US prepares for web gambling hearing

Congressman George Miller signed up last week as a co-sponsor of the bill introduced by Congressman Barney Frank, chairman of the House Committee on Financial Services. "The banks have a lot of other things to worry about right now," said Frank, referring to the mortgage crisis and other challenges. "I do not think poker should be one of them."

Hundreds of comments submitted to the US Department of the Treasury and the US Federal Reserve are understood to highlight the ambiguity in the proposed rules to implement the Unlawful Internet Gambling Enforcement Act 2006. One of the major criticisms is that the rules do not clearly differentiate between legal and illegal internet gambling activities.

Concerns raised by the American Bankers Association and others state that the proposed rules will be a compliance trap and are not likely to stop citizens gambling with foreign-based internet gambling operators.

"This hearing is significant and must address the issues being raised by the financial services sector and others," said Jeffrey Sandman, spokesman for the Safe and Secure Internet Gambling Initiative.

"The proposed Treasury Department regulations are unclear, burdensome and untenable. It becomes clearer each week that the attempt to prohibit internet gambling activity is doomed to fail”, he said, and added: "Rather than waste valuable resources attempting to enforce the Act, the US should instead regulate and tax internet gambling."

The Act would require licensed operators to put in place safeguards to protect consumers, and ensure that the individual placing the bet or wager is physically located in a jurisdiction that permits a particular form of internet gambling.

US states would also have the right to control what, if any, level of internet gambling is permissible within their borders, and could apply additional taxes and restrictions. A companion piece of legislation that would ensure the collection of taxes on regulated internet gambling activities was introduced earlier this week by Congressman Jim McDermott.

The Internet Gambling Regulation and Tax Enforcement Act of 2008 strengthens provisions in an earlier version of the bill introduced last year.

A recent letter sent by Congressman McDermott to fellow members of Congress stated that, according to a tax revenue analysis prepared by PricewaterhouseCoopers, taxation of internet gambling is expected to generate between us$ 8.7 billion to us$ 42.8 billion in federal revenues over its first 10 years.