WASHINGTON – Opposition to the current form of a proposed bill to legalize and regulate Internet gaming in the United States was overwhelming opposed at a committee hearing July 21.

The House Committee on Financial Services heard testimony on H.R. 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act, but only one person unconditionally supported the bill as written.

The bill would overturn the Unlawful Internet Gambling Enforcement Act of 2006 that bans the use of credit cards in paying for online wagers.

Rep. Barney Frank (D-Mass.), who chairs the committee, introduced H.R. 2267 last year.

Tribal governments have remained split on the issue and as recently as April tribal leaders at the National Indian Gaming Association (NIGA) voted to table action on a resolution opposing Frank’s bill.

Proponents of the bill claim it will create up to 30,000 new jobs and generate up to $42 billion over a decade in tax revenues for the federal government. Some California tribal leaders oppose online wagering as competition to their brick-and-mortar casinos, and others regard the Internet as an opportunity to grow their gaming markets.

Others are taking a wait and see attitude while NIGA and the United South and Eastern Tribes undertake a comprehensive study of the issues surrounding Internet gaming and their impact on sovereign tribal nations.

Internet gaming is offered online by offshore unlicensed operators and by operators in different countries under various licensing and regulatory regimes – but none of them provide protections for U.S. citizens or any established or enforced standards and the federal government receives no revenues from the online industry.

H.R. 2267 would establish a licensing program and give the treasury secretary regulatory and enforcement jurisdiction. It would prohibit anyone from operating an Internet gambling site without a license. It requires the secretary to assess fees to cover the cost of administering the act, and set fines for violations of the act.

The law also requires safeguards for tax collection and against fraud, money laundering, and terrorist finance. It requires safeguards to combat compulsive Internet gambling; shields a financial transaction provider from liability under certain circumstances, prohibit electronic cheating; subjects violators to civil and criminal penalties, and permits states and Indian tribal authorities to opt-out of Internet gambling activities within their respective jurisdictions.

But it doesn’t acknowledge or protect tribal sovereignty, or create “a level playing field” between tribal and commercial operators of Internet gaming.

Lynn Malerba, the chairwoman of the Mohegan Tribe, testified at the hearing and provided a series of suggestions for improvements to the proposed act.

The suggestions were written in a June 13 letter to Frank from a coalition of tribes including the Mohegan, the Mississippi band of Choctaw Indians, the Barona Band of Missions Indians, and the California Tribal Business Alliance. The alliance represents the Lytton Band of Pomo Indians, the Pala Band of Mission Indians, the Paskenta Band of Nomlaki Indians, and the Viejas Band of Kumeyaay Indians.

Maleraba reviewed the coalition’s recommended improvements at the hearing. They include the following:

• Modify the bill to clearly authorize tribal governments or their designated tribal agency or entity to operate Internet sites.
• Clarify that tribes will not be subject to the Indian Gaming Regulatory Act (IGRA) restriction that limits them to accepting bets only from people on tribal lands. Tribes would locate their Internet gaming operations on tribal lands, but would accept bets from any place that hasn’t opted out of the federal regulatory framework.
  
• Specify that all games offered under the bill are exempt from IGRA tribal-state compacts or revenue-sharing provisions, so that tribes can compete on a level playing field with non-tribal competitors and pay the same federal tax. This clarification would eliminate conflicts between states and tribes under existing compacts, and ensure that compacts would not need to be renegotiated or amended. “Without such a measure the support of Indian country would evaporate,” the coalition wrote.
  
• Engage in “meaningful consultation” before the bill is enacted.
  
• Include restrictions on unlicensed competitors “in fairness” to tribal and commercial casinos that have had to comply with U.S. law.” This change would require unlicensed foreign operators to operate for an unspecified period under license by a “reputable foreign government” before they can apply for a U.S. license.
  
• Require Internet gaming operations to be located in the U.S. “Requiring facilities to be located domestically would greatly aid regulations, and quiet potential criticisms of the legislation,” the coalition wrote. Prohibit or restrict Internet “casino cafés” where people could gather to do online gambling. This would prevent kick-back schemes and other criminal behaviors under conditions where there are no requirements for security, surveillance, patron dispute resolution and safety stands.
  
• Provide for strict enforcement against unlicensed sites.
  

In response to a request for comment from ICT, Malerba said that Frank had “repeatedly reached out to Indian country for input and he demonstrated his willingness to hear us by allowing me to testify. As with any bill, there are many varied interests at work once it gets to mark up.”

Annie Duke, a professional poker player who had just returned for the World Series of Poker in Las Vegas, testified in support of the bill on behalf of the Poker Players Alliance.

“At its most basic level, the issue before this committee is personal freedom – the right of individual Americans to do what they want in the privacy of their homes without the intrusion of the government.” Duke said.

Other opponents of the bill included Michael K. Fagan, a consultant on domestic and transnational criminal law, Tom Malkasian, owner, board member and director of the Commerce Casino in Los Angeles, and Edwin Williams, who testified on behalf of the Credit Union National Association.

During a break in the hearing, Frank noted the extent and variety of opposition to the bill.

“We are prepared to make some of the changes that people talked about, (such as) Ms. Malerba, but fundamentally it comes down to this: Do we stop adults from engaging in this activity either at the request of competitors or at the request of busybodies? And I hope the answer will be no,” Frank said.