Federal Internet Gambling Advances

Legislation would leave it up to states on whether residents can place online wagers.

A bill that would legalize and regulate Internet gambling in the U.S. advanced July 28 when it was approved 41-22 by the House Financial Services Committee.

The legislation, HR 2267 introduced by Rep. Barney Frank (D-MA), would establish regulatory and enforcement standards under which licensed gambling operators would be able to accept bets from individuals. The legislation gives states the rights to determine whether to allow Internet gambling for persons accessing the Internet within their state, as well as applying other restrictions.

According to the House Financial Services Committee’s overview of the bill, "H.R. 2267 protects the freedom of adults to spend their money as they see fit, while providing appropriate consumer protection. The bill, which licenses and regulated online gambling, requires licensees to take appropriate safeguards to prevent fraud, money laundering, underage and compulsive gambling. As amended, it contains additional, strong protections to prevent minors from gambling online; prevents inappropriate online advertising targeted toward underage or compulsive gamblers; clarifies the effect of this act on Indian tribes; requires consultation with tribes in implementation; prohibits licensees from accepting bets or wagers from persons on the self excluded list of compulsive gamblers and persons delinquent with child support payments; prevents the use of a credit card to gamble online; clarifies an exception for intrastate and intratribal online lotteries; prohibits sports betting; requires that players set financial loss limits; strengthens regulatory requirements re: integrity and fairness; bans violators of federal and state gambling laws from obtaining a license; and requires a substantial U.S. presence as a condition of obtaining a license."

Internet gambling has been prohibited in the U.S. since 2006, but the move to legalize it has grown in recent years due to the growth of business being conducted by off-shore Internet gambling entities.

Currently, the wagering on pari-mutuel horse racing is the only legal form of online wagering in the U.S. Previously, National Thoroughbred Racing Association president and CEO Alex Waldrop said the organization has worked with Frank on his bill to "ensure that any federal legislation that pertains to Internet gambling contains adequate protections for online pari-mutuel wagering on horse racing as authorized by the Interstate Horseracing Act."

House Financial Services Committee vote on Internet Gambling Bill