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Bills Look to Overturn Online Gambling Ban

5/6/09 - Wall Street Journal - View Source

By Corey Boles

WASHINGTON -- A senior House Democrat introduced bills Wednesday that would suspend rules banning Internet-based gambling and seek to regulate it instead.

A third bill introduced by a Democratic member of the Ways and Means Committee would ensure that online gaming companies would start paying taxes to the U.S.

According to a recent study from consultancy PricewaterhouseCoopers, the U.S. Treasury could stand to gain $48.6 billion annually by taxing online-gambling companies.

This is the second consecutive year that the bills have been brought forward, in an attempt to undue a move in the last days of the Republican-controlled Congress in 2006 to ban Internet gambling.

House Financial Services Chairman Barney Frank said Wednesday at a news conference introducing his bills that he hadn't spoken to either House or Senate leadership nor to the Obama administration about the bills. But he said he planned on pushing the legislation through his committee before Congress breaks in August.

Rep. Jim McDermott of Washington is the author of the bill that would tax regulated online-gambling companies.

The ban is set to go into place in December, after the Bush administration moved to put rules enacting the ban in place toward the end of 2006.

Mr. Frank's legislation would allow companies to apply for a license allowing them to provide gambling services to U.S. residents. Applicants would have to meet the same standards as individuals wanting to work in the Las Vegas gambling industry.

They would have to be willing to subject to a review of their financial condition, corporate structure and business experience.

Companies would have to put in place controls to ensure that neither minors nor residents in states with laws in place banning online gambling could access their sites.

The bill also would attempt to mollify concerns of professional sports leagues by continuing a prohibition on gambling on pro sports.

Under the rules that are set to go into place, it would be up to financial-services companies that process credit- and debit-card transactions to determine which are related to illegal gambling activities.

The industry strongly objected to the rules, arguing that they shouldn't be expected to be sheriffs determining what transactions are against the laws.

Mr. Frank said that Rep. Shelley Berkley (D., Nev.), who represents Las Vegas and is one of the co-sponsors of the bill, has supported a ban on online gambling in the past.

The American Gaming Association, which counts among its members many of the large casino operators, has decided to remain neutral over the issue. The group had been another strong opponent of online gambling in the past.

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