Internet Gambling Bill Clears Committee

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Artwork: Chip Taylor
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A bill to regulate Internet gambling cleared its first hurdle yesterday on the way to becoming a law. The measure--which would require anyone running Net gambling operations to be licensed by the U.S. government if they want to take bets from U.S. citizens--cleared the House Financial Services committee by a vote of 41-22 and now goes before the full House of Representatives.

Two significant amendments were added to the legislation before it left the committee, which is chaired by Barney Frank (D-Massachusetts), who filed the bill. One would require gambling operators licensed by the proposed law to be located in the United States; the other bars anyone running illegal gambling operations from receiving a license under the provisions of the measure.

The U.S. location requirement for gambling operators appears to be designed to preserve American jobs and make the licensing structure proposed by the bill more effective. "There had been concerns expressed at the hearings on this particular bill about the potential loss of jobs of Americans," Kevin Di Gregory, a partner with the Washington, D.C. law firm of Manatt, Phelps & Phillips told PCWorld. "It seems to me that this is a way in which to protect American jobs and also insure that regulation can be most effective."

"If your operators are here in the United States, it's easier to regulate them," added Di Gregory, a former deputy criminal chief in the United States Attorney’s Office for the Eastern District of Virginia.

In 2006, a law was enacted, the Unlawful Internet Gambling Act (UIGEA), which attempted to prohibit Internet gambling by barring financial institutions from processing deposits and withdrawals from the accounts of U.S. citizens by online gambling sites. That law has been unworkable, and the Frank bill is largely seen as a way to rectify the problems created by the earlier act.

Although the bill is before the House, it may not be voted up or down on its own merits by the body's members. Democratic aides told the Wall Street Journal that the bill will most likely be stuffed later into some kind of "must pass" measure, such as an appropriations bill, and become law that way.

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