More detail on the King legalisation bill

News on 7 Jun 2013

More details on the internet gambling legalisation bill launched Thursday by Rep. Peter King are now available, including licensing requirements, which can be executed on a 5 year basis through existing state or tribal regulatory frameworks, or through a body specifically created for that activity…but with federal government input, using the criteria applied to bricks and mortar licensing.

Licensing will include “vendors” associated with operations, such as software and services providers, and marketing affiliates will be required to register with the licensing authority – it is not yet known whether such registration will carry a financial fee.

Taxation and licensing fees have yet to be specified in the legislation

The high profile “bad actor” clause that has caused so much comment at both state and federal level lately on grounds that it could be construed as commercial protectionism, is covered in the King bill, but appears to apply only to operators or affiliates who have provided [illegal] online sports betting services to American punters, leaving some leeway for competitors but not binding on states that may wish to impose such a clause with tighter constraints.

There is also sensible provision to allow “illegal” operators to exit the US market in a professional and fair manner, imposing time limits under which players must be informed and allowed to withdraw balances from their accounts, and detailing hefty fines for non-compliance.

Where illegal operators continue to offer services, there are enforcement options in the King bill, and seriously punitive measures against operators who continue to risk operating without US licensing that include million dollar fines and ten year prison penalties.

US players who give such illegal sites their business can also have their funds seized and confiscated.

Interestingly, the bill also contains clauses dealing with players who cheat and collude or use bots…and setting steep punishments for those that do.

Internet cafe “sweepstakes” gambling – a topic that has seen several states including Florida, South Carolina and California taking enforcement actions recently is also addressed by the King bill and are declared illegal.

There is an age limit for players of 21 years, forming part of the section of the bill that deals with a raft of the customary problem gambling and underage preventative and exclusion requirements.

It is also gratifying to note that specific clauses call for player funds to be held in segregated accounts to protect them against operational failures – long a bone of contention with players. Heavy penalties are prescribed for operators who do not respect this requirement.

International punters who wish to play on US-licensed websites will be permitted to do so…but only where the countries in which they are resident have legalised online gambling.

The federal legalisation drive will be reassessed after a year of operations, with the Treasury required to submit a data-backed study of financial numbers and playing characteristics.

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