I-POKER BILL MAY BE DYING

While it appears that the I-Poker Bill may be dead for this session, it is likely to reemerge next year.  Here is our review.

 

 

 ‘‘Prohibition of Internet Gambling, Internet Poker Regulation, and Strengthening UIGEA Act of 2010” 

  • “Poker has long been part of the cultural and recreational fabric of the United States”

According to the latest conversations, it appears that the I-poker bill is dying on the vine and it may be a stretch for Senate Majority Leader Harry Reid to get his bill attached to the tax cuts.  However, we thought it might be helpful to summarize the latest and greatest draft of the ‘‘Prohibition of Internet Gambling, Internet Poker Regulation, and Strengthening UIGEA Act of 2010”.  Some of the key highlights of the bill include:

  • Timing:  at least 15 months after enactment (April 2012 at earliest)
  • Who can get licensed: Currently licensed US operators and suppliers that have been licensed for at least 5 years
  • Term and Terms: Initial 5 year term with renewal options with a license fee of 20% of poker receipts
  • Who can’t get licensed:  Anyone who owned (5% or more) or controlled a company that knowingly accepted illegal wagers from US players or any person that was a significant vendor to such person.  The acquisition of any Person also precludes a person from getting licensed
  • Down the road:  After 2 years, governing agency reserves the right to expand the universe of qualified licensees
  • What happens to unlicensed operators:  Unlicensed operators must cease operations within 30 days of the bill’s enactment and return any monies to customers or face fines of up to $1MM/day.
  • International players?  Can’t get licensed under this bill but there’s nothing in here that suggests that they can’t partner with land based operators to help them get up and running.

 

FULL SUMMARY

Part I:  PROHIBITION ON UNLICENSED INTERNET GAMBLING AND REGULATION OF INTERNET POKER

  • Basically lays out the argument of why Poker is different from other games of chance and how it’s legal to play poker in 15 states
  • Claims that since the US never intended to include Internet gaming of any kind within the scope of its commitments under the General Agreement for Trade in Services, and therefore, no WTO Member had any competitive expectation of access to the United States Internet gaming market
  • Licensees may not accept wagers from individuals located outside the US, unless the entity that operates that internet gaming facility is separate from the one that is licensed to operate an internet poker facility under this title
  • To the extent international wagers are accepted by a separate entity, there must be no commingling of funds
  • The Secretary may choose to remove the limitation of accepting international bets 3 years after licenses are first issued
  • Essentially bars former participants in the illegal US igaming market to be licensed and prohibits any licensee from purchasing former illegal operators (anything over 5% ownerships or control).  Prohibits issuing licenses to any Person who:
    • Previously owned an internet gaming facility that knowingly accepted bets/ wagers from persons located in the US
    • Was a significant vendor to the bets or wagers from persons known to be located in the US
    • Who purchased or acquired on whole or part an online gaming operator who knowingly accepted wagers from persons in the US or who was a vendor to sure operators
  • Licenses will only be issued to applicants who:
    • Own or control a company that operates a casino facility or a qualified track for  a duration of at least 5 years
    • Suppliers (who have been licensed for at least 5 years) of slot machines or qualified mobile gaming systems casino gaming facilities with at least 500 machines
    • After 2 years following the issuances of licenses, the Secretary may expand the definition of qualified licensees as deemed appropriate
  • Prohibits
    • Underage gaming (21 years old)
    • Wagers from States and Tribes that prohibit gaming
      • Although states that do not currently permit commercial poker may opt in to online poker and states that do permit commercial poker may opt out
  • Mandates collection or reporting of customer taxes
  • Safeguards against financial crime (money laundering/fraud/etc), compulsive gambling, privacy, and cheating
  • No licenses will be issued before 15 months after this bill is enacted
  • Operators running internet poker sites without a license would have up to 30 days to cease operations once this bill is enacted and return all monies in accounts back to players over 2 years , after which any remaining funds would be put in escrow with a financial institution for safekeeping
  • Penalties for unlicensed of not more than the greater of :
    • Amount of bets or wagers taken by the person from players in the US during the unlicensed period; or
    • $1MM per day that they person accepts bets or wagers from players during the unlicensed period
  • Licenses are issued for a term of 5 years with renewal options. Any transfer of a license or change in a control require approval by a qualified body.
  • All licensees will have to report all transactions to the regulatory body and provide annual reports
  • There will be regulations developed for exclusion of compulsive gamblers and other persons that want to opt into a self-exclusion program which each licensee will have to implement
  • Deems it illegal to operate a place of public accommodation (club or associations) in which computer terminals or devices are made available principally for the purpose of Internet gambling

Part II: STRENGTHENING OF UNLAWFUL INTERNET GAMBLING ENFORCEMENT ACT OF 2006 (UIGEA)

  • Financial transaction providers shall not be held liable for accepting bets or wagers permitted by the UIGEA 2010 unless they know or should know that the transactions are conducted in violation of Federal or State law
  • Identify unlicensed Internet gambling enterprises and within 120 days of the enactment of the Prohibition of Internet Gambling, Internet Poker Regulation and Strengthening of the UIGEA Act of 2010 submit a list of those companies to the Secretary.  The list will be updated every 60 days. Financial transaction providers will not be able to process transactions for any companies on this list.

Part III: INTERNET POKER REVENUE PROVISIONS

  • License fee to be paid no later than 15 days after the end of each month in the amount of 2% of the licensee’s Internet poker receipts
  • Fees include any commissions, tournament fee, or any other charges to customers
  • The fee/ penalty for unlicensed operators is 50% of poker receipts
  • Internet Poker licensee fee trust fund where all the I-poker revenues will go
  • Expenditures from the fund will go to qualified Indian tribes and States,  allocated on a pro-rata basis with the number of players within each jurisdiction

Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more