Reid-Kyl bill's player penalties removed

US Senators Harry Reid and Jon Kyl have dropped language from their federal online poker bill penalising players from depositing funds at unlicensed sites.

The 73-page draft of the bill, obtained by the Poker Players Alliance on Friday and subsequently published by Quadjacks, contains no provisions permitting the government to seize money deposited or won at illegal sites.

In contrast, the summary of the bill which leaked last month stipulated: “To deter US players from patronizing illegal sites, the bill makes explicit that any property involved in or traceable to a gambling transaction in violation of the new act (including winnings) is subject to forfeiture.”

The bill states that to apply for an online poker licence, an operator must have owned a US casino for 180 days after the Act is passed, therefore favouring existing US land-based casino licensees. There is also a 15-month blackout period before any operator is allowed to go online.

The bill also appears to clear the path for Nevada to drive federal regulation, due to a provision stating that a qualified body that has “demonstrated capabilities relevant to the online poker environment” will be designated. To date, Nevada is the only US state that has experience in investigating online poker applicants and issuing licences.

To increase protection of players’ funds, the bill states that deposits must be segregated in order to avoid financial risk the operator could face, while strict measures are also imposed for cheating, as any individual caught using bot software programs could receive up to three years in prison. Moreover, any person found failing to comply with any applicable law could face a US$250,000 fine, which increases to $750,000 for corporations.

The bill’s other main provisions as outlined in the summary still remain, including the articles which would impose a five year-ban on any entities that continued to operate online in the US post UIGEA at the end of 2006 for five years, unless that is can prove to a court that they did not break any federal or state laws during this time. This would prohibit PokerStars and its recently acquired Full Tilt brand unless the former can argue its case successfully.

States will have the chance to opt-in, with tribes only permitted to offer online poker if the state they reside in has opted-in. Interstate poker between participating states would be permitted, but international player pools would be prohibited.

The Office of Online Poker Oversight (OOPO) would be set up as part of the Department of Commerce to oversee online poker regulation. Operators would be required to pay a gross rake tax rate of 16%, with 14% going to states and tribes, and 2% set aside for the federal government to cover the cost of the OOPO.

It is anticipated that the bill could be introduced in the lame-duck session following the 6 November Presidential elections. Reid reportedly wanted to move the bill in Congress before the October recess, but was unable to secure enough Republican support, which led to a public falling out between him and Senator Dean Heller, who he had entrusted to help gain GOP votes.

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The bill in summary

Player penalties

No language present penalising players from depositing funds at unlicensed sites, despite last month’s summary’s warning: “To deter US players from patronizing illegal sites, the bill makes explicit that any property involved in or traceable to a gambling transaction in violation of the new act (including winnings) is subject to forfeiture.”

Segregation of player funds

“Appropriate safeguards to ensure player funds are held in accounts segregated from the funds of licensees and are otherwise protected from corporate insolvency, financial risk, or criminal or civil actions against the licensee.”

Limitation eligible licensees

“An applicant who””

(i) is, or owns or controls, a company that operates a casino gaming facility, a

qualified race track, or a qualified card room; and

(ii) has owned or controlled such facility, race track, or card room (or the company that operates such facility, race track, or card room) throughout the 180-day period ending on the date of the enactment of this Act.”

Date of first issuance

“The date of first issuance specified in this subsection is the date that is 450 days after the date of the enactment of this Act.”

Qualified bodies ““ selection

“Except as provided in subparagraph (E), the Secretary shall select for designation as benchmark qualified bodies under subparagraph (A) those agencies and regulatory bodies which submit an application under subparagraph (B) and which the Secretary determines in the Secretary’s sole discretion have each of the following:

(i) A reputation as a regulatory and enforcement leader in the gaming industry.

(ii) A strict regulatory regime.

(iii) Regulatory and enforcement personnel with recognized expertise.

(iv) Adequate regulatory and enforcement resources.

(v) Demonstrated capabilities relevant to the online poker environment.”

Segregation of player funds

“Appropriate safeguards to ensure player funds are held in accounts segregated from the funds of licensees and are otherwise protected from corporate insolvency, financial risk, or criminal or civil actions against the licensee.”

Bots

“A software program that makes bets or wagers according to an algorithm

shall constitute a type of cheating device under this subsection”¦”¦

“¦..Criminal Penalty.””Whoever violates subsection (a) or (b) shall be fined under title 18,

United States Code, imprisoned for not more than 3 years, or both.”

Penalties assessed by secretary

“The Secretary may assess upon any licensee or other person subject to the requirements of this title for each violation of this title or any regulation prescribed or order issued under this title, a civil penalty of not more than the greater of””

(i) the amount involved in the violation, if any; or

(ii) $250,000 for an individual and $750,000 for a corporation.”