More details are emerging of the Reid/Kyl bill which would legalise online Poker in the US – and will give a significant first-mover advantage to existing land-based operators.
It calls for each state to actively opt in to legalised e-gaming via a majority vote in each chamber of that state’s legislature. Once a state has opted in, Native American tribal lands within it can also choose to opt in.
Regulation will be the responsibility of an Office of Online Poker Oversight (OOPO), within the Department of Commerce. However, many duties will be devolved to state regulators, effectively giving the Nevada Gaming Control Board significant control over the online Poker business. If tribes wish to act as operators, they will not be able to regulate themselves.
For two years, licences will be limited to current land-based casino operators, although not all that apply will necessarily be authorised. Companies that were involved in the provision of Internet gaming in the US after it was effectively banned by the UIGEA law in 2006 will be excluded from the market for five years.
Poker will be taxed at 16 percent, of which 14 percent will go to the individual states and tribes concerned, and two percent to the federal government. However, it is unclear whether this tax will be on wagers or on gross gaming revenue.
And if the bill becomes law, it will be far from an e-gaming free-for-all in the US. For example, state governments will be expressly prohibited from operating online casino or slot games, although they will be allowed to continue to sell lottery tickets over the Internet. International pooling of liquidity by Poker operators will also be prohibited, as will access to e-gaming via computers or terminals in public places.
However, the controversial plan revealed in an earlier draft to confiscate from consumers the proceeds of wins on illegal e-gaming sites has been dropped.
The bill is provisionally entitled the Internet Gambling Prohibition, Poker Consumer Protection, and Strengthening UIGEA Act of 2012. It “strengthens” UIGEA in that it bans all online gaming other than Poker.
Dutch courage
In the Netherlands, likewise, it seems that legalised online gaming could at last be drawing close.
More than half of the 40 online operators warned in June to stop targeting Dutch consumers have complied, according to regulator the Dutch Gaming Authority (DGA). It says that companies which earlier accounted for around 70 percent of the Dutch e-gaming market have already stopped serving it or “have indicated that on very short notice they will do so”.
The June warning told operators to stop using .nl Web domains and to stop advertising in Dutch media, or face fines. It followed a March ruling in the country’s high court that operators, rather than Internet service providers, are responsible for ensuring that Dutch consumers do not play on their Websites.
Now, says the DGA, those that have complied with the warning are “more likely” than others to be licensed if the Netherlands legalises e-gaming. That process had got as far as the drafting of regulations before the Dutch government collapsed in April, but it is believed that the justice ministry is now working on it again and could release draft laws in early 2013. It is speculated that Denmark’s rules, which tax land-based casinos at a higher rate than online operators, could be a model.
Currently, the government-controlled De Lotto is the only legal gambling provider in the Netherlands.
Elswhere in Europe, meanwhile, Hungary looks set to regulate e-gaming as a way to recoup the tax revenue it has lost from sensationally banning nearly all slot machines (although those in the country’s few casinos will be permitted to remain).
Socially inadequate
Social gaming is highly vulnerable to regulation, according to Global Betting and Gaming Consultants (GBGC). Commenting on a recent London conference, it said that because of the low conversion rate from for-fun play to real-money play, and the low revenue per user when compared to online gambling, social gaming could be hurt if it becomes subject to regulations developed for e-gaming such as “licensing by jurisdiction, independent checks on technical standards, and know-your-customer verification”.
Added the firm: “At present Facebook and Apple are acting as quasi-regulators of the social gaming sector, determining the requirements and approving what can be run through their platforms. But if individual jurisdictions begin to look at social gaming and regulate it individually, then social gaming will face the same problems that have afflicted e-gaming.
“There are the increased licensing costs of complying with multiple regulations, different taxes being applied, and possible restrictions on the type of games that can be offered. All of this could restrict the liquidity, as it has done with online Poker, and upon which some social games do depend.”
Any requirement for external testing could also impose significant costs, according to GBGC, particularly since social games are frequently updated.
