming on Capitol Hill – did not issue a press release, but its senior vice president of government affairs and corporate communications, Jan Jones, told The Wall Street Journal: “We’ve been supportive of this bill, it addresses the reality of what is happening on the internet.”
In all, 18 amendments to Frank’s bill were proposed during this week’s markup hearing, 14 of which were adopted.
The bill is expected to change considerably if it reaches the Senate, and there was much talk Thursday of HR 2267 being in its initial stages (the expression “early iteration” was particularly popular among lobbyists).
A floor vote for Frank’s bill has not been scheduled, nor has a committee vote for its tax companion, HR 2967.