iMEGA Lose in Court, but IGRTEA Picks Up the Fight

In what is almost certain to be a long-running war against the controversial UIGEA, there were some developments this week worth mentioning.

The Good:

Representative Jim McDermott (D-WA 7th) introduced the Internet Gambling Regulation and Tax Enforcement Act of 2008 (IGRTEA) earlier this week, an amendment to his previously proposed legislation that seeks to regulate and tax the online gaming industry in the US.

PricewaterhouseCoopers has estimated potential tax revenues of $8.7 billion to $42.8 billon over ten years, should the US government decide that regulation is a better option then prohibition for online gambling.

McDermott's legislation would ensure online gambling companies offering services to US residents were subjected to a 2% licensing fee as well as requirements to provide all customers with annual statements of their winnings and losses.

McDermott is wisely selling the revenue implications of IGRTEA:
"Before us is a tremendous opportunity to protect consumers and recoup billions of dollars that should be collected by the Internal Revenue Service. These are revenues that are desperately needed, given that we are at war and face difficulty financing the nation's priorities."

The IGRTEA is a companion bill to Rep. Barney Frank's Internet Gambling Regulation and Enforcement Act. Frank's bill has been slowly gaining increasing support, with the Chairman of the House Democratic Policy Committee, Rep. George Miller (D – CA), becoming the latest congressman to sign up as a co-sponsor for Frank's bill.

The Bad:

The US District Court of New Jersey dismissed a motion by iMEGA, which had been seeking a temporary restraining order of the UIGEA. iMEGA's argued that the UIGEA violated American's civil rights and did not comply with international treaty obligations.

Judge Mary Cooper ruled that the UIGEA was lawfully enacted and does not intrude on constitutional guarantees. iMEGA is planning an appeal.

The Ugly:

US residents who wish to gamble online continue to face restrictions on payment options in the wake of UIGEA anti-online payment regulations. The US Treasury has published draft proposals of regulations which have the potential to bury banking institutions in unnecessary paperwork.

Rep. Barney Frank will be bringing attention to this issue via another round of Congressional hearings this spring.

"The banks have a lot of other things to worry about right now," Frank said. "I don't think poker should be one of them."

Since the UIGEA, US residents have also (somewhat ironically) been subjected to increased dangers when gambling online. Large, publicly-listed online gaming companies such as PartyGaming and 888 were forced to withdraw from the US market post-UIGEA, leaving the door open for privately-owned operators which are not subject to strict governmental controls. It is now more dangerous for US residents to gamble online than it was pre-UIGEA.

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