Legal online poker bill clears committee (Caro blog)

  • By Mike Caro | Exit
Poker1.com default content graphicEntry #12 (2010-07-28. Updated 2010-07-29)

A bill that would authorize highly regulated Internet poker (and some other gambling forms) cleared a U.S. House of Representatives committee today. It’s called the Internet Gambling Regulation, Consumer Protection, and Enforcement Act. The vote was 41-22 in favor.

This bill was championed by The Poker Players Alliance of which I’m an original charter member — although I’m not certain whether I’m happy with this proposed legislation. In fact, there’s a lot to dislike. (Here’s a link to the text of a short speech I delivered at the PPA’s public launch in 2006: Death of poker in America.)


♦ See list of amendments below this blog entry.
♦ Read the full text of the bill here.


Government oversight

Representative Barney Frank, a long-term Democrat from Massachusetts, chaired the Financial Services Committee that passed the bill. Next it will likely be voted on by the full House of Representatives. The bill authorizes U.S. government oversight of online gambling, including poker. It specifies that problem gamblers, minors, and adults behind in child-support payments cannot participate.

I think minors should be prohibited from playing, of course. Most young people simply don’t have the experience handling money, including myself when I was a beginning player. I don’t think most players gain a good perspective about bankrolls and money until they’re 30 — if ever. Some master these skills early, but pre-21 is playing with fire.

I don’t know how you identify a “problem gambler.” And it’s possible, but not likely, that some people might have enough skills to win at poker and actually catch up on their child-support payments. So, I think the legislation overreaches in those regards.

Prohibitions

Fines and sanctions, including loss of gaming licenses, are to be established in accordance with the legislation.

The bill also includes prohibitions against credit card use, but allows debit cards.

And, remember: This bill still has to pass both the House and Senate and will undoubtedly be amended along the way. I believe this bill is more likely to pass if it’s attached to more encompassing legislation that might not even be related. Voting on it as a separate bill might prompt too much opposition.

Remember that the current prohibition against online poker (and other Internet gambling) was sneakily attached by the Senate to an anti-terrorism bill (Safe Ports Act) late night in 2006, without debate. What goes around comes around, right?  — MC

List of amendments passed by the committee:

  • Any online sites having been in violation of existing law cannot be licensed under the provisions.
  • Sports betting is prohibited (other than horse racing).
  • Advertising to “problem gamblers” and minors is prohibited. Violations can result in fines or revocation of licenses.
  • Sites must locate in the United States to be licensed.
  • The minimum wagering age is 21 and sites must require proof.
  • The house edge must be posted for each form of gambling (which will be difficult to do with poker).
  • Treasury Department will supply lists of legal and illegal sites for bank compliance.
  • Anyone having financial interest or ownership in approved gambling sites will be licensed.
  • Maximum allowable losses must be established.
  • States can individually decide not to participate. This must be done during the first legislative session following enactment.
  • Standard credit cards cannot be used. Debit cards and pre-paid credit cards are okay.
  • People behind on child support payments cannot play. Allowing them to play can result in license revocation.

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Mike Caro

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Known as the “Mad Genius of Poker,” Mike Caro is generally regarded as today's foremost authority on poker strategy, psychology, and statistics. He is the founder of Mike Caro University of Poker, Gaming, and Life Strategy (MCU). See full bio → HERE.

23 thoughts on “Legal online poker bill clears committee (Caro blog)”

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  1. The bill proposes a tax on daily poker rooms in the state which would be 3% on what is collected from the players in rakes and other fees. The initial bill was 10% and had it been passed, many of the poker rooms would have permanently closed their doors due to the recession in the country.

  2. The Internet Gambling Regulation bill is promising. It’s at the very least a step in the right direction. One thing I’m confused about is this amendment:

    “Any online sites having been in violation of existing law cannot be licensed under the provisions.”

    Can this mean any current internet poker site that operates with U.S. customers? Can that be considered a violation and limit their ability to register in the U.S. if this passes?

    I’m just thinking.

    1. Hi, Mike —

      Thanks for making your first comment. I especially appreciate the proofreading contributions you’ve made (noted in the change log linked to from the home page). You’ve been very helpful in improving Poker1.

      I’m not sure what that stipulation means, because most sites still operating in the United States have taken the position that they’re not in violation of the law (as they understand it) and have banned players from states that expressly forbid play.

      I think this will need to be debated and resolved.

      Straight Flushes,
      Mike Caro

  3. Hi Mike,

    Thanks for this concise update. I’ve also read all of the comments to this point.

    I agree strongly with not being able to use credit cards for deposits. Credit is not my money. Debit is my money to do with as I please (or so it should be).

    I am a member of the PPA and support efforts to keep online poker legal. However, I’m not really very excited about the legislation. I’m pretty sure it will turn me into a “criminal” eventually — sooner than most, I suspect. After all, I live in Alabama. There’s no freakin’ way Alabama will go along with the federal legislation, no matter how strict. Online poker will likely become felonious here. And that’s depressing.

