In the recent deal between Harrah’ Interactive Entertainment and Dragonfish for its casino and poker software it was stated that the focus would be the launch of the World Series of Poker and Caesar Casino brands in the UK.
But with Harrah’ Entertainment being a major US gaming company it was inevitable that the deal would be seen as a dry run for a time in the future when the US Internet market is regulated.
Frank’ other related piece of legislation the Reasonable Prudence in Regulation Act (HR 2266) has 37 co-sponsors and seeks to delay the implementation of UIGEA by a year until 1 December 2010.
The Internet Gambling Regulation, and Tax Enforcement Act (HR 2268) introduced by Democrat James McDermott seeks to introduce a Federal Fee, which every licensee will be required to pay. It will amount to 2% of all funds deposited by customers during the preceding month. The bill has four co-sponsors and has been referred to committee.
The timeframe within which any of these bills will become signed laws is not certain and the current financial crisis already seems to have delayed Frank’ (HR 2267) Internet Gambling Regulation, Consumer Protection, and Enforcement Act. Indeed, there is no guarantee that any will fair any more successfully in their progress through the legislature than previous versions that have been introduced.
At a state level, the financial crisis could be beneficial for the prospects of state Internet gambling law. Many states, most notably California, are struggling with budget deficits and are cutting services.
On 26 August 2009 a bill was signed into law which now allows Illinois residents to place horse racing bets online. Racing handle in Illinois has been generally falling from a peak of US$ 1.29bn in 1992, dipping below US$ 1bn in 2006 and in 2008 the state’ handle for all forms of racing stood at US$ 818m. Nevertheless, the new law should be of interest to the likes of Betfair-owned TVG.com and Youbet.
But it should not be taken for granted that UIGEA is dead. At the start of September 2009 the US Court of Appeals in Philadelphia upheld the law in a challenge brought by Interactive Media Entertainment & Gaming Association Inc. (iMEGA). One of iMEGA’ arguments related to the vagueness of UIGEA but the Court rejected this, saying “the Act’ prohibitions are not in terms so vague that persons of ordinary intelligence must necessarily guess at its meaning and differ as to its application”.
Many of the major operators based in European jurisdictions are taking hope from the proposed skill games regulation bills and are looking to the time when the US market opens up to Internet gambling. In April 2009 PartyGaming signed a Non-Prosecution Agreement with the US Attorney’ Office for the Southern District of New York, relating to its activities in the United States before the enactment of the UIGEA in October 2006.
But there has to be a concern as to whether any of these companies will be granted a licence, assuming that any favourable legislation is passed. Despite settling their cases with the US Attorney there will always be a “reputation” linked to those firms that operated in the US prior to October 2006. The deal between Harrah’ Interactive Entertainment and Dragonfish suggests that B2B deals might be the way back in to the US for these companies. But as noted earlier, the Harrah’ deal is focused on the UK market, where Internet gambling licensing and regulation is in operation.
Especially in the current economic climate – the fallout from which is likely to last for several years – the lawmakers will make sure that US companies benefit and no revenues are lost to companies based outside its borders. Witness President Obama’ September introduction of “safeguard duties” of 35% on tyre imports from China in order to protect US interests – unrelated to gambling but a definite sign of the economic times.