After much anticipation and speculation, Financial Services Committee Chairman, Barney Frank, has introduced a bill that proposes legalization and regulation of online gambling companies.  This legislation has been long awaited by those looking for clarification of UIGEA and hoping for clear regulation regarding online poker.  More information about the bill can be read here.

Initial reaction from poker players and supporters concerning the bill was far from positive, however.  The bill does include the much dreaded opt-out option for individual states.  However, this is seen by some as an unavoidable piece of the legislation.  Without the opt-out clause, it would be very difficult to get the bill passed, and it will likely be difficult even with the clause.  This bill, like most pieces of legislation, will no doubt be reviewed, revised, and amended before eventually being put to a vote.

Another piece of the verbiage in the bill that had poker players worried was that it calls for gambling operators to withhold taxes at cash-out.  However, it is unclear exactly what this means.  We don’t yet know if that means every cash-out would have taxes withheld or if it would go by current withholding rules, which require companies to collect tax identification numbers or withhold taxes.  Current law also requires companies to withhold taxes for winnings over $5,000.  This will obviously need to be clarified before the final draft.

Finally, many were initially concerned about this piece:

Ҥ 5390. Cheating and other fraud
(a) ELECTRONIC CHEATING DEVICES PROHIBITED.—No person initiating, receiving, or otherwise making a bet or wager with a licensee, or sending, receiving, or inviting information assisting with a bet or wager with a licensee, knowingly shall use, or assist another in the use of, an electronic, electrical, or mechanical device which is designed, constructed, or programmed specifically for use in obtaining an advantage in any game authorized under this subchapter, where such advantage is prohibited or otherwise violates the rules of play established by the licensee.”

Immediately players began to worry that the bill would outlaw software such as heads-up displays and trackers like Hold’em Manager and Poker Tracker.  However, it appears that the most important statement is made in the last sentence, “where such advantage is prohibited or otherwise violates the rules of play established by the licensee.”  That would seem that it would be up to the site as to what they would allow players to use, much like it is today.

On the other hand, there are some very promising parts of the bill.  For one, the bill allows any company, foreign or domestic, to apply for and obtain a license (with certain restrictions).  Also, there is no reference to any additional taxes, only proper documentation and collection of taxes.  Also, the US regulation would allow for cheaters to be prosecuted in court and require sites to do more to prevent cheating.  It would provide extra protection against underage gambling and problem gambling and allow a venue for clearing up disputes or logging complaints about problems, such as payout issues.

So it seems that although it is not a “perfect” bill for poker (poker is not even specifically mentioned in it), it does seem like a step in the right direction.  Hopefully, with some good input from online poker supporters, changes can be made to make the legislation more poker friendly.