    With the laws as they currently stand, I am not doing anything illegal (as far as I know). I am not depositing funds.

    The other concern I have is the quality of the game. It’s already hard enough to find tournaments or ring games at the huge sites if you want to play anything other than NLHE during any time other than peak hours. What happens when each state opts for their own online poker site, making it illegal to play anywhere else? Florida players will only be playing other Florida players, etc.

    As I said, I support the PPA. I’m just really nervous, for so many reasons, about the legislation. I just want to play where *I* want to play and not have the state or the federal government making my decisions. I think I’m going to be very disappointed.

    Here’s an idea for a jobs program — how many prisons would it take to house all of us online poker players? I don’t mean to sound like a whiner. I’m just bummed. I found poker quite late in life and I love learning and playing. Distance and disability keep me out of the casinos (though I did stop for an hour of $3/6 LHE on a trip recently — pretty high stakes for me — and walked out a winner).

    I hope really good things come out of Washington regarding online poker, but I’m not optimistic.

    Thanks again for your excellent write-up. Having read yours, I don’t have to go to other sites to read up on it for now.

    All the best,
    Sheryl

  4. Ive been waiting for this for YEARS. online poker based in the US,( with a GAMING commission) will be poker heaven. the first RANDOMLY delt site to fire up will close all the rest within a year.

  5. First off how do you prove a man is behind with child support? Then turn all names over to the powers to be as if they don’t know who you are by now? Keep kids from playing that should be the parents job. Did I read the word tax lol well surprise surprise now who do you think will win that one lol? All kind of information to be given the powers to be that just maybe they don’t have to do with as they see fit another invasion by big brother. Can’t see how this will work.

  6. “Without high taxes we would not have the quality of govermental services we have now.” This is the best reason to cut government and taxes. The quality of governmental services is atrocious.

    As to the bill. Most likely the first thing that will be done is require legalized sited to provide the names and cash outs of all players for the past 7 years. Then the IRS will charge them with income tax evasion. Just because money is made illegally does not exempt it to income tax, if he were alive Al Capone could telly you about that.

    The second move would be to require withholding of taxes on profits from cash outs as is done with slot machines now. How to determine profits is imposable. If I deposit $1000 and loose $800, give up and cash out, the remaining $200, Washington would assume this is profit and tax it. The only way to endorse this is for the sites to report all deposits and withdrawals to a governmental agency. The Feds already know too much about citizens. I’ll continue playing at an illegal site, thank you.

    “Sites must locate in the United States to be licensed.” This is most likely in violation of World Trade Organization rules. Unfortunately Antigua found out just how useless a WTO legal finding is when applied to the U.S.

    “Maximum allowable losses must be established.” Colorado almost destroyed it’s fledgling casino industry with this law. I can’t see any way this is enforceable. Loose the max at one site, just move to another.

    “People behind on child support payments cannot play. Allowing them to play can result in license revocation.” How do sites assure players are not behind in child support?

    What should have been a simple bill is turning into the typical Congressional Cluster Fork, and the real amendments have not been introduced yet.

    This is a full employment bill for U.S. based casinos, the only ones elegiacal for licensing, more governmental bureaucracy.and another loss of privacy. The road to Hell is paved with good intentions” Taking the leap of faith that government has good intentions, this bill still is the road to Hell.

    1. Amen. Al Capone and many others. I’m with you FarOutFish. I believe it will be bad for online gaming.

    2. ““Without high taxes we would not have the quality of govermental services we have now.” This is the best reason to cut government and taxes. The quality of governmental services is atrocious.
      As to the bill. Most likely the first thing that will be done is require legalized sited to provide the names and cash outs of all players for the past 7 years. Then the IRS will charge them with income tax evasion. Just because money is made illegally does not exempt it to income tax, if he were alive Al Capone could telly you about that.”

      The quality of our governmental services is atrocious compared to what? Have you ever been to Mexico, Albania, or the chezch republic? Also they could not tax Capone on illegal Monet, all they could tax him for was assets tar were directly linked to him. Since he had more assets than income that he claimed they were able to prove he evaded taxes.

      If you ask ANY judge they will tell you that they cannot make a judgment for something that was illegal. Say you promised your wife a ring for her birthday. Then you get divorced. In the divorce proceeding the judge can make a claim for the ring. Now suppose you are in the same situation only you make your wife promise that in exchange for the ring she has to sleep with you every day for a week. Then you get divorced and she asks in her claim for thering that was promised. If the husband had not bought the ring yet the judge will tell the wife she cannot make a claim based on an illegal activity. I know this from experience.

      Youcannot be taxed on something that was illegal this is why when the DEA busts high up drug dealers with millions in their house the IRS doesn’t go after them or tax evasion.

  7. So really, how could it get better if the government steps in? If all they do is tax your cash outs or let you write off deposits, then I’m all for it.

