Frank Proposes Allowing Online Gambling in the U.S.

Representative Barney Frank, the Democratic chairman of the House Financial Services Committee, introduced legislation that would allow online gambling in the U.S., loosening a ban enacted last year.

The measure would allow Americans to bet online with licensed Internet operators that have safeguards against underage and compulsive gambling and agree to be subject to U.S. jurisdiction and taxes, Frank said at a press conference in Washington.

„The issue here is whether adults who work for their money, in the comfort of their homes, should be allowed to engage in a form of recreation which they enjoy and which has no conceivable negative impact on anybody else,“ said Frank, a 14- term lawmaker from Massachusetts.

Some Republicans said they would vigorously oppose Frank’s legislation, and lawmakers predicted a political uproar over it.

„There are high levels of passion by people on both sides,“ said Representative Ray LaHood, an Illinois Republican. „The people who are opposed feel very strongly.“

The proposed legislation would let the U.S. Treasury Department set protections against money laundering and fraud. It bars betting on college and professional sports whose governing bodies such as the National Collegiate Athletic Association and National Football League don’t sanction gambling.

Financial Payments

The Republican-controlled Congress passed legislation Sept. 30 that curbs financial payments from banks to offshore Internet casinos that are illegal under U.S. law. Sponsored by Representative Jim Leach, an Iowa Republican who lost a re- election bid in November, the law is aimed at shutting down the payment system for Internet gambling.

Democrats won control of Congress in January. Still, opponents of Internet gambling predicted Frank’s bid would be defeated.

„I don’t see the Congress going in the opposite direction anytime soon,“ said Representative Bob Goodlatte, a Virginia Republican and co-sponsor of last year’s ban. „I am very strongly opposed.“

Internet-based casinos such as PartyGaming Plc and 888 Holdings Plc, operating in locations such as Gibraltar and Antigua, took in billions from U.S. gamblers.

U.S. Internet gambling generated USD 5.9 billion in 2005 while U.S. commercial casinos took in about USD 32 billion that year, according to the American Gaming Association.


Analysts said the legislation to create exemptions for license holders, may favor U.S. gambling companies.

„Wouldn’t you expect licensing in the U.S. to benefit U.S. companies and U.S. shareholders?“ said Ivor Jones, an analyst at Panmure Gordon & Co. in London.

Shares of PartyGaming dropped 7.5 pence, or 13 percent, to 51 pence in London, the steepest slide since Oct. 16, which was the first trading day after the company ceased U.S. operations. After slumping 76 percent in 2006, the stock had almost doubled this year before Frank’s remarks today.

Shares of London-based Sportingbet Plc and Gibraltar-based 888 Holdings Plc also fell in London trading today.

Frank introduced the bill with Representative Peter King, a New York Republican, and 10 other co-sponsors. Frank and King said they expect many other members will come forward to support the legislation.

„This is a kind of libertarian, let-people-have-fun kind of thing,“ Frank said.

Poker Players

The ban has „activated“ online poker players and others who are lobbying now for a reversal, he said.

The government of Antigua, which is home to 32 registered online gambling operations, praised Frank’s initiative in a written statement.

„While we have not yet seen the legislation,“ said Errol Cort, Antigua’s minister of finance and the economy, „we are encouraged that such a prominent legislator in the United States has stepped forward in support of a rational approach to the provision of remote gaming services.“

Poker Players Alliance Chairman Alfonse D’Amato, a former Republican senator from New York, called Frank’s proposal „a common sense approach to Internet gambling.

„The Internet poker genie is out of the bottle,“ he said. „You cannot put it back.“

„The United Kingdom successfully regulates gambling, and with this bill we can too,“ D’Amato said.

Federal Study

Representative Shelley Berkley, a Nevada Democrat, plans to introduce a measure next week calling for a one-year federal study of online gambling, said her spokesman, David Cherry.

Directors of the American Gaming Association, whose members include Harrah’s and MGM Mirage, will meet in Las Vegas tomorrow and will discuss Frank’s proposal, spokeswoman Holly Thomsen said in Washington.

Harrah’s Entertainment Inc. and MGM Mirage, the world’s largest and second-largest casino operators, have urged Congress to let U.S. companies enter the online gambling business. Other members of the U.S. casino industry view online gambling as unwelcome competition.

„The industry is divided,“ Goodlatte said. „Some feel if you can’t beat ‚em, join ‚em. Others say ‚this is crazy, you are never going to be able to get to the lowest common denominator against somebody operating a server in Antigua or some other tax haven.'“

The gaming association projected last year, before the U.S. ban was enacted, that online betting would double from an estimated USD 12 billion to about USD 24 billion a year in global revenue by 2010. About half of the online industry’s revenue came from U.S. bettors.