Congressional Action on Online Gaming?
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With a full schedule awaiting Congress after the election, including the expiring tax cuts and attempting to avoid going over the fiscal cliff, could Congress consider revamping online gaming regulations?
Though it may seem like an out-of-place topic with such weighty issues on the congressional calendar, the evolution of online gaming regulation has come to a head over the past few months.
It all started with the enactment of the Interstate Wire Act of 1961, which for decades prevented interstate gambling. Long before the creation of the Internet, the law was pushed by the Kennedy administration with the intention of cracking down on organized crime. Until recently, this law was interpreted as prohibiting any Internet gaming.
But in 2011, 50 years after the passage of the law, the Justice Department reinterpreted the Wire Act. The new view of the law is that it prohibits only sports betting online, not all online gaming, as long as the gaming does not cross state lines. After this interpretation was held up in federal court, many states moved forward with their own laws sanctioning online gambling.
In an economy that is still sluggish, states are looking for creative ways to raise revenue without raising taxes. Much like the push to allow states the freedom to decide whether to tax online sales, which CSG has backed, several states believe sanctioning online gaming, and then taxing it, could provide a boon for state revenue. Delaware, Illinois, New Jersey, Vermont and several other states already have begun moving forward with sanctioned online gaming under this premise.
Legislation that could restrict exactly how states regulate online gaming, however, is in the works in the U.S. Senate. The bill, sponsored by Senate Majority Leader Harry Reid of Nevada and Sen. John Kyl of Arizona, could do anything from requiring gaming companies to obtain federal licenses to limiting sanctioned online gaming to poker only. The bill is currently in the draft phase.
While action on the bill may seem unlikely in the lame-duck session of Congress, exactly how this legislation takes shape will have an impact on states, especially if they already have moved forward with their own online gaming structures.