    Beyond that, why do we need them to approve something that people have been doing and apparentley not getting in trouble for it anyways?

    I suppose too that someone needs to keep the kids out of it and speaking of which…. if you are behind on child support, you probably ought to not be gambling anyway.

  8. I have no problem with taxes… they are a needed for all kinds of things people use in common.. like roads, ssi, grants, etc,,, but what I have a problem with is the waste that there is with our taxes… building bridges to no where and such… if the govt didnt waste so much we would have so much more…

  9. Also there’s a big difference between credit and debit cards. Debit cards withdraw directly from a checking or savings account whereas credit cards withdraw from a line of credit. Debit cards produce only the money available whereas credit cards give you up to your line of credit. 
    Should there be children on here. Lol you shouldn’t be gambling if your underage. 
    Reply

  10. By “back taxes” your meaning something else. Back Taxes are taxes that were not paid when due. All players are currently required to claim their winnings. The government cannot tax you for something you made while it was illegal in the US. This would be like taxing drug dealers and hookers.  Bottom line is the government cannot regulate something that was illegal. You will only be taxed on what you earn if and when it’s legalized. People should not complain about taxes. Without high taxes we would not have the quality of govermental services we have now. Imagine a life with a strictly private mail sector instead of governmental. Imagine not having as many police officers or firemen. Imagine not having road upkeep and year after year the potholes build. Imagine no Social Security or Gov. Grants. To bitch about taxes is to be un-American. You should want to pay more taxes (with a cap on gov. salaries) so that we can live in an even better America than the one we live in now. With all the taxable income available in Poker and Gambling you better damn well pay your taxes. 

    Also there’s a big difference between credit and debit cards. Debit cards withdraw directly from a checking or savings account whereas credit cards withdraw from a line of credit. Debit cards produce only the money available whereas credit cards give you up to your line of credit. 

    Should there be children on here. Lol you shouldn’t be gambling if your underage. 

    1. Hi, Anthony —

      Thanks for your first comment and welcome to our Poker1 family.

      This is a duplicate of the one I think you posted earlier as “Anonymous,” but I understand the comment system takes a while to get used to.

      As a matter of interest, many countries don’t tax gambling profits in any way — nor can losses be written off. The thinking is, I suppose, that the money lost was already taxed.

      Straight Flushes,
      Mike Caro

      1. Sorry, I was doing the message from my iPod and thought my iPod just wasn’t sending it through. I looked on my computer and saw it posted all the ones i thought didn’t work. I did not know that most countries don’t tax gambling income. It makes sense. I do think that the US does. I think I remember hearing they use the money taxed from US gambling for primarily schools and such. Could you clarify if I’m right or wrong. Thanks for all the years of excellent (in depth) poker knowledge. Love Caro’s book of tells.

        1. Hi, Anthony —

          Gambling revenue is often specifically targeted by legislation for schools or other select purposes, such as that received by some states for lotteries.

          Canada is an example of a country that doesn’t tax gambling wins, unless the profit is the result of a gambling business.

          Thanks for your kind words.

          Straight Flushes,
          Mike Caro

  11. By “back taxes” your meaning something else. Back Taxes are taxes that were not paid when due. All players are currently required to claim their winnings. The government cannot tax you for something you made while it was illegal in the US. This would be like taxing drug dealers and hookers. Bottom line is the government cannot regulate something that was illegal. You will only be taxed on what you earn if and when it’s legalized. People should not complain about taxes. Without high taxes we would not have the quality of govermental services we have now. Imagine a life with a strictly private mail sector instead of governmental. Imagine not having as many police officers or firemen. Imagine not having road upkeep and year after year the potholes build. Imagine no Social Security or Gov. Grants. To bitch about taxes is to be un-American. You should want to pay more taxes (with a cap on gov. salaries) so that we can live in an even better America than the one we live in now. With all the taxable income available in Poker and Gambling you better damn well pay your taxes.

    1. “Anonymous” seems to be responding to Stan Jett (first comment above). When replying to another comment, please click the “Reply” link at the bottom of it.

      Thanks for making your first comment at Poker1.

      Straight Flushes,
      Mike Caro

    2. I will pay all the taxes I am obligated to pay by first the Federal, then the state, and finally, locally. But one, not necessarily in that order, and more importantly, B) Why should I let someone else spend my hard earned money?

    3. wait, what – didn’t they incarcerate Al Capone for not paying taxes on the money he recieved from bootlegging, rackettering, and prostitution?

  12. Mike:
    I can hardly believe I am cheering legislation proposed by Barney Frank.
    Worse, I am so disappointed the members that are fighting against our personal freedoms are Republicans.
    You are right to be wary of amendments. Remember the UIEGA was an amendment.
    Rich

  13. Every ones clapping while I’m booing. You watch what I say. The governament will mess it up like everything else.They will tax the hell out of it and will demand and get everyones names from all the sites. Have you heard of “Back taxes”. I hope I’m wrong.